[Federal Register Volume 83, Number 43 (Monday, March 5, 2018)]
[Rules and Regulations]
[Pages 9222-9232]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-04411]


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SURFACE TRANSPORTATION BOARD

49 CFR Part 1102

[Docket No. EP 739]


Ex Parte Communications in Informal Rulemaking Proceedings

AGENCY: Surface Transportation Board.

ACTION: Final rule.

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SUMMARY: In this decision, the Surface Transportation Board (the Board) 
modifies its regulations to permit, subject to disclosure requirements, 
ex parte communications in informal rulemaking proceedings. The Board 
also adopts other changes to its ex parte rules that would clarify and 
update when and how interested persons may communicate informally with 
the Board regarding pending proceedings other than rulemakings. The 
intent of the modified regulations is to enhance the Board's ability to 
make informed decisions through increased stakeholder communications 
while ensuring that the Board's record-building process in rulemaking 
proceedings remains transparent and fair.

DATES: This rule is effective on April 4, 2018.

ADDRESSES: Requests for information or questions regarding this final 
rule should reference Docket No. EP 739 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: Jonathon Binet at (202) 245-0368. 
Assistance for the hearing impaired is available through the Federal 
Information Relay Service (FIRS) at (800) 877-8339.

SUPPLEMENTARY INFORMATION: The Board's current regulations at 49 CFR 
1102.2 generally prohibit most informal communications between the 
Board and interested persons concerning the merits of pending Board 
proceedings. These regulations require that communications with the 
Board or Board staff regarding the merits of an ``on-the-record'' Board 
proceeding not be made on an ex parte basis (i.e., without the 
knowledge or consent of the parties to the proceeding).\1\ See 49 CFR 
1102.2(a)(3), (c). The current regulations detail the procedures 
required in the event an impermissible communication occurs and the 
potential sanctions for violations. See 49 CFR 1102.2(e), (f).
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    \1\ ``On-the-record proceeding'' means ``any matter described in 
Sections 556-557 of the Administrative Procedure Act [(APA)] (5 
U.S.C. 556-557) or any matter required by the Constitution, statute, 
Board rule, or by decision in the particular case, that is decided 
solely on the record made in a Board proceeding.'' 49 CFR 
1102.2(a)(1).
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    In 1977, the Board's predecessor agency, the Interstate Commerce 
Commission (ICC), determined that the general prohibition on ex parte 
communications in proceedings should include the informal rulemaking 
proceedings the Board uses to promulgate regulations.\2\ See Revised 
Rules of Practice, 358 I.C.C. 323, 345 (1977).\3\ At that time, several 
court decisions expressed the view that ex parte communications in 
informal rulemaking proceedings were inherently suspect.\4\ 
Accordingly, it has long been the agency's practice to prohibit 
meetings with individual stakeholders on issues that are the topic of 
pending informal rulemaking proceedings.
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    \2\ The APA, 5 U.S.C. 551-559, governs two categories of agency 
rulemaking: Formal and informal. Formal rulemaking is subject to 
specific procedural requirements, including hearings, presiding 
officers, and a strict ex parte prohibition. See 5 U.S.C. 556-57. 
But most federal agency rulemakings, including the Board's, are 
informal rulemaking proceedings subject instead to the less 
restrictive ``notice-and-comment'' requirements of 5 U.S.C. 553.
    \3\ In Revised Rules of Practice, the ICC stated ``ex parte 
communication during a rulemaking is just as improper as it is 
during any other proceeding. The Commission's decisions should be 
influenced only by statements that are a matter of public record.'' 
358 I.C.C. at 345.
    \4\ See, e.g., Home Box Office v. Fed. Commc'ns Comm'n, 567 F.2d 
9, 51-59 (D.C. Cir. 1977) (finding that ex parte communications that 
occurred after the notice of proposed rulemaking (NPRM) violated the 
due process rights of the parties who were not privy to the 
communications because the written administrative record would not 
reflect the possible ``undue influence'' exerted by those 
stakeholders who had engaged in ex parte communications); Nat'l 
Small Shipments Traffic Conference v. ICC, 590 F.2d 345, 351 (D.C. 
Cir. 1978) (finding ex parte communications ``violate[d] the basic 
fairness of a hearing which ostensibly assures the public a right to 
participate in agency decision making,'' foreclosing effective 
judicial review); Sangamon Valley Television Corp. v. United States, 
269 F.2d 221, 224 (D.C. Cir. 1959) (finding that undisclosed ex 
parte communications between agency commissioners and a stakeholder 
were unlawful because the informal rulemaking involved ``resolution 
of conflicting private claims to a valuable privilege, and that 
basic fairness requires such a proceeding to be carried on in the 
open'').
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    At the same time, however, other court decisions were more tolerant 
of ex parte communications in informal rulemaking proceedings, so long 
as the proceedings were not quasi-adjudicative in nature and the 
process remained fair.\5\ In 1981, in Sierra Club v. Costle, 657 F.2d 
298 (D.C. Cir. 1981), the U.S. Court of Appeals for the District of 
Columbia Circuit significantly clarified and liberalized treatment of 
this issue. In that case, the court considered the ``timing, source, 
mode, content, and the extent of . . . disclosure'' of numerous written 
and oral ex parte communications received after the close of the 
comment period to determine whether those communications violated the 
governing statute or due process. Id. at 391. The court held that, 
because the agency docketed most of the ex parte communications and 
none of the comments were docketed ``so late as to

[[Page 9223]]

preclude any effective public comment,'' the agency satisfied its 
statutory requirements. Id. at 398. The court also declined to prohibit 
ex parte communications in informal rulemakings on constitutional due 
process grounds, and even held that not all ex parte communications 
must necessarily be docketed (implicitly concluding that whether such 
communications require docketing depends on case-specific 
circumstances). Id. at 402-04. Today, Sierra Club is considered the 
most recent influential decision on ex parte communications in informal 
rulemakings and is often cited by courts for the proposition that ex 
parte communications in informal agency rulemaking are generally 
permissible.\6\
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    \5\ See, e.g., Action for Children's Television v. Fed. Commc'ns 
Comm'n, 564 F.2d 458 (D.C. Cir. 1977) (upholding the agency's 
decision not to issue proposed rules and finding no APA violation 
for ex parte discussions where the agency provided a meaningful 
opportunity for public participation and the proceeding did not 
involve competing claims for a valuable privilege).
    \6\ See, e.g., Tex. Office of Pub. Util. Counsel v. Fed. 
Commc'ns Comm'n, 265 F.3d. 313, 327 (5th Cir. 2001) (``Generally, ex 
parte contact is not shunned in the administrative agency arena as 
it is in the judicial context. In fact, agency action often demands 
it.''); Ammex, Inc. v. United States, 23 Ct. Int'l Trade 549, 569 
n.16 (1999) (noting that the decision at issue ``constitutes an 
exercise of `informal' rulemaking under the [APA] and, as such, is 
not subject to the prohibition on ex parte communications set forth 
in 5 U.S.C. 557(d)(1) (1994)''); Portland Audubon Soc. v. Endangered 
Species Comm., 984 F.2d 1534, 1545-46 (9th Cir. 1993) (``The 
decision in [Sierra Club] that the contacts were not impermissible 
was based explicitly on the fact that the proceeding involved was 
informal rulemaking to which the APA restrictions on ex parte 
communications are not applicable.'').
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    More recently, in 2014, the Administrative Conference of the United 
States (ACUS), the body charged by Congress with recommending agency 
best practices, provided guidance to agencies indicating that a general 
prohibition on ex parte communications in informal rulemaking 
proceedings is neither required nor advisable. Ex Parte Commc'ns in 
Informal Rulemaking Proceedings (2014 ACUS Recommendation), 79 FR 
35988, 35994 (June 25, 2014). ACUS concluded that ex parte 
communications in informal rulemaking proceedings ``convey a variety of 
benefits to both agencies and the public,'' although it acknowledged 
that fairness issues can arise if certain groups have, or are perceived 
to have, ``greater access to agency personnel than others.'' Id. 
However, in balancing these competing considerations, ACUS urged 
agencies to consider placing few, if any, restrictions on ex parte 
communications that occur before an NPRM is issued because 
communications at this early stage are less likely to cause harm and 
more likely to ``help an agency gather essential information, craft 
better regulatory proposals, and promote consensus building among 
interested persons.'' Id. ACUS further recommended that agencies 
establish clear procedures ensuring that all ex parte communications 
occurring after an NPRM is issued, whether planned or unplanned, be 
disclosed.
    Starting in 2015, the Board began to look at the possibility of 
conducting ex parte meetings to gain more stakeholder input in the 
informal rulemaking process. As a result, the Board waived the ex parte 
prohibition to permit Board Members or designated Board staff to 
participate in ex parte communications in two proceedings.\7\ See 
Reciprocal Switching, EP 711 (Sub-No. 1), slip op. at 28-29 (STB served 
July 27, 2016); \8\ U.S. Rail Serv. Issues--Performance Data Reporting, 
EP 724 (Sub-No. 4), slip op. at 2-3 (STB served Nov. 9, 2015). Many 
stakeholders in these proceedings expressed appreciation for the 
opportunity to meet with Board Members or Board staff regarding the 
merits of the proposed rules and expressed the hope to interact with 
the Board informally in the future as well.\9\ In these meetings, 
parties have been able to respond directly to questions from Board 
Members and Board staff on the feasibility and utility of certain 
aspects of the Board's proposals.
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    \7\ Greater use of ex parte meetings in Board rulemaking 
proceedings was also a topic of the U.S. Senate Committee on 
Commerce, Science, and Transportation's August 11, 2016 hearing. See 
Freight Rail Reform: Implementation of the STB Reauthorization Act 
of 2015: Field Hearing Before the S. Comm. on Commerce, Sci., & 
Transp., 114th Cong. 32, 35, 46, 50-52, 57, 69, 72 (2016), https://www.gpo.gov/fdsys/pkg/CHRG-114shrg23228/pdf/CHRG-114shrg23228.pdf.
    \8\ In the Board's July 27, 2016 decision, which embraced 
Petition for Rulemaking to Adopt Revised Competitive Switching 
Rules, Docket No. EP 711, the Board terminated the proceeding in 
Docket No. EP 711, and all meetings with Board Members are taking 
place under Reciprocal Switching, Docket No. EP 711 (Sub-No. 1).
    \9\ See, e.g., Summary of Ex Parte Meeting Between Packaging 
Corp. of Am. & Board Member Begeman at 3, Aug. 3, 2017, Reciprocal 
Switching, EP 711 (Sub-No. 1); Summary of Ex Parte Meeting Between 
the Am. Chemistry Council & Board Member Miller at 1, Mar. 22, 2017, 
Reciprocal Switching, EP 711 (Sub-No. 1); Summary of Ex Parte 
Meeting Between CSX Transp. & STB Staff at 1, Dec. 16, 2015, U.S. 
Rail Serv. Issues--Performance Data Reporting, EP 724 (Sub-No. 4).
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    Based on the developments in case law related to ex parte 
communications and the Board's own experiences waiving its ex parte 
prohibitions in the two recent proceedings, the Board determined that 
it was appropriate to revisit the agency's strict prohibition on ex 
parte communications in informal rulemaking proceedings. The Board also 
determined that certain other aspects of its ex parte regulations that 
apply to proceedings other than rulemakings could be clarified and 
updated to reflect current practices and better guide stakeholders and 
agency personnel. Accordingly, the Board issued an NPRM on September 
28, 2017, proposing to: (1) Modify its regulations to permit, subject 
to disclosure requirements, ex parte communications in informal 
rulemaking proceedings, and (2) change its ex parte rules to clarify 
and update when and how interested persons may communicate informally 
with the Board regarding pending proceedings other than rulemakings. 
See Ex Parte Commc'ns in Informal Rulemaking Proceedings (NPRM), EP 739 
(STB served Sept. 28, 2017). The Board received nine opening comments 
and three reply comments on the NPRM.\10\
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    \10\ Comments were received from the following organizations: 
The American Chemistry Council, the Fertilizer Institute, the 
National Industrial Transportation League, American Fuel and 
Petrochemical Manufacturers, Independent Lubricant Manufacturers 
Association, International Warehouse Logistics Association, American 
Forest & Paper Association, Alliance for Rail Competition, Private 
Railcar Food and Beverage Association, Glass Packaging Institute, 
National Association of Chemical Distributors, the Chlorine 
Institute, Alliance of Automobile Manufacturers, Association of 
Global Automakers, American Petroleum Institute, American Malting 
Barley Association, Corn Refiners Association, Portland Cement 
Association, and Plastics Industry Association (collectively the 
Rail Customer Coalition or RCC); the American Short Line and 
Regional Railroad Association (ASLRRA); the Association of American 
Railroads (AAR); BNSF Railway Company (BNSF); the Freight Rail 
Customer Alliance (FRCA); the George Mason University Antonin Scalia 
Law School Administrative Law Clinic (GMU); the National Grain and 
Feed Association (NGFA); Samuel J. Nasca on behalf of SMART/
Transportation Division, New York State Legislative Board (SMART); 
and the Western Coal Traffic League (WCTL). On November 1, 2017, the 
Board also received a letter from NGFA informing the Board that the 
following national agricultural producer and agribusiness 
organizations notified NGFA that they support NGFA's opening 
comments: National Association of State Departments of Agriculture, 
National Council of Farmer Cooperatives, National Farmers Union, 
National Oilseed Processors Association, and North American Millers' 
Association.
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    Below, the Board addresses the comments submitted by parties in 
response to the NPRM and discusses clarifications and modifications 
being adopted in the final rule. The text of the final rule is also 
below.
    Changes to Definitions. In the NPRM, the Board proposed to add two 
new definitions to section 1102.2(a): ``informal rulemaking 
proceeding'' and ``covered proceedings.'' ``Informal rulemaking 
proceeding'' would include any proceeding to issue, amend, or repeal 
rules pursuant to 49 CFR part 1110 and 5 U.S.C. 553. ``Covered 
proceedings'' would encompass both on-the-record proceedings and 
informal rulemaking proceedings following the issuance of an NPRM.\11\ 
The Board

[[Page 9224]]

further proposed, as discussed in more detail below, that ex parte 
communications would be permitted in informal rulemaking proceedings 
(subject to disclosure requirements for those communications occurring 
post-NPRM), but would remain prohibited in on-the-record proceedings.
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    \11\ Accordingly, the Board proposed to replace references to 
``on-the-record proceedings'' with ``covered proceedings,'' as 
appropriate, throughout section 1102.2.
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    Additionally, the Board proposed redefining an ``ex parte 
communication'' as ``an oral or written communication that concerns the 
merits or substantive outcome of a pending proceeding; is made without 
notice to all parties and without an opportunity for all parties to be 
present; and could or is intended to influence anyone who participates 
or could reasonably be expected to participate in the decision.'' This 
proposed new definition would alter the existing definition in two 
ways; first, by removing the existing concept that communications are 
only ex parte if made ``by or on behalf of a party'' and second, by 
removing the suggestion that an ex parte communication that is made 
with the ``consent of any other party'' could be permissible.
    The Board noted in the NPRM that these revisions would not change 
the generally understood concept that certain communications, by their 
very nature, do not concern the merits or substantive outcome of 
pending proceedings or are not made to Board Members or staff who are 
reasonably expected to participate in Board decisions. Such permissible 
communications include, for example, communications about purely 
procedural issues; public statements or speeches by Board Members or 
staff that merely provide general and publicly available information 
about a proceeding; communications that solely concern the status of a 
proceeding; and communications with the Board's Rail Customer and 
Public Assistance Program.
    ASLRRA, NGFA, and RCC support the proposed changes to the 
definitions. (ASLRRA Comments 3; NGFA Comments 5; RCC Comments 7.) 
ASLRRA argues that the proposed definitions and amendments preserve the 
transparency and fairness of the rulemaking process. (ASLRRA Comments 
3.)
    WCTL supports the Board's proposed changes to the definition of 
``ex parte communication.'' (WCTL Comments 23; WCTL Reply 9.) WCTL 
agrees with the Board that ex parte communications can be made by non-
parties and that the definition of ``ex parte communication'' should 
encompass communications made by these non-parties. (WCTL Reply 9.) 
WCTL argues, however, that the Board should amend the definition of 
``on-the-record proceeding'' to expressly include rate reasonableness 
and unreasonable practice adjudications. (WCTL Comments 19.) According 
to WCTL, rate reasonableness and unreasonable practice cases may not 
technically be formal ``on-the-record'' proceedings within the meaning 
of the APA, and adding the suggested text would remove any uncertainty. 
(Id. at 20.) AAR states that it does not oppose WCTL's suggestion. (AAR 
Reply 5.)
    The final rule will adopt the proposal as set forth in the NPRM. It 
is not necessary to amend the definition of ``on-the-record 
proceeding'' to specifically include rate reasonableness and 
unreasonable practice adjudications, as WCTL suggests. Although rate 
reasonableness and unreasonable practice formal complaints may not 
technically be covered by the APA definition of on-the-record 
proceedings, the definition of that term in the Board's regulations is 
sufficient to cover those types of proceedings, which are decided 
solely on the record. See 49 CFR 1102.2(a)(1).
    Communications That Are Not Prohibited. The Board also proposed in 
the NPRM to modify section 1102.2(b) to include additional categories 
of ex parte communications that are permissible and would not be 
subject to the disclosure requirements of proposed section 1102.2(e) 
and (g), discussed in more detail below. Specifically, the Board 
proposed adding to this category communications related to an informal 
rulemaking proceeding prior to the issuance of an NPRM; \12\ 
communications related to the Board's implementation of the National 
Environmental Policy Act and related environmental laws; and 
communications concerning judicial review of a matter that has already 
been decided by the Board made between parties to the litigation and 
the Board or Board staff involved in that litigation. Additionally, the 
Board proposed to modify the existing regulations to remove from 
section 1102.2(b)(1) the language permitting any communication ``to 
which all the parties to the proceeding agree.''
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    \12\ For example, informal communications following a notice of 
intent to institute a rulemaking proceeding or an advance notice of 
proposed rulemaking (ANPRM) would not be prohibited. See 49 CFR 
1110.3(b).
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    NGFA, RCC, and WCTL support including environmental review and 
judicial review communications within the scope of permitted ex parte 
communications. (NGFA Comments 5; RCC Comments 7; WCTL Comments 2; WCTL 
Reply 2, 10.) ASLRRA, NGFA, and RCC also support the proposal to permit 
ex parte communications prior to the issuance of an NPRM. (ASLRRA 
Comments 3; NGFA Comments 3; RCC Comments 7.) ASLRRA argues that 
allowing undisclosed ex parte communications prior to the issuance of 
an NPRM would enable the Board to obtain helpful stakeholder input, 
particularly in the preliminary stages of a rulemaking proceeding, 
without adversely implicating due process or raising administrative 
concerns. (ASLRRA Comments 3.) NGFA likewise supports permitting 
undisclosed ex parte communications before the issuance of an NPRM. 
(NGFA Comments 3.) According to NGFA, the information the Board gathers 
prior to the issuance of an NPRM would be evident within the NPRM 
itself. (Id.) NGFA, however, suggests that the Board adopt the practice 
of including in the NPRM a list of the identities of all stakeholders 
who provided input, as the Board did in Expediting Rate Cases, EP 733, 
slip op. at 2 n.3 (STB served June 15, 2016). (Id.)
    AAR, FRCA, SMART, and WCTL object to the Board's proposal to permit 
undisclosed ex parte communications prior to the issuance of an NPRM. 
(See AAR Comments 5-6; FRCA Comments 1; SMART Comments 10; WCTL 
Comments 21; AAR Reply 4.) AAR argues that the Board should require the 
disclosure of ex parte contacts occurring after the issuance of an 
ANPRM. (AAR Comments 5-6.) For cases initiated by a petition for 
rulemaking, AAR suggests that ex parte communications should be 
permitted, subject to disclosure requirements, once that petition has 
been filed and docketed. (AAR Reply 5.) AAR argues that such a rule 
would be consistent with Department of Transportation (DOT) policy that 
recommends disclosure of ex parte communications upon issuance of an 
ANPRM, and Federal Aviation Administration rules that require 
disclosure of ex parte communications before an ANPRM or an NPRM. (AAR 
Comments 6.) According to AAR, permitting such ex parte communications 
without disclosure may discourage stakeholder participation on the 
record. (AAR Comments 6; AAR Reply 4-5.) \13\
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    \13\ AAR also asks the Board to clarify whether ex parte 
communications would be permitted in major rail merger proceedings 
and suggests that the Board add a new paragraph section 1102.2(b)(7) 
permitting, as a communication that is not prohibited, ``[a]ny 
communication permitted by statute.'' (AAR Comments 7.) WCTL 
objected to AAR's suggestion, arguing that it does not comply with 
the provisions of 49 U.S.C. 11324(f) and conflicts with the Board's 
1996 determination not to exercise its statutory authority under 
section 11324(f) to permit ex parte communications in merger cases. 
(WCTL Reply 8-9 (citing Pet. of Fieldston Co. to Establish 
Procedures Regarding Ex Parte Commc'ns in R.R. Merger Proceedings, 1 
S.T.B. 1083, 1084-85 (1996)).) The Board finds that this request, 
related to major merger proceedings, is outside the scope of this 
proceeding, which focuses primarily on informal rulemaking 
proceedings; however, parties are free to raise the issue of the 
permissibility of ex parte communications in individual major merger 
proceedings.

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[[Page 9225]]

    WCTL likewise argues that the Board should apply ex parte 
communication disclosure rules and limitations to all publicly-docketed 
informal rulemaking proceedings where the Board has sought public 
comments (e.g., if the Board initiates a docketed proceeding using an 
ANPRM, the ex parte communication rules would apply starting when the 
ANPRM is docketed). (WCTL Comments 21; WCTL Reply 3-4.) WCTL argues 
that this would better advance the Board's objective of ``free 
flowing'' communications by allowing all interested members of the 
public to see what others are saying in ex parte meetings and to then 
respond to these communications. (WCTL Comments 21; WCTL Reply 4.) 
According to WCTL, permitting undisclosed ex parte communications prior 
to the issuance of an NPRM would discourage parties from filing 
detailed comments in response to ANPRMs and similar forms of pre-NPRM 
notices when those comments may be rejected based on ex parte 
communications that the parties were unaware of and had no opportunity 
to rebut. (WCTL Comments 21.) FRCA agrees with WCTL that disclosure 
requirements ``should not become operative only after an [NPRM] is 
served.'' (FRCA Comments 1.) Lastly, SMART argues that the 2014 ACUS 
Recommendation raises potential harms that would apply to ex parte 
communications prior to issuance of an NPRM (although the alleged 
potential harms are not specified by SMART). (SMART Comments 9-10 
(citing 2014 ACUS Recommendation, 79 FR 35993-95).)
    Having reviewed the comments, the Board continues to believe that 
the benefits of not requiring disclosure for ex parte communications 
prior to the issuance of an NPRM outweigh the potential harms. 
Regarding the benefits, the Board agrees with ASLRRA that such 
communication would enable the Board to obtain helpful stakeholder 
input in crafting proposed regulations. Informal communications with 
stakeholders prior to issuance of an NPRM provide an opportunity for 
the Board to obtain useful information and input that would inform the 
development of the Board's proposal and help identify the issues the 
agency should consider. In fact, the final report to ACUS, on which the 
2014 ACUS Recommendation is based, states that ``pre-NPRM ex parte 
communications are generally beneficial and do not implicate 
administrative and due process principles.'' Esa L. Sferra-Bonistalli, 
Ex Parte Commc'ns in Informal Rulemaking Final Report (Final Report), 
69 (May 1, 2014) (prepared for consideration of the Admin. Conference 
of the U.S.), https://www.acus.gov/report/final-ex-parte-communications-report. The report continued, stating that ``[r]ather 
than restricting [ex parte] communications, agencies should experiment 
with how they can capitalize on the communications' value.'' Id. at 85. 
Thus, permitting informal communications pre-NPRM, without 
restrictions, such as disclosure and timing requirements, could lead to 
better policy-making by enabling a freer flow of communication during 
the preliminary, exploratory phase of a rulemaking proceeding.
    The Board believes that these benefits outweigh any potential 
harms. SMART's claim--that the ACUS report raises some important 
potential and anticipated harms that would apply to ex parte 
communications prior to issuance of an NPRM--is inconsistent with the 
conclusion of ACUS's recommendations. ACUS expressly states that 
``[b]efore an agency issues [an NPRM], few if any restrictions on ex 
parte communications are desirable.'' 2014 ACUS Recommendation, 79 FR 
35994. ACUS further states that pre-NPRM communications are ``less 
likely'' to pose the same harms as ex parte communications that take 
place later in the process, and ``can help an agency gather essential 
information, craft better regulatory proposals, and promote consensus 
building among interested persons.'' Id.
    In addition, the potential harm identified by both WCTL and AAR--
that commenters would be less likely to file comments on the record 
during a proceeding--seems unlikely. In a recent case where the Board 
invited and/or received informal stakeholder communications prior to 
the initiation of a proceeding, participation in the subsequent 
proceeding remained at a high level. See, e.g., Expediting Rate Cases, 
Docket No. EP 733 (25 comments received following informal 
communications). The Board believes that stakeholders will continue to 
weigh in on proposed rules (through written comments and/or disclosed 
ex parte communications) even where they have had an opportunity to 
share general and preliminary views with the agency pre-NPRM. 
Additionally, as the Board noted in the NPRM, any information gathered 
in a pre-NPRM meeting that the Board incorporates or relies upon in its 
proposal will be evident in the NPRM itself. See NPRM, EP 739, slip op. 
at 10. The public would have an opportunity to examine and respond to 
that information.\14\ The Board believes that parties will still have 
the incentive to participate through written comments following 
informal ex parte communications to ensure that the Board has a record 
that reflects their views.
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    \14\ For example, as the Board noted in the NPRM, in Docket No. 
EP 733, Expediting Rate Cases, where Board staff held informal 
meetings with stakeholders with the goal of enhancing the Board 
staff's perspective on strategies and pathways to expedite and 
streamline rate cases, parties were permitted to comment on the 
details of the proposal, including those stemming from feedback 
gathered in the informal meetings. See NPRM, EP 739, slip op. at 10 
n.12; see also Expediting Rate Cases, EP 733, slip op. at 1 (STB 
served June 15, 2017).
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    For these reasons, the final rule will adopt the proposal regarding 
communications that are not prohibited as set forth in the NPRM.
    Communications That Are Prohibited. In the NPRM, the Board proposed 
to modify section 1102.2(c)(1) by adding the introductory clause, 
``[e]xcept to the extent permitted by these rules'' to reflect the fact 
that the revised rules would now govern, but not entirely prohibit, ex 
parte communications.
    The Board also proposed amending section 1102.2(d) to clarify when 
ex parte prohibitions would take effect and how long they would remain 
in effect. Specifically, the NPRM provided that the prohibitions 
against ex parte communications in on-the-record proceedings would 
begin when the first filing or Board decision in a proceeding is posted 
to the public docket or when the person responsible for a communication 
knows that the first filing has been filed with the Board, whichever 
occurs first. The Board further proposed that, in informal rulemaking 
proceedings, except as provided in the new section 1102.2(g), discussed 
in more detail below, the prohibitions on ex parte communications would 
begin when the Board issues an NPRM. Lastly, the Board proposed to 
clarify that ex parte prohibitions in covered proceedings would remain 
in effect until the proceeding is no longer subject to administrative 
reconsideration under 49 U.S.C. 1322(c) or judicial review.

[[Page 9226]]

    Commenters generally support this proposal. ASLRRA states that it 
supports the proposed changes to section 1102.2(d), which clarify when 
ex parte prohibitions would begin. (ASLRRA Comments 3.) Likewise, NGFA 
states that it supports changing the provision on when ex parte 
prohibitions begin to better reflect the various ways Board proceedings 
are initiated. (NGFA Comments 5.) NGFA and RCC also both support 
application of the ex parte prohibitions when the first filing or Board 
decision is posted to the public docket in an on-the-record proceeding. 
(Id.; RCC Comments 7-8.) No commenters raised specific objections to 
this aspect of the Board's proposal. Accordingly, the final rule will 
adopt the proposal as set forth in the NPRM.
    Procedures Upon Receipt of Prohibited Ex Parte Communications. The 
Board also proposed to revise section 1102.2(e) and (f), which entail 
the procedures required of Board Members and employees upon receipt of 
prohibited ex parte communications and sanctions, to reflect the fact 
that some ex parte communications would now be permissible under the 
revised regulation. First, the proposed rules clarified that the 
procedures in section 1102.2(e)(1) and (2) would apply to ``[a]ny Board 
Member, hearing officer or Board employee'' who receives an ex parte 
communication. Second, the proposal clarified that the procedures set 
forth in the existing section 1102.2(e) and (f) would apply only to 
communications not otherwise permitted by the regulation. Lastly, the 
Board proposed to amend the provision in section 1102.2(e)(1)--that 
currently requires the Chief of the Office of Proceedings' Section of 
Administration to place any written communication or a written summary 
of an oral communication not permitted by these regulations in the 
public correspondence file--to also require that such placements be 
made ``promptly'' and contain a label indicating that the prohibited ex 
parte communication is not part of the decisional record of the 
proceeding.
    The only comment in response to this aspect of the proposal was 
from WCTL, which states that it agrees with the Board's proposal to 
clarify the procedures the Board should follow if a Board Member or 
Board staff receives a prohibited ex parte communication. (WCTL 
Comments 24; WCTL Reply 10.) No commenters objected to the proposal. 
Accordingly, the final rule will adopt the proposal as set forth in the 
NPRM.
    Ex Parte Communications in Informal Rulemaking Proceedings. In the 
NPRM, the Board proposed to add a new section 1102.2(g) specifically 
governing ex parte communications in informal rulemaking proceedings 
that occur following the issuance of an NPRM, at which point disclosure 
requirements would attach. Under the proposed rule, ex parte 
communications with Board Members in informal rulemaking proceedings 
following the issuance of an NPRM would be permitted, subject to 
disclosure requirements, until 20 days before the deadline for reply 
comments to the NPRM, unless otherwise specified by the Board. The 
proposed rules provided that Board Members may delegate their 
participation in such ex parte communications to Board staff.
    Under the proposed rules, ex parte communications in informal 
rulemaking proceedings that occur outside of the permitted meeting 
period, that are made to Board staff where such participation has not 
been delegated by the Board, or that do not comply with the required 
disclosure requirements would be subject to the sanctions provided in 
section 1102.2(f). Further, the proposed rules provided that, to 
schedule an ex parte meeting, parties should contact the Board's Office 
of Public Assistance, Governmental Affairs, and Compliance at (202) 
245-0238 or the Board Member office with whom the meeting is requested, 
unless otherwise specified by the Board.
    The proposed rules also required that the substance of each ex 
parte meeting be disclosed by the Board by posting in the docket of the 
proceeding a written meeting summary of the arguments, information, and 
data presented at each meeting and a copy of any handouts given or 
presented. The proposed meeting summary would also disclose basic 
information about the meeting, including the date and location of the 
ex parte communication (or means of communication in the case of 
telephone calls or video-conferencing) and a list of attendees/
participants. The proposed rules further provided that the meeting 
summaries would have to be sufficiently detailed to describe the 
substance of the ex parte communication. Under the proposed rules, 
presenters could be required to resubmit summaries that are 
insufficiently detailed or that contain inaccuracies as to the 
substance of the presentation.
    The proposed rules also provided that a single meeting summary 
could be submitted to the Board even if multiple parties, persons, or 
counsel were involved in the same ex parte meeting. In such instances, 
it would be the responsibility of the person submitting the summary to 
ensure that all other parties at the meeting agree to the form and 
content of the summary. The proposed rules would permit parties to 
present confidential information during ex parte meetings. Under the 
proposed rules, if the presentations contain material that a party 
asserts is confidential under an existing protective order governing 
the proceeding, parties would be required to present a public version 
and a confidential version of ex parte summaries and any handouts. If a 
protective order has not been issued in the proceeding at the time the 
presenter seeks to file a meeting summary or handout containing 
confidential information, the proposed rules provided that the 
presenting party would have to file a request with the Board seeking 
such an order no later than the date it submits its meeting summary. 
The proposed rules also required parties to submit summaries within two 
business days of an ex parte presentation or meeting. Under the 
proposed rules, the Board would post the summaries within seven days of 
submission of a summary that is complete for posting.
    Comments in Support. Most commenters were supportive of the Board's 
proposal to permit, subject to disclosure requirements, ex parte 
communications in informal rulemaking proceedings. (See AAR Comments 2; 
ASLRRA Comments 1; BNSF Comments 1; GMU Comments 1; RCC Comments 3.) 
AAR and ASLRRA state that the Board should adopt the proposed rules 
because they will lead to better reasoned decision-making and more 
informed rules. (AAR Comments 3; see also ASLRRA Comments 4.) AAR 
argues that the relatively modest burdens that ex parte meetings might 
place on stakeholders participating in rulemaking proceedings would be 
outweighed by the benefits of improved flow of relevant information to 
Board decision makers. (AAR Reply 3.) According to AAR, face-to-face 
communications would allow the Board to ensure that its data and 
information have not grown stale over time, and even when 
communications do not provide new information, face-to-face 
conversations summarizing and highlighting points of emphasis can 
provide value to decision-makers. (AAR Comments 4.) AAR also noted that 
the NPRM is responsive to stakeholder requests for more interaction 
with Board Members and staff. (Id.) ASLRRA also supports the proposed 
process for ex parte communications during informal rulemaking 
proceedings, stating that it

[[Page 9227]]

would ensure transparency and fairness. (ASLRRA Comments 3.) According 
to ASLRRA, the Board's proposal meets its goals of enhancing its 
ability to make informed decisions in informal proceedings while 
ensuring its record-building in rulemaking proceedings remains 
transparent and fair. (Id. at 1.)
    BNSF likewise supports the Board's proposal, stating that increased 
communications with the Board regarding informal rulemakings will 
provide value to both the Board and its stakeholders. (BNSF Comments 
2.) According to BNSF, the Board's current ex parte regulations reflect 
the outdated and overly restrictive view of the Board's predecessor 
agency, the ICC, and are ``out of step'' with long-held doctrines of 
administrative law, the ex parte rules generally under the APA, and 
procedures of other federal agencies. (Id. at 1-2; see also AAR 
Comments 1 (``[T]he Board's application of its current regulations 
unnecessarily prohibits most informal communications with the Board and 
its staff in the informal rulemaking context.'').) BNSF argues that 
modernizing the Board's ex parte rules to permit an increased flow of 
information and technical expertise between the Board and its 
stakeholders during informal rulemaking proceedings will enable the 
Board to engage in more reasoned policymaking and should produce 
regulatory policies that are more grounded in the complex operational 
and market realities currently facing the rail industry. (BNSF Comments 
1.)
    GMU asserts that the Board's proposed changes to the procedures for 
ex parte communications would promote responsible governance by 
facilitating promulgation of informed substantive rules while 
preserving transparency. (GMU Comments 1.) According to GMU, relaxing 
the Board's ex parte regulations would remove a procedural hurdle, 
making it easier for the Board to engage in informed notice-and-comment 
proceedings, which in turn encourages transparency. (Id. at 2.) GMU 
further argues that the Board has the statutory authority to change its 
ex parte communications regulations in the context of a notice-and-
comment rulemaking, noting that both the APA notice-and-comment 
requirements and the statutory provisions governing the Board permit ex 
parte communications during informal rulemaking proceedings. (Id. at 2-
3.)
    RCC agrees that ex parte communications should be permitted in 
informal rulemaking proceedings if appropriate safeguards to preserve 
fairness and transparency also are adopted. (RCC Comments 3.) RCC 
states that ex parte communications in informal rulemakings would 
ultimately produce better outcomes. (Id.) According to RCC, face-to-
face dialogue facilitates a more efficient exchange of information, 
development of ideas, explanation of concepts, and responsiveness to 
questions and would allow the Board to probe more deeply into subjects 
based upon the comments submitted. (Id. at 3-4.) RCC further states 
that the Board would also benefit from clarification of concepts and 
proposals submitted in written comments, especially in proceedings that 
implicate complex technical matters. (Id. at 4.)
    As further support for the Board's proposal, a number of commenters 
cite their positive experiences participating in ex parte meetings in 
recent Board proceedings where the agency waived the ex parte 
prohibition. (See, e.g., BNSF Comments 2 (noting that the ex parte 
meetings in U.S. Rail Serv. Issues--Performance Data Reporting, Docket 
No. EP 724 (Sub-No. 4), better informed the Board about highly 
technical service reporting issues and resulted in regulations that 
were more efficiently tailored to the realities of railroad 
operations); NGFA Comments 2-3 (stating that its ex parte meeting in 
U.S. Rail Serv. Issues--Performance Data Reporting, Docket No. EP 724 
(Sub-No. 4), was extremely beneficial because it allowed NGFA to 
explain the details of their railroad service needs and concerns and to 
answer Board staff's questions in a more effective manner); RCC 
Comments 1-2 (noting positive experiences with ex parte meetings in 
Reciprocal Switching, Docket No. EP 711 (Sub-No. 1), and U.S. Rail 
Serv. Issues--Performance Data Reporting, Docket No. EP 724 (Sub-No. 
4), as well as the informal meetings in Expediting Rate Cases, Docket 
No. EP 733).)
    Comments Requesting Modifications. Several commenters, while 
expressing overall support for the Board's proposal, suggest 
modifications that they argue would improve the rule. RCC urges the 
Board to be mindful of informal rulemaking proceedings that are closely 
associated with pending adjudicatory proceedings. (RCC Comments 6.) In 
that regard, RCC suggests that the Board establish safeguards against 
parties using permissible ex parte communications in the rulemaking 
proceedings to circumvent the prohibition of the same in adjudicatory 
proceedings. (Id.; see also WCTL Comments 18; AAR Reply 5.) RCC 
suggests that the most effective potential modifications would be to 
either: (1) Not allow ex parte communications in rulemakings that are 
closely associated with pending cases, or (2) not apply any rules that 
were developed in a rulemaking that utilized ex parte communications in 
pending adjudications. (RCC Comments 6.)
    NGFA and RCC both suggest that the Board modify the period during 
which ex parte communications would be permitted. (NGFA Comments 4; RCC 
Comments 5-6.) Specifically, they suggest that the Board permit ex 
parte communications for a specified time (e.g., 30 days) after the 
deadline for filing reply comments--subject to the same disclosure 
requirement contained in the NPRM--and permit written responses 
confined specifically to the content of the ex parte communication 
within 10 days thereafter. (NGFA Comments 4; RCC Comments 5-6.) 
According to both commenters, under the Board's proposal, which would 
prohibit ex parte communications within 20 days of the deadline for 
written reply comments, stakeholders would not have enough time to both 
participate in ex parte meetings and also review and prepare responses 
to other parties' written comments. (NGFA Comments 4; RCC Comments 4-
5.) RCC adds that, in those proceedings where the Board solicits three 
rounds of comments, rather than the usual two rounds, the Board could 
apply its 20-day rule to the third round of comments and still preserve 
most of the benefits from ex parte communications. (RCC Comments 6.) 
RCC requests that, at a minimum, the Board express its willingness to 
extend the 20-day deadline on a case-by-case basis when appropriate to 
realize the benefits of ex parte communications in informal 
rulemakings. (Id.) AAR concurs in a modification that would permit ex 
parte communications for a specific time after the submission of at 
least two rounds of comments, stating that this change would allow 
meetings held with Board Members or staff to reflect all the issues in 
the record and would not create any incentives for parties to hold 
evidence or arguments back for the reply round. (AAR Reply 4.)
    WCTL, however, opposes allowing ex parte communications following 
the written comment period because it claims that doing so would add 
unnecessary cost and delay to rulemaking proceedings. (WCTL Reply 7-8.) 
WCTL also notes that ex parte communications conducted after the 
comment period has closed are disfavored by ACUS. (Id. at 8 (citing 
2014 ACUS Recommendation, 79 FR 35994).)

[[Page 9228]]

    Additionally, AAR states that the proposal in section 1102.2(g)(1), 
which authorizes the Board to delegate its participation in such ex 
parte communications to Board staff, implies that such a delegation 
would require an entire board decision, which AAR argues would be 
unnecessarily formalistic. (AAR Comments 7.) AAR suggests that the 
Board should expand the proposed rules to indicate that communications 
with staff during the appropriate period are permissible, subject to 
disclosure rules. (Id.) AAR indicates there are many instances where 
technical information could be best explained to staff responsible for 
the subject matter, like financial reporting, costing, or railroad 
operations. (Id.)
    Regarding the proposed disclosure requirements, NGFA states that it 
supports the Board's proposals concerning the preparation and 
disclosure of ex parte meeting summaries that are detailed sufficiently 
to describe the substance of the communication, but recommends that the 
Board shorten the period for posting the meeting summaries from seven 
calendar days (as the Board proposed) to two business days. (NGFA 
Comments 4-5.) NGFA argues that this change would align with the two-
business-day requirement for meeting summaries to be submitted by the 
participants in the ex parte communication and would provide for more 
timely transparency and opportunity for review by interested parties. 
(Id. at 5.)
    Comments in Opposition. Some commenters object to the idea of 
allowing ex parte communication in informal rulemaking proceedings or 
suggest that, if allowed, such communications be utilized more 
sparingly. SMART states that railroad employees, represented by SMART, 
would be adversely affected by a `` `closed door' and secret [Board] 
tribunal.'' (SMART Comments 4.) According to SMART, the Board's 
proposal would ``abolish[ ]'' the prohibition on ex parte 
communications in most, if not all rulemakings, since the terms 
``informal'' and ``formal'' rulemakings are not in the APA. (SMART 
Comments 3 n.2.) SMART argues that ``unrestricted'' and ``wide-
ranging'' ex parte communications would be ``prejudicial to parties and 
counsel situated at a distance,'' because the Board does not have 
regional offices and rarely sets hearings outside the Washington, DC 
area. (SMART Comments 7.) It contends that telephonic communications 
are ``not a satisfactory alternative for face-to-face participation.'' 
(Id.) SMART further argues that ``[t]here is nothing to suggest that 
face-to-face communication will better promote efficiency so as to 
substitute for the written word in the decisionmaking process''; 
rather, the ``real impact of ex parte communication repeal would be to 
limit the audience, restrict the spread of knowledge, and * * * impair 
the final action.'' (SMART Reply 4.) SMART also argues that joint 
meetings conducted with other parties and agency personnel could be 
problematic. (SMART Comments 8.) According to SMART, the Board need not 
adopt the proposed rule because it may continue to waive its ex parte 
prohibition, as it has done in two recent proceedings. (Id. at 7.) 
SMART also argues that the benefit of oral communication can be 
achieved through oral argument. (SMART Reply 5.)
    WCTL argues that the Board's proposal would increase the cost of 
participating in a rulemaking proceeding, (WCTL Comments 15), and 
likely result in substantial administrative delay, (Id. at 16). WCTL 
argues that the proposal would lead parties to believe they must 
participate in the ex parte communication process or they will be 
``left out.'' (Id. at 15.) WCTL also argues that shippers, unlike large 
railroads, frequently lack the time and financial resources to 
participate in ex parte meetings, which can create the perception of an 
unlevel playing field. (Id. at 17.) WCTL further argues that, in many 
proceedings, the Board may have more efficient administrative tools to 
address concerns with the record, such as the use of technical 
conferences. (Id. at 16.) According to WCTL, unless the Board requires 
that ex parte sessions be video-taped and then makes the tapes publicly 
available, the perception may continue to be that deals are being done 
``behind closed doors,'' not in open fora. (Id. at 17.) WCTL argues 
that the Board should instead continue to allow ex parte communications 
in informal rulemaking proceedings on a case-by-case basis. (Id. at 1, 
14, 18; WCTL Reply 2, 5.) WCTL asserts that a case-by-case approach 
would address concerns raised by other commenters in this proceeding. 
(WCTL Reply 6-7.)
    FRCA agrees with WCTL that the Board should determine whether to 
permit ex parte communications on a case-by-case basis, although FRCA 
also acknowledges the benefits of ex parte communications in 
rulemakings generally. (FRCA Comments 1.) According to FRCA, permitting 
ex parte communications should not be the ``automatic default'' until 
the Board has accumulated more experience with ex parte communications. 
(Id.)
    AAR disagrees with WCTL that ex parte communications could result 
in administrative delay. (AAR Reply 5.) According to AAR, WCTL's 
suggestion of using technical conferences instead of ex parte meetings 
does not have to be an ``either/or'' proposition, as greater use of 
technical conferences could supplement NPRM proposals. (Id. at 3.) AAR 
also disagrees with WCTL's suggestion that the Board should permit ex 
parte communications in informal rulemaking proceedings on a case-by-
case basis. (Id. at 2.) AAR argues that stakeholders will be best 
equipped to fully participate in a rulemaking when the rules for such 
participation are known in advance. (Id.) AAR notes that pre-
established rules would save the Board from expending its limited time 
and resources on ad hoc determinations related to ex parte 
communications in every rulemaking proceeding on its docket. (Id. at 2-
3.) AAR further asserts that the proposed rules would allow the Board, 
on a case-by-case basis, to restrict communications in a particular 
proceeding, if the concerns cited by WCTL or others present themselves. 
(Id. at 3.)
    Board Determination. After considering all of the comments, the 
Board concludes that direct communications with stakeholders in 
informal rulemaking proceedings, in accordance with a transparent and 
fair record-building process, would enhance the Board's consideration 
of issues and better enable it to promulgate the most effective 
regulations. The Board will first address the arguments of commenters 
that oppose the proposed rule. Then, the Board will address the 
suggested modifications to the proposed rule.
    The commenters that urge the Board to withdraw the proposal in 
favor of continuing to prohibit ex parte communications in rulemakings 
have not identified a potential or likely harm that outweighs the 
benefits of such communications. Specifically, the Board disagrees with 
SMART that permitting ex parte communications in informal rulemaking 
proceedings would create a ``secret [Board] tribunal'' and with WCTL 
that ex parte sessions must be video-taped and made publicly available 
in order not to be perceived as ``behind closed doors.'' The final rule 
incorporates safeguards to ensure the rulemaking process remains fair 
and transparent, such as requiring the written and public disclosure of 
ex parte communications received after a rule is proposed and providing 
parties an opportunity to submit written comments in response to those 
summaries. The Board agrees with RCC

[[Page 9229]]

that the safeguards the Board has proposed are sufficient to preserve 
fairness and transparency in informal rulemakings. As noted above, the 
Board has gained familiarity in recent proceedings with developing such 
safeguards and has used that experience to develop the proposed rules. 
Additionally, as several commenters noted, the final rule is consistent 
with the practices of other agencies and the best practices guidelines 
published by ACUS.\15\
---------------------------------------------------------------------------

    \15\ SMART's assertion that the proposed rule improperly would 
``abolish[]'' the prohibition on ex parte communications in most, if 
not all, rulemakings is not relevant to this proceeding. The APA 
prohibits ex parte communications in formal proceedings, but not in 
informal rulemaking proceedings. See Sierra Club, 657 F.2d at 402 
(noting that Congress declined to extend the ex parte prohibition 
applicable to formal rulemakings to informal rulemakings despite 
being urged to do so). Should the Board conduct a rulemaking that is 
subject to the APA restriction, the rules proposed here would not 
apply.
---------------------------------------------------------------------------

    The Board also disagrees that the proposal would disadvantage 
witnesses and counsel located outside the Washington, DC area, as SMART 
asserts. As indicated in the NPRM, EP 739, slip op. at 8, 13, parties 
will be permitted to participate in ex parte meetings via telephone or 
videoconferencing. Indeed, ex parte meetings have been conducted 
remotely, and the Board does not believe that there is any significant 
difference in the effectiveness of the interaction between face-to-face 
meetings and meetings occurring via telephone or videoconferencing. 
Additionally, in response to SMART's argument that there is no evidence 
that direct communication will promote more efficiency in the decision-
making process than written comments, the Board notes that ex parte 
communications are not intended to replace written comments in a 
rulemaking. Rather, ex parte communications are a supplement to the 
written record and provide parties with yet another avenue for 
communicating their needs and concerns to the Board. Ex parte 
communications would actually enhance the usefulness of written 
comments, as such communications would allow Board Members to obtain 
clarification and seek additional information regarding arguments 
contained in the written opening comments.
    The Board is not persuaded that WCTL's argument that parties will 
believe they must participate in the ex parte communication process to 
avoid having less access than others warrants limiting all parties' 
access to this communication tool. A party's decision whether or not to 
engage in ex parte communications is not much different than having to 
decide whether to participate through more traditional means, such as 
submitting written comments or participating in a hearing. In fact, 
unlike a traditional hearing, the proposal here would allow parties to 
participate remotely, as the Board is permitting ex parte meetings to 
be conducted via telephone and videoconference, which could reduce a 
party's cost to participate in a proceeding. The Board is confident 
that parties will be able to assess the appropriate level of 
participation for their organization based on their particularized 
interest in the subject matter. The Board's intention here is to 
provide stakeholders with increased access to the Board while 
maintaining a fair and transparent record-building process, and, for 
the reasons discussed in this decision, the Board believes the final 
rule achieves that goal.
    Additionally, the Board is not persuaded that permitting ex parte 
communications in informal rulemaking proceedings will result in 
``significant administrative delay,'' as WCTL claims. While WCTL is 
correct that permitting ex parte communications necessarily will add 
some time to rulemaking proceedings, the Board believes that the 
benefit of the additional information provided will outweigh the 
disadvantages of a slightly longer procedural schedule. Based on the 
Board's experiences, incorporating ex parte communication into the 
informal rulemaking process results in final rules that better reflect 
the needs and concerns of the Board's stakeholders. (See AAR Comments 
3; ASLRRA Comments 4; BNSF Comments 2; NGFA Comments 2-3; RCC Comments 
1-2, 3; AAR Reply 3); see also 2014 ACUS Recommendation, 79 FR 35994. 
Contrary to SMART's and WCTL's arguments, the Board does not intend ex 
parte communications to be a substitute for oral argument or technical 
conferences in informal rulemaking proceedings. Rather, ex parte 
communications would supplement the tools currently available in 
rulemaking proceedings. If the Board believes oral argument or 
technical conferences would be useful, it may decide to include those 
steps as a supplement to (or even in lieu of, if the circumstances 
warrant) ex parte communications.
    To the extent that SMART and WCTL argue that the Board's recent 
practice of waiving the ex parte prohibition in particular proceedings 
is superior to the proposed rules, the Board agrees with AAR that 
stakeholders will be better equipped to fully participate in an 
informal rulemaking when the rules for participation are well-
established. As AAR notes, pre-established rules would save the Board 
from expending time and resources on ex parte determinations in every 
rulemaking proceeding. Additionally, as several parties note, the Board 
by decision could restrict communications in a particular proceeding, 
where appropriate. Thus, the Board will not accept WCTL's and SMART's 
recommendation that the Board continue to waive its ex parte 
regulations on a case-by-case basis, rather than adopting changes to 
its ex parte regulations permitting ex parte regulations in informal 
rulemaking proceedings.
    Several parties proposed modifications to the Board's proposed ex 
parte communication procedures, which the Board addresses below. With 
regard to the most appropriate deadline for the conclusion of ex parte 
meetings in an informal rulemaking proceeding, the Board continues to 
believe that the cutoff should be 20 days before the reply comment 
deadline. NGFA's, RCC's, and AAR's suggestions--that the Board permit 
ex parte communications for a specified time after the deadline for 
filing reply comments--would add an additional round of comments and 
result in a longer proceeding than under the Board's proposal. Indeed, 
as WCTL argues, post-comment period ex parte communications are 
disfavored by ACUS given the propensity of those communications to 
delay proceedings if significant information is presented to the agency 
late in the process. (See WCTL Reply 8; see also 2014 ACUS 
Recommendation, 79 FR 35994.) ACUS notes in 2014 ACUS Recommendation 
that ``the dangers associated with agency reliance on privately-
submitted information become more acute'' after the comment period 
closes and may require an agency to reopen the comment period. Post-
comment period ex parte communications are also generally discouraged 
at several other agencies. See Final Report at 57, 59-60, 64 (noting 
prohibition or discouragement of post-comment period ex parte contacts 
at DOT, the U.S. Coast Guard, the Department of Education and the 
Federal Trade Commission). In addition, RCC's suggestion that the Board 
could permit written responses limited to just the ex parte 
communication meeting summaries could lead to disputes between 
commenters as to whether the response is properly limited to the 
summaries and put the Board in the position of having to resolve such 
disputes, which

[[Page 9230]]

would only add to the complexity of the rulemaking process.
    However, considering NGFA's and RCC's arguments that parties may 
have insufficient time during the comment period to both prepare 
written comments and participate in ex parte meetings, the Board will 
be cognizant of such constraints when establishing reply comment period 
deadlines in rulemaking proceedings. Also, in particular proceedings, 
if a party is unable to both prepare written comments and participate 
in ex parte meetings within this deadline, it may seek an extension. 
Additionally, if the Board concludes in a particular proceeding that ex 
parte discussions would be more beneficial following the submission of 
written comments (e.g., in highly technical rulemakings where post 
comment ex parte communication would be beneficial to ensure the Board 
understands the complex, technical data and arguments), the Board may 
modify the procedural schedule to permit such discussion. See infra 
App. A, section 1102.2(g)(1) (``unless otherwise specified by the Board 
in procedural orders governing the proceeding'').
    The Board agrees with RCC that the Board must be mindful of 
informal rulemaking proceedings that are closely associated with 
pending adjudicatory proceedings to ensure that permissible ex parte 
communications in the rulemaking proceedings are not used to circumvent 
the prohibition of the such communications in the related adjudicatory 
proceedings. If the Board determines that ex parte communications are 
not appropriate for a particular rulemaking proceeding based on this 
concern, it can issue an order declining to permit such meetings in 
that particular proceeding. And if the Board concludes that ex parte 
meetings can be used, the Board may provide additional guidelines in 
its procedural order and inform parties of its expectations at the 
beginning of ex parte meetings.
    AAR raises a concern that the proposed language in section 
1102.2(g)(1) implies that Board staff may only participate in ex parte 
communications after a delegation of authority through an ``entire 
board'' decision. The Board clarifies here that, under the proposal, no 
delegation would be required for Board staff to attend ex parte 
meetings scheduled with a Board Member (at that Member's request). A 
delegation of authority would be required only where the ex parte 
meetings would occur solely with staff (i.e., no Board Member in 
attendance), such as the ex parte meetings that occurred in U.S. Rail 
Service Issues--Performance Data Reporting, Docket No. EP 724 (Sub No. 
4). Thus, it is the Board's determination that ex parte meetings will 
be conducted under the auspices of the Board Members' offices, unless 
the Board determines otherwise. AAR's suggestion that the Board permit, 
as a default option, ex parte communications with any Board staff could 
render the disclosure process--which is essential to maintaining 
fairness and transparency--unduly complicated. Under the AAR's 
proposal, the number of potential stakeholder meetings could increase 
exponentially, and after every such meeting, each individual staff 
contact would be required to be summarized and disclosed in a meeting 
summary that would be posted to the public docket, to which other 
parties would then have to review and possibly file responses. The 
Board, however, recognizes AAR's concern that there may be instances 
where interaction with Board technical staff would be beneficial. The 
Board anticipates that individual Members will make a concerted effort 
to include relevant staff in ex parte meetings or delegate the meetings 
to Board staff, when appropriate.
    In response to NGFA's request that the Board shorten the time 
permitted for meeting summaries to be posted by the Board, the Board 
will reduce the allotted time from within seven days of submission to 
within five days of submission. The Board believes that fewer than five 
days would not provide sufficient time for the Board to confirm that a 
meeting summary is sufficiently detailed to describe the substance of 
the presentation and request resubmissions, if necessary. However, the 
Board will endeavor to post meeting summaries as soon as they are 
ready. Thus, the final rule will adopt the proposal as set forth in the 
NPRM with this one modification.
    Application of the Final Rule. In its comments, WCTL argues that 
new ex parte communication rules should not be retroactively applied to 
pending proceedings. (WCTL Comments 22.) WCTL is concerned generally 
that the retroactive application of the new rules in pending 
proceedings would delay Board action in those proceedings. (Id. at 23; 
WCTL Reply 9 n.22.) AAR states that it does not disagree with WCTL and 
notes that if the Board believes that further communications would be 
beneficial in ongoing proceedings, the Board could issue waivers in 
those proceedings on a going-forward basis. (AAR Reply 5.) RCC, 
however, requests that the Board retroactively apply its new ex parte 
communications rules in one pending rulemaking proceeding, Review of 
Commodity, Boxcar, and TOFC/COFC Exemptions, Docket No. EP 704. (RCC 
Comments 7.) According to RCC, permitting ex parte meetings to occur in 
that rulemaking proceeding would ensure that the benefits and impacts 
of any final Board decision are fully understood by the Board and 
would, given the anticipated changes to the make-up of the Board since 
the proceeding was first instituted, help in briefing and educating any 
newly confirmed Board Members in their understanding of the issues. 
(Id.)
    The final rule will not be applied retroactively to pending 
proceedings. Rather, the final rule adopted here will apply to 
proceedings newly initiated following the effective date of the final 
rule. The Board, however, may waive the prohibition on ex parte 
communications in pending informal rulemaking proceedings on a case-by-
case basis, as it did prior to the final rule. In such instances, the 
Board will set out the procedures that will govern such communications 
in an order.

Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, 
generally requires a description and analysis of new rules that would 
have a significant economic impact on a substantial number of small 
entities. In drafting a rule, an agency is required to: (1) Assess the 
effect that its regulation will have on small entities; (2) analyze 
effective alternatives that may minimize a regulation's impact; and (3) 
make the analysis available for public comment. Sections 601-604. In 
its final rule, the agency must either include a final regulatory 
flexibility analysis, section 604(a), or certify that the proposed rule 
would not have a ``significant impact on a substantial number of small 
entities,'' section 605(b). The impact must be a direct impact on small 
entities ``whose conduct is circumscribed or mandated'' by the proposed 
rule. White Eagle Coop. v. Conner, 553 F.3d 467, 480 (7th Cir. 2009).
    In the NPRM, the Board certified under 5 U.S.C. 605(b) that the 
proposed rule would not have a significant economic impact on a 
substantial number of small entities within the meaning of the RFA.\16\ 
The Board

[[Page 9231]]

explained that the proposed regulations provide for participation in ex 
parte communications with the Board in informal rulemaking proceedings 
to provide stakeholders with an alternative means of communicating 
their interests to the Board in a transparent and fair manner. When a 
party chooses to engage in ex parte communications with the Board in an 
informal rulemaking proceeding, the requirements contained in these 
proposed regulations do not have a significant impact on participants, 
including small entities. The Board noted that, while the proposed 
rules would require parties to provide written summaries of the ex 
parte communications, based on the Board's experiences in Reciprocal 
Switching, Docket No. EP 711 (Sub-No. 1), and U.S. Rail Service 
Issues--Performance Data Reporting, Docket No. EP 724 (Sub-No. 4), the 
summary documentation is a minimal burden. The meeting summaries are 
generally only a few pages long (excluding copies of handouts from the 
meetings that were attached). For example, the meeting summaries the 
Board received in U.S. Rail Service Issues--Performance Data Reporting, 
Docket No. EP 724 (Sub-No. 4), ranged from two to six pages in length. 
Of those summaries, nearly half were just two pages long. Likewise, in 
Reciprocal Switching, Docket No. EP 711 (Sub-No. 1), the meeting 
summaries ranged from one to four pages in length, with the majority of 
those summaries being three or fewer pages long. Therefore, the Board 
certified under 5 U.S.C. 605(b) that these proposed rules, if 
promulgated, would not place any significant burden on a substantial 
number of small entities.
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    \16\ Effective June 30, 2016, for the RFA analysis for rail 
carriers subject to Board jurisdiction, the Board defines a ``small 
business'' as only those rail carriers classified as Class III rail 
carriers under 49 CFR 1201.1-1. See Small Entity Size Standards 
Under the Regulatory Flexibility Act, EP 719 (STB served June 30, 
2016) (with Board Member Begeman dissenting). Class III carriers 
have annual operating revenues of $20 million or less in 1991 
dollars, or $35,809,698 or less when adjusted for inflation using 
2016 data. Class II rail carriers have annual operating revenues of 
less than $250 million in 1991 dollars or less than $447,621,226 
when adjusted for inflation using 2016 data. The Board calculates 
the revenue deflator factor annually and publishes the railroad 
revenue thresholds on its website. 49 CFR 1201.1-1.
---------------------------------------------------------------------------

    The final rule adopted here revises the rules proposed in the NPRM; 
however, the same basis for the Board's certification of the proposed 
rule applies to the final rule. Thus, the Board again certifies under 5 
U.S.C. 605(b) that the final rule will not have a significant economic 
impact on a substantial number of small entities within the meaning of 
the RFA. A copy of this decision will be served upon the Chief Counsel 
for Advocacy, Office of Advocacy, U.S. Small Business Administration, 
Washington, DC 20416.

List of Subjects in 49 CFR part 1102

    Administrative practice and procedure.

    It is ordered:
    1. The Board adopts the final rule as set forth in this decision. 
Notice of the adopted rule will be published in the Federal Register.
    2. This decision is effective April 4, 2018.
    3. A copy of this decision will be served upon the Chief Counsel 
for Advocacy, Office of Advocacy, U.S. Small Business Administration.

    Decided: February 27, 2018.

    By the Board, Board Members Begeman and Miller.
Brendetta S. Jones,
Clearance Clerk.

    For the reasons set forth in the preamble, the Surface 
Transportation Board amends 49 CFR part 1102 as follows:

PART 1102--COMMUNICATIONS

0
1. The authority citation for part 1102 is revised to read as follows:

    Authority:  49 U.S.C. 1321.


0
2. Amend Sec.  1102.2 as follows:
0
a. Revise the section heading;
0
b. Redesignate paragraphs (a)(2) and (3) as paragraphs (a)(4) and (5) 
and add new paragraphs (2) and (3);
0
c. Revise newly redesignated paragraph (a)(5);
0
d. Revise paragraphs (b) through (e);
0
e. In paragraph (f)(1), remove ``concerning the merits of a 
proceeding'';
0
f. In paragraph (f)(2), add ``covered'' before the word ``proceeding'';
0
g. Revise paragraph (f)(3); and
0
h. Add paragraph (g).
    The revisions and additions read as follows:


Sec.  1102.2  Procedures governing ex parte communications.

    (a) * * *
    (2) ``Informal rulemaking proceeding'' means a proceeding to issue, 
amend, or repeal rules pursuant to 5 U.S.C. 553 and part 1110 of this 
chapter.
    (3) ``Covered proceedings'' means on-the-record proceedings and 
informal rulemaking proceedings following the issuance of a notice of 
proposed rulemaking.
* * * * *
    (5) ``Ex parte communication'' means an oral or written 
communication that concerns the merits or substantive outcome of a 
pending proceeding; is made without notice to all parties and without 
an opportunity for all parties to be present; and could or is intended 
to influence anyone who participates or could reasonably be expected to 
participate in the decision.
    (b) Ex parte communications that are not prohibited and need not be 
disclosed. (1) Any communication that the Board formally rules may be 
made on an ex parte basis;
    (2) Any communication occurring in informal rulemaking proceedings 
prior to the issuance of a notice of proposed rulemaking;
    (3) Any communication of facts or contention which has general 
significance for a regulated industry if the communicator cannot 
reasonably be expected to have known that the facts or contentions are 
material to a substantive issue in a pending covered proceeding in 
which it is interested;
    (4) Any communication by means of the news media that in the 
ordinary course of business of the publisher is intended to inform the 
general public, members of the organization involved, or subscribers to 
such publication with respect to pending covered proceedings;
    (5) Any communications related solely to the preparation of 
documents necessary for the Board's implementation of the National 
Environmental Policy Act and related environmental laws, pursuant to 
part 1105 of this chapter;
    (6) Any communication concerning judicial review of a matter that 
has already been decided by the Board made between parties to the 
litigation and the Board or Board staff who are involved in that 
litigation.
    (c) General prohibitions. (1) Except to the extent permitted by the 
rules in this section, no party, counsel, agent of a party, or person 
who intercedes in any covered proceeding shall engage in any ex parte 
communication with any Board Member, hearing officer, or Board employee 
who participates, or who may reasonably be expected to participate, in 
the decision in the proceeding.
    (2) No Board Member, hearing officer, or Board employee who 
participates, or is reasonably expected to participate, in the decision 
in a covered proceeding shall invite or knowingly entertain any ex 
parte communication or engage in any such communication to any party, 
counsel, agent of a party, or person reasonably expected to transmit 
the communication to a party or party's agent.
    (d) When prohibitions take effect. In on-the-record proceedings, 
the prohibitions against ex parte communications apply from the date on 
which the first filing or Board decision in a proceeding is posted to 
the public docket by the Board, or when the person responsible for the 
communication has knowledge that such a filing has been filed, or at 
any time the Board, by rule or decision, specifies, whichever occurs 
first. In informal rulemaking proceedings, except as provided in

[[Page 9232]]

paragraph (g) of this section, the prohibitions against ex parte 
communications apply following the issuance of a notice of proposed 
rulemaking. The prohibitions in covered proceedings continue until the 
proceeding is no longer subject to administrative reconsideration under 
49 U.S.C. 1322(c) or judicial review.
    (e) Procedure required of Board Members and Board staff upon 
receipt of prohibited ex parte communications. (1) Any Board Member, 
hearing officer, or Board employee who receives an ex parte 
communication not permitted by these regulations must promptly transmit 
either the written communication, or a written summary of the oral 
communication with an outline of the surrounding circumstances to the 
Chief, Section of Administration, Office of Proceedings, Surface 
Transportation Board. The Section Chief shall promptly place the 
written material or summary in the correspondence section of the public 
docket of the proceeding with a designation indicating that it is a 
prohibited ex parte communication that is not part of the decisional 
record.
    (2) Any Board Member, hearing officer, or Board employee who is the 
recipient of such ex parte communication may request a ruling from the 
Board's Designated Agency Ethics Official as to whether the 
communication is a prohibited ex parte communication. The Designated 
Agency Ethics Official shall promptly reply to such requests. The 
Chief, Section of Administration, Office of Proceedings, shall promptly 
notify the Chairman of the Board of such ex parte communications sent 
to the Section Chief. The Designated Agency Ethics Official shall 
promptly notify the Chairman of all requests for rulings sent to the 
Designated Agency Ethics Official. The Chairman may require that any 
communication be placed in the correspondence section of the docket 
when fairness requires that it be made public, even if it is not a 
prohibited communication. The Chairman may direct the taking of such 
other action as may be appropriate under the circumstances.
    (f) * * *
    (3) The Board may censure, suspend, dismiss, or institute 
proceedings to suspend or dismiss any Board employee who knowingly and 
willfully violates the rules in this section.
    (g) Ex parte communications in informal rulemaking proceedings; 
disclosure requirements. (1) Notwithstanding paragraph (c) of this 
section, ex parte communications with Board Members in informal 
rulemaking proceedings are permitted after the issuance of a notice of 
proposed rulemaking and until 20 days before the deadline for reply 
comments set forth in the notice of proposed rulemaking, unless 
otherwise specified by the Board in procedural orders governing the 
proceeding. The Board may delegate its participation in such ex parte 
communications to Board staff. All such ex parte communications must be 
disclosed in accordance with paragraph (g)(4) of this section. Any 
person who engages in such ex parte communications must comply with any 
schedule and additional instructions provided by the Board in the 
proceeding. Communications that do not comply with this section or with 
the schedule and instructions established in the proceeding are not 
permitted and are subject to the procedures and sanctions in paragraphs 
(e) and (f) of this section.
    (2) To schedule ex parte meetings permitted under paragraph (g)(1) 
of this section, parties should contact the Board's Office of Public 
Assistance, Governmental Affairs, and Compliance or the Board Member 
office with whom the meeting is requested, unless otherwise specified 
by the Board.
    (3) Parties seeking to present confidential information during an 
ex parte communication must inform the Board of the confidentiality of 
the information at the time of the presentation and must comply with 
the disclosure requirements in paragraph (g)(4)(iv) of this section.
    (4) The following disclosure requirements apply to ex parte 
communications permitted under paragraph (g)(1) of this section:
    (i) Any person who engages in ex parte communications in an 
informal rulemaking proceeding shall submit to the Board Member office 
or delegated Board staff with whom the meeting was held a memorandum 
that states the date and location of the communication; lists the names 
and titles of all persons who attended (including via phone or video) 
or otherwise participated in the meeting during which the ex parte 
communication occurred; and summarizes the data and arguments presented 
during the ex parte communication. Any written or electronic material 
shown or given to Board Members or Board staff during the meeting must 
be attached to the memorandum.
    (ii) Memoranda must be sufficiently detailed to describe the 
substance of the presentation. Board Members or Board staff may ask 
presenters to resubmit memoranda that are not sufficiently detailed.
    (iii) If a single meeting includes presentations from multiple 
parties, counsel, or persons, a single summary may be submitted so long 
as all presenters agree to the form and content of the summary.
    (iv) If a memorandum, including any attachments, contains 
information that the presenter asserts is confidential, the presenter 
must submit a public version and a confidential version of the 
memorandum. If there is no existing protective order governing the 
proceeding, the presenter must, at the same time the presenter submits 
its public and redacted memoranda, file a request with the Board 
seeking such an order pursuant to Sec.  1104.14 of this chapter.
    (v) Memoranda must be submitted to the Board in the manner 
prescribed no later than two business days after the ex parte 
communication.
    (vi) Ex parte memoranda submitted under this section will be posted 
on the Board's website in the docket for the informal rulemaking 
proceeding within five days of submission. If a presenter has requested 
confidential treatment for all or part of a memorandum, only the public 
version will appear on the Board's website. Persons seeking access to 
the confidential version must do so pursuant to the protective order 
governing the proceeding.

[FR Doc. 2018-04411 Filed 3-2-18; 8:45 am]
 BILLING CODE 4915-01-P