[Federal Register Volume 86, Number 225 (Friday, November 26, 2021)]
[Proposed Rules]
[Pages 67588-67620]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25169]



[[Page 67587]]

Vol. 86

Friday,

No. 225

November 26, 2021

Part II





Surface Transportation Board





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49 CFR Parts 1011, 1108, 1115, et al.





Joint Petition for Rulemaking To Establish a Voluntary Arbitration 
Program for Small Rate Disputes; Proposed Rule

  Federal Register / Vol. 86 , No. 225 / Friday, November 26, 2021 / 
Proposed Rules  

[[Page 67588]]


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SURFACE TRANSPORTATION BOARD

49 CFR Parts 1011, 1108, 1115 and 1244

[Docket No. EP 765]


Joint Petition for Rulemaking To Establish a Voluntary 
Arbitration Program for Small Rate Disputes

AGENCY: Surface Transportation Board.

ACTION: Notice of proposed rulemaking.

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SUMMARY: In response to a joint petition for rulemaking filed by five 
Class I rail carriers, the Surface Transportation Board (STB or Board) 
proposes to modify its regulations to establish a voluntary arbitration 
program for small rate disputes.

DATES: Comments on the proposed rule are due by January 14, 2022. Reply 
comments are due by March 15, 2022.

ADDRESSES: Comments and replies may be filed with the Board via e-
filing on the Board's website at www.stb.gov and will be posted to the 
Board's website.

FOR FURTHER INFORMATION CONTACT: Amy Ziehm at (202) 245-0391. 
Assistance for the hearing impaired is available through the Federal 
Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION: Pursuant to 49 U.S.C. 11708, the Board's 
regulations at 49 CFR part 1108 establish a voluntary arbitration 
program ``under which participating parties, including rail carriers 
and shippers, have agreed voluntarily in advance or on a case-by-case 
basis to resolve disputes about arbitration-program-eligible matters 
brought before the Board using the Board's arbitration procedures.'' 49 
CFR 1108.1(c).
    On July 31, 2020, five Class I rail carriers--Canadian National 
Railway Company (CN),\1\ CSX Transportation, Inc. (CSXT), the Kansas 
City Southern Railway Company, Norfolk Southern Corp. (NSR), and Union 
Pacific Railroad Company (UP) (collectively, Petitioners)--filed a 
petition for rulemaking (the Petition) to add a small rate case 
arbitration program at 49 CFR part 1108a, which would function 
alongside the existing arbitration program at 49 CFR part 1108.\2\ 
Petitioners pledge to consent to arbitrate disputes under their 
proposed program for a period of five years, provided the Board adopts 
the program according to the terms set forth in the Petition. These 
terms include the right of the carriers to withdraw from the program 
under certain circumstances, such as if the Board adopts a material 
change to its existing rate reasonableness methodologies or creates a 
new rate reasonableness methodology after a shipper or railroad has 
opted into the program. (Pet. 17.)
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    \1\ The petition lists one of the petitioners only as ``CN.'' A 
supplemental filing identifies this party as the ``U.S. operating 
subsidiaries of CN.'' Although not identified in either filing, the 
Board understands ``CN'' to mean Canadian National Railway Company.
    \2\ Although the Petition refers to Norfolk Southern Corp., a 
noncarrier, a subsequent supplement instead refers to that entity's 
operating affiliate, Norfolk Southern Railway Company. (Pet'rs 
Suppl. 2.) When referring to NSR in this decision, the Board is 
referring only to Norfolk Southern Railway Company.
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    Replies to the Petition were filed on August 20, 2020, by the 
National Grain and Feed Association (NGFA); Olin Corporation (Olin); 
the American Fuel & Petrochemical Manufacturers (AFPM); the U.S. 
Department of Agriculture (USDA); \3\ and (filing jointly) the American 
Chemistry Council, Corn Refiners Association, Institute of Scrap 
Recycling Industries, National Industrial Transportation League, The 
Chlorine Institute, and The Fertilizer Institute (collectively, Joint 
Shippers).
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    \3\ USDA structures its comment as individual letters to the 
three then-current Board Members. Aside from the headings, the 
content of each letter is identical.
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    Supplemental pleadings were filed on September 10, 2020, and the 
Board instituted a rulemaking proceeding to consider the proposal on 
November 25, 2020.
    After considering the Petition and the comments received, the Board 
will grant the Petition, as qualified below, and propose new 
regulations at 49 CFR part 1108, subpart B,\4\ establishing a voluntary 
arbitration program for small rate cases.
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    \4\ Petitioners proposed that the regulations establishing the 
new arbitration program at a new part (49 CFR part 1108a) but 
creating a new subpart within 49 CFR part 1108 is more consistent 
with Code of Federal Regulations formatting.
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Background

    The Board established arbitration procedures at 49 CFR part 1108 in 
1997. See Arb. of Certain Disputes Subject to the Statutory Juris. of 
the STB, 62 FR 46217 (Sept. 2, 1997), 2 S.T.B. 564 (1997). Under those 
procedures, as originally conceived, parties could agree voluntarily on 
a case-by-case basis to arbitrate any dispute involving the payment of 
money or involving rates or practices related to rail transportation or 
services subject to the Board's statutory jurisdiction. Id. at 565. The 
Board established those procedures pursuant to its authority at 49 
U.S.C. 721 (now 49 U.S.C. 1321), which generally authorizes the Board 
to prescribe regulations in carrying out its statutory 
responsibilities. Id. at 582.
    In 2013, the Board modified its arbitration procedures in 
Assessment of Mediation & Arbitration Procedures, 78 FR 29071 (May 17, 
2013), EP 699 (STB served May 13, 2013) (revising and consolidating the 
Board's arbitration procedures). Among other things, the Board 
established a program under which a party could voluntarily agree in 
advance to arbitrate particular types of disputes with clearly defined 
limits of liability. Id. at 4. The revised regulations did not include 
rate disputes as an arbitration-program-eligible matter.\5\ Id. at 7-9.
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    \5\ The revised regulations permitted parties to agree on a 
case-by-case basis to arbitrate additional matters, provided that 
the matters were within the Board's statutory jurisdiction to 
resolve and that the dispute did not require the Board to grant, 
deny, stay or revoke a license or other regulatory approval or 
exemption, and did not involve labor protective conditions. See 
Assessment of Mediation & Arb. Procs., EP 699, slip op. at 8-9.
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    In section 13 of the Surface Transportation Board Reauthorization 
Act of 2015 (STB Reauthorization Act), Congress required the Board to 
promulgate regulations establishing a voluntary and binding arbitration 
process to resolve rail rate and practice complaints under its 
jurisdiction. See Public Law 114-110, section 13, 129 Stat. 2228, 2235-
38. Section 13, which is codified at 49 U.S.C. 11708, set forth certain 
requirements and procedures for the Board's arbitration process, such 
as listing categories of covered disputes and imposing timelines. Id.
    In response to section 13 of the STB Reauthorization Act, the Board 
further adjusted its procedures at 49 CFR part 1108 to add rate 
disputes to the matters eligible for arbitration under its arbitration 
program and made other changes to conform to the requirements set forth 
in the statute. See Revisions to Arb. Procs. (Revisions Final Rule), 81 
FR 69410 (Oct. 6, 2016), EP 730, slip op. at 1-2 (STB served Sept. 30, 
2016) corrected (STB served Oct. 11, 2016). To date, three Class I 
carriers have opted into the Board's arbitration program for certain 
types of disputes (though not rate disputes),\6\ but the program has 
never been used.
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    \6\ See UP Notice (June 21, 2013), CSXT Notice (June 28, 2019), 
and CN Notice (July 1, 2019), Assessment of Mediation & Arb. Procs., 
EP 699.
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    In January 2018, the Board established the Rate Reform Task Force 
(RRTF) with the objective of, among other things, determining how best 
to provide a rate review process for small cases.\7\ After

[[Page 67589]]

holding informal meetings throughout 2018, the RRTF issued a report on 
April 25, 2019 (RRTF Report).\8\ Two key recommendations of the report 
were legislation to permit mandatory arbitration of small rate disputes 
and that the Board establish a new rate reasonableness decision-making 
process under which a shipper and railroad would each submit a ``final 
offer'' of what it believes a reasonable rate to be, subject to short, 
non-flexible deadlines, with the Board selecting one party's offer 
without revision. RRTF Report 14-20.
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    \7\ The RRTF Report stated that, for small disputes, the 
litigation costs required to bring a case under the Board's existing 
rate reasonableness methodologies can quickly exceed the value of 
the case. RRTF Report 5-8, 9, 14; see also Expanding Access to Rate 
Relief, 81 FR 61647 (Sept. 7, 2016), EP 665 (Sub-No. 2), slip op. at 
10 (STB served Aug. 31, 2016).
    \8\ The RRTF Report can be accessed on the Board's website at 
https://prod.stb.gov/wp-content/uploads/Rate-Reform-Task-Force-Report-April-2019.pdf.
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    In September 2019, the Board proposed a new procedure for 
challenging the reasonableness of railroad rates in smaller cases based 
on a final offer selection procedure, which it called Final Offer Rate 
Review (FORR). See Final Offer Rate Rev., 84 FR 48872 (Sept. 17, 2019), 
EP 755 (STB served Sept. 12, 2019). All Class I carriers who commented 
in that proceeding opposed FORR on both legal and policy grounds. In 
its comments, CN argued that the Board should abandon consideration of 
FORR and suggested that the Board instead consider including within its 
existing arbitration program a targeted avenue for smaller rate 
disputes. See CN Comments 25-27, Nov. 12, 2019, Final Offer Rate Rev., 
EP 755; see also CN Reply Comments 2-3, Jan. 10, 2020, Final Offer Rate 
Rev., EP 755. CN stated that such a program should include the 
following features: Mandatory mediation, confidentiality, non-
precedential decisions, more modest limits on relief than those 
authorized under 49 U.S.C. 11708, and voluntariness. See CN Comments 
25-27, Nov. 12, 2019, Final Offer Rate Rev., EP 755.\9\
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    \9\ The Association of American Railroads (AAR) also called for 
the Board to investigate how to encourage parties to make greater 
use of its voluntary arbitration program in a separate proceeding. 
See AAR Comments 3, Feb. 13, 2020, Hr'g on Revenue Adequacy, 84 FR 
48982 (Sept. 17, 2019), EP 761.
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    In May 2020, the Board issued a decision that allowed for post-
comment period ex parte discussions with stakeholders regarding FORR. 
See Final Offer Rate Rev., EP 755 (STB served May 15, 2020). Noting 
that its arbitration program has gone unused, the Board expressed 
interest in exploring the issues raised in CN's comments, as well as 
whether and how its arbitration program at 49 CFR part 1108 could be 
modified to provide a practical and useful dispute resolution 
mechanism, particularly for stakeholders with smaller rate disputes. 
Id. at 2.
    During ex parte discussions with the Board Members, certain 
Petitioners elaborated on the potential small rate case arbitration 
framework outlined in CN's comments. Some carriers argued that the 
Board should adopt changes to its existing arbitration process, such as 
allowing for a more flexible arbitrator selection process and for 
arbitration to have greater confidentiality protections. See CN, CSXT, 
NSR, & UP Ex Parte Meeting Mem. 1-2, July 8, 2020 (filing ID 300856) 
Final Offer Rate Rev., EP 755; CN, CSXT, NSR, & UP Ex Parte Meeting 
Mem. 1-2, July 27, 2020 (filing ID 300928) Final Offer Rate Rev., EP 
755. Those carriers also suggested that the Board consider, among other 
things, creating an incentive for carriers to arbitrate by exempting 
them from FORR or other types of rate challenges if they agree to 
participate in arbitration. See CN, CSXT, NSR, & UP Ex Parte Meeting 
Mem. 2, July 10, 2020 (filing ID 300866) Final Offer Rate Rev., EP 755. 
They indicated their intent to submit a proposal to the Board that 
could attract support from multiple stakeholders. See CN, CSXT, NSR, & 
UP Ex Parte Meeting Mem. 1-2, July 21, 2020 (filing ID 300901) Final 
Offer Rate Rev., EP 755.
    In their ex parte discussions with Board Members, shipper interests 
generally did not oppose an arbitration process provided it is fair, 
though most advocated in favor of the Board adopting FORR. See, e.g., 
Olin Ex Parte Meeting Mem. 2, July 15, 2020 (filing ID 300883) Final 
Offer Rate Rev., EP 755; American Chemistry Council Ex Parte Meeting 
Mem. 3, July 17, 2020 (filing ID 300897) Final Offer Rate Rev., EP 755; 
Solvay America Inc. Ex Parte Meeting Mem. 1, July 22, 2020 (filing ID 
300916) Final Offer Rate Rev., EP 755.
    On July 31, 2020, Petitioners filed the Petition, asking the Board 
to establish a new arbitration program for small rate cases. 
Petitioners argue that establishing a working arbitration program for 
small rate disputes may offer the best long-term way to resolve the 
recurring concern that even the Board's simplified rate review 
methodologies are insufficient in terms of flexibility, cost, and 
speed. (Pet. 1.) Petitioners propose certain changes from the Board's 
existing arbitration process at 49 CFR part 1108, which they assert 
would make their proposed arbitration program streamlined and more 
flexible than the existing process and thus incentivize both railroad 
and shipper participation. (Id. at 3.) Among these changes are 
delegating market dominance determinations to the arbitration panel, 
adding confidentiality protections, and allowing the use of arbitrators 
who are not on the Board-maintained roster. (Id. at 21.) Petitioners 
also claim that their proposed small rate case arbitration program is 
both low-cost and consistent with statutory and economic principles, 
which they claim distinguishes it from the FORR procedures proposed in 
Docket No. EP 755. (Id. at 4.)
    On August 20, 2020, NGFA, Olin, AFPM, USDA, and Joint Shippers 
filed replies. NGFA and USDA state that they support the Board 
commencing a rulemaking proceeding on the Petition, subject to certain 
modifications and provided that the Board not delay implementation of 
FORR. (NGFA Reply 1; USDA Reply 1.) \10\ Joint Shippers, Olin, and AFPM 
urge the Board to deny the Petition and focus on completing the 
proceeding in FORR. (Joint Shippers Reply 2-3; Olin Reply 1-2; AFPM 
Reply 5.) Though some reply commenters state that the Petitioners' 
proposal has elements worthy of consideration, (Joint Shippers Reply 
3), and that a properly structured, efficient, and affordable 
arbitration approach could well be a preferred alternative to FORR in 
many circumstances, (USDA Reply 2), several reply commenters argue that 
Petitioners are attempting to either delay the Board's adoption of FORR 
or to avoid being subject to FORR if it is adopted. (Joint Shippers 
Reply 4-5; AFPM Reply 1, 4; Olin Reply 8-9; USDA 1; see also NGFA Reply 
5 (objecting to allowing carriers to be exempt from the FORR process if 
they participate in the arbitration program).) Reply commenters also 
object to specific aspects of the proposal, such as the fact that 
shippers would be prohibited from challenging the rates under revenue 
adequacy principles, (see Joint Shippers Reply 4-5; Olin Reply 7-8), 
and that arbitration decisions would be confidential, (see USDA Reply 
3; NGFA Reply 7-8).
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    \10\ NGFA explains that it had a series of initial discussions 
with representatives of the Petitioners prior to Petitioners' 
submission of the Petition and that, while those discussions were 
``constructive and conducted in good faith,'' NGFA and the 
Petitioners were unable to reach a consensus on the proposal. (NGFA 
Reply 1-2.)
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    NGFA stated that it would not object to allowing Petitioners an 
opportunity to reply and inform the Board whether the carriers would be 
amenable to NGFA's proposed modifications, ``as well as whether 
consideration and adoption of those changes would result in their 
electing not to participate in the [proposed program] if modified in 
certain respects.'' (NGFA Reply 3.) The Board issued a decision on 
August 26, 2020, permitting Petitioners to submit a

[[Page 67590]]

supplemental pleading regarding the proposed modifications to the 
arbitration program suggested by NGFA and other parties. Other 
interested parties were also permitted to respond.
    On September 10, 2020, Petitioners submitted a supplemental filing, 
as did AFPM, the Joint Shippers, and the U.S. Wheat Associates 
Transportation Working Group (U.S. Wheat).\11\ In their supplemental 
filing, Petitioners state that they are agreeable to several 
modifications to the proposed program, but not to the core features of 
confidentiality, exemption from FORR, and a prohibition on revenue 
adequacy considerations. The shipper groups largely renew their 
previously stated objections.
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    \11\ U.S. Wheat did not submit a reply to the Petition but filed 
a response to the Board's August 26, 2020 decision. In its 
supplement, U.S. Wheat argues that there are several differences 
between Petitioners' proposed arbitration program and the Board's 
FORR proposal that make FORR more favorable to wheat shippers, such 
as the fact that FORR would be a public process, that the proposed 
arbitration program would take longer because of a party's ability 
to appeal to the Board, and that the proposed arbitration program 
would exclude the ability to raise claims based on the revenue 
adequacy constraint. (U.S. Wheat Suppl. 6-7.)
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    On January 25, 2021, Canadian Pacific (CP),\12\ a Class I rail 
carrier, filed a letter stating that it supports the effort to find a 
``workable, reasonable, accessible arbitration program for small rate 
cases, and would participate in such a pilot program.'' (CP Letter 1.)
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    \12\ According to CP, ``Canadian Pacific'' is a trade name under 
which Canadian Pacific Railway Company and its United States 
subsidiaries--Soo Line Railroad Company; Dakota, Minnesota & Eastern 
Railroad Corporation; Delaware and Hudson Railway Company, Inc.; and 
Central Maine & Quebec Railway US Inc.--operate. (CP Letter 1.)
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The Proposed Rule

    The Board has pursued different ways to improve its processes for 
rate relief, particularly for smaller cases. See Final Offer Rate Rev., 
EP 755, slip op. at 3 (STB served Sept. 12, 2019); Mkt. Dominance 
Streamlined Approach, 84 FR 48882 (Sept. 17, 2019), EP 756, slip op. at 
3 n.5 (citing Expanding Access to Rate Relief, EP 665 (Sub-No. 2), slip 
op. at 10 (STB served Aug. 31, 2016). Based on one of the RRTF's 
recommendations, the Board proposed the FORR process. Here, Petitioners 
urge the Board to adopt their proposed voluntary arbitration program 
and exempt those carriers that choose to participate in the program 
from having their rates challenged under the FORR process, if that 
process is adopted.
    Petitioners argue that their proposed arbitration program is the 
best path forward to provide meaningful access to rate review for small 
rate cases and that, with Petitioners' pledge to commit to the program 
for five years, the program would provide an available avenue to 
resolve small rate disputes. (Pet. 28.) As noted, they claim that their 
proposed arbitration program is both low-cost and consistent with 
statutory and economic principles, which they argue makes the program 
different from FORR. (Pet. 4.)
    As noted above, several shipper interests generally oppose 
Petitioners' proposed arbitration program. Among their objections is 
the idea that carriers participating in arbitration would be exempt 
from FORR. (Joint Shippers Reply 4-5; AFPM Reply 1, 4; Olin Reply 8-9; 
AFPM Suppl. 1, 2; U.S. Wheat Suppl. 7.) The Joint Shippers argue that 
this condition would allow ``a railroad to exempt itself from the FORR 
process simply by opting into the arbitration process and there would 
be nothing that a shipper who prefers FORR over arbitration could do 
about it.'' (Joint Shippers Reply 4.) The Joint Shippers also argue 
that, if carriers are exempt from FORR, they will have no incentive to 
seek improvements to the arbitration program to ensure it is effective. 
(Joint Shippers Suppl. 5.) Olin argues that the ``adequate 
justification'' required for the grant of a rulemaking petition under 
the Board's regulations has not been presented by Petitioners here. 
(Olin Reply 8.)
    AFPM and U.S. Wheat argue that FORR presents far greater potential 
for reducing regulatory burdens and increasing the accessibility of a 
remedy for unreasonable rail rates than the arbitration process 
outlined in the Petition. (AFPM Reply 1; U.S. Wheat Suppl. 6.) \13\ 
AFPM and U.S. Wheat also take issue with the fact that only five of the 
seven Class I railroads have indicated they would participate. AFPM 
argues that this ``would create a patchwork of inconsistent 
regulations.'' (AFPM Reply 4.) U.S. Wheat states that it has a serious 
concern that the process would be unfair if the other two Class I 
carriers, BNSF Railway Company (BNSF) and CP do not participate, 
particularly since a large amount of U.S. Wheat's stakeholders' rail 
traffic moves on BNSF. (U.S. Wheat Suppl. 6.) These filings pre-dated 
CP's letter, described above, concerning its potential participation in 
an arbitration program. (CP Letter 1.)
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    \13\ APFM also objects to Petitioners submitting their Petition 
eight months after the comment period closed in Final Offer Rate 
Review. (APFM Reply 2-4.) However, the Board itself--prompted by 
comments filed in that proceeding by CN--stated that it was 
interested in exploring the possibility of modifying its arbitration 
procedures to increase their usefulness for stakeholders with 
smaller rate disputes and waived its prohibition on ex parte 
communications for that specific purpose. Final Offer Rate Rev., EP 
755, slip op. at 2-3 (STB served May 15, 2020). Moreover, the 
Board's regulations do not limit when petitions for rulemaking may 
be filed. 49 CFR 1110.2(b), (c).
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    NGFA believes that FORR and arbitration can be constructed in a way 
to coexist and complement one another. (NGFA Reply 2.) Although NGFA 
generally objects to exempting railroads that participate in 
arbitration from the FORR process, it proposes several alternatives to 
Petitioners' proposal. These alternatives, which contemplate some 
limited form of a FORR exemption, include the Board: (1) Setting the 
duration for the proposed arbitration program at two to three years, 
after which time, the Board would be required to conduct an assessment 
to determine whether the program is working as intended and whether the 
FORR exemption should be removed; (2) requiring a shipper to pursue its 
initial rate case against a carrier through arbitration but allow the 
shipper to utilize either FORR or arbitration for any subsequent rate 
cases; or (3) allowing a railroad to voluntarily decline to be subject 
to the FORR exemption. (NGFA Reply 5-6.)
    USDA states that while an arbitration process could be useful, an 
arbitration program should complement FORR (rather than be a 
substitute), and it urges the Board to move forward expeditiously to 
finalize FORR and not allow the Petition to interfere with or delay 
that effort. (USDA Reply 1-2; see also Olin Reply 2 (arguing that the 
Board should adopt FORR now and consider implementing a new arbitration 
process later).) USDA argues that carriers will have no incentive to 
arbitrate without an effective rate review mechanism as a backstop. 
(USDA Reply 1; see also Olin Reply 9.)
    In their supplemental filing, Petitioners argue that the voluntary 
nature of arbitration, as well as the efficiency, speed, low cost, and 
flexibility of the proposed program would make it a superior option to 
FORR, which they contend has various legal and procedural infirmities. 
(Pet'rs Suppl. 13-14.) Petitioners contend that it would not be 
reasonable for them to consent to participate in the proposed 
arbitration program without being exempt from FORR, and such an 
exemption appears to be central to their proposal. (Id. at 14.) 
Petitioners argue that their proposed program solves the very problem 
that the Board seeks to remedy with FORR. (Id.)
    After careful consideration, the Board has determined to defer 
final action in the FORR docket to provide for parallel consideration 
of the voluntary, small rate case arbitration program proposed in this 
docket. This approach will

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enable the Board and stakeholders to consider a new proposal for an 
arbitration process simultaneously along with the proposed rulemaking 
in Final Offer Rate Review, Docket No. EP 755. In order to consider the 
pros and cons of enacting an arbitration process that would effectively 
exempt participating carriers from FORR challenges, as Petitioners 
request, or enacting FORR and making it available regardless of whether 
or not the Board adopts a new arbitration program, as many shipper 
interests have urged, the Board has concluded that both the voluntary, 
small rate case arbitration program and FORR should be considered 
concurrently by the Board and stakeholders before final action is taken 
on either.
    The arbitration proposal in the notice of proposed rulemaking 
(NPRM) here is modeled on some (but not all) aspects of Petitioners' 
proposal.\14\ Congress required rate disputes be included as eligible 
for arbitration. 49 U.S.C. 10708(b); see also S. Rep. No. 114-52 at 7, 
13. The Board has frequently stated that it favors the resolution of 
disputes through the use of mediation and arbitration procedures, in 
lieu of formal Board proceedings, ``whenever possible.'' See 49 CFR 
1108.2(a); Bos. & Me. Corp.--Appl. for Adverse Discontinuance of 
Operating Auth.--Milford-Bennington R.R., AB 1256, slip op. at 10 (STB 
served Oct. 12, 2018). The Board finds it would be premature to discard 
the possibility of a voluntary, small rate case arbitration program 
without further exploring whether such an approach might be workable 
and the interplay of that approach with FORR.
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    \14\ Due to the potential interrelationship between the small 
rate case arbitration program proposed by Petitioners and FORR, the 
Board will post notice of this decision in Docket No. EP 755.
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    A voluntary arbitration program focused on the resolution of small 
rate disputes, as proposed below, could further the rail transportation 
policy of 49 U.S.C. 10101. Specifically, it could facilitate the 
expeditious handling and resolution of proceedings (49 U.S.C. 
10101(15)); support fair and expeditious regulatory decisions when 
regulation is required (49 U.S.C. 10101(2)); and help to maintain 
reasonable rates where there is an absence of effective competition (49 
U.S.C. 10101(6)). The proposed voluntary arbitration program could also 
complement congressional directives in the STB Reauthorization Act, 
which requires that the Board ``maintain 1 or more simplified and 
expedited methods for determining the reasonableness of challenged 
rates in those cases in which a full stand-alone cost presentation is 
too costly, given the value of the case,'' and that it ``maintain 
procedures to ensure the expeditious handling of challenges to the 
reasonableness of railroad rates.'' 49 U.S.C. 10701(d)(3), 10704(d). A 
voluntary arbitration program for small rate disputes could provide an 
additional option beyond the Board's existing formal rate 
reasonableness processes designed for relatively small disputes (i.e., 
Three-Benchmark and Simplified Stand-Alone Cost (Simplified-SAC) 
tests).
    In order to allow stakeholders to fully compare the arbitration and 
FORR proposals, as emphasized above, the Board is simultaneously with 
this NPRM issuing a supplemental notice of proposed rulemaking (FORR 
SNPRM), published elsewhere in this issue of the Federal Register, 
reflecting modifications in the FORR rule proposed in Final Offer Rate 
Review, EP 755 (STB served Sept. 12, 2019). In addition to noticing 
those modifications, FORR SNPRM addresses comments received by the 
Board in response to the original notice of proposed rulemaking and the 
ex parte meetings conducted in the FORR docket. Whether to adopt any 
voluntary rate review arbitration program, how such a program might 
interact with the process proposed in the FORR docket, and whether to 
adopt the proposed FORR process will be guided by the parallel 
consideration of both proposals.
    Because the arbitration of disputes before the Board is voluntary, 
fundamental to the Board's determination whether to enact the 
arbitration proposal in this docket will be a commitment of all Class I 
carriers to agree to arbitrate disputes submitted to the program for a 
term of no less than five years. This initial commitment would promote 
the goal that shippers have similar access to rate review procedures. 
The importance of this initial commitment is amplified by the carriers' 
opposition to FORR and the likelihood that they would seek to challenge 
adoption of that process. (See Pet'rs Suppl. 13 (stating that the FORR 
process would be ``subject to immediate legal challenges'').) If all 
Class I carriers consent to participate in this proposed arbitration 
program for five years, and the Board determines to adopt the program 
after stakeholder consideration and input, shippers served by Class I 
carriers would be afforded a new avenue for potential rate relief, and 
with the certainty of carrier engagement.\15\
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    \15\ As stated in the FORR proceeding, rate cases filed to date 
indicate that complainants' rate concerns relate primarily to Class 
I carriers. Final Offer Rate Rev., EP 755, slip op. at 16-17. While 
the Board views participation by the Class I carriers as 
particularly important, nothing in this proposal would prohibit 
Class II and Class III carriers from voluntarily participating in 
the arbitration process on a term basis. As explained below, Class 
II and Class III carriers would also be permitted to participate on 
a case-by-case basis.
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    Further, given the voluntary nature of the arbitration of rate 
disputes, any such program is not likely to succeed unless stakeholders 
find the program's important elements acceptable. Accordingly, the 
voluntary arbitration program being proposed here focuses on 
incentivizing railroad and shipper participation \16\ and ensuring that 
the program is fair and balanced. To achieve this, the Board's proposal 
modifies aspects of the program proposed by Petitioners. Although 
Petitioners have ``reserve[d] their right'' not to participate in 
arbitration if any modifications are made to their proposal, (Pet. 21), 
certain elements of Petitioners' proposal would have made the program 
unbalanced or simply are not feasible. However, the program proposed 
here is based on law and sound policy and still includes features that 
carriers should find attractive. By the same token, the Board also 
views its proposed voluntary arbitration program as including features 
that shippers should find beneficial, particularly those shippers that 
consider the Board's current processes too expensive and time consuming 
given the size of their disputes.
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    \16\ Although the Board uses the term ``shipper'' throughout the 
decision for convenience, the Board has made clear that parties 
other than shippers have standing to bring rate challenges. See 
Publ'n Requirements for Agri. Prods., EP 526 et al., slip op. at 7-8 
(STB served Dec. 29, 2016). For this reason, the Board uses the term 
``shipper/complainant'' in the proposed regulations. See below.
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    The Board will consider all comments received on the proposal set 
forth in this decision and the information gathered during any 
requested ex parte meetings in this docket,\17\ along with the comments 
filed and ex parte discussions that have taken place in the FORR 
docket, before deciding its next actions with respect to both 
proceedings.
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    \17\ Pursuant to 49 CFR 1102.2(g), 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.
---------------------------------------------------------------------------

    The Board discusses below the significant features of the 
voluntary, small rate case arbitration program that it is proposing 
here. The proposed rule is set out below.

I. Authority for a Separate Small Rate Case Arbitration Program

    The Petition calls for the Board to establish a new arbitration 
program under a new set of regulations at 49 CFR

[[Page 67592]]

part 1108a, which would function alongside the Board's existing 
regulations at 49 CFR part 1108. Petitioners argue that the Board may 
establish such a program pursuant to its general authority at 49 U.S.C. 
1321, and that the program would therefore be ``separate and distinct'' 
from the requirements of 49 U.S.C. 11708. (Pet. 19, 22.) \18\ 
Specifically, Petitioners contend that the Board has satisfied 49 
U.S.C. 11708 through its most recent amendments to 49 CFR part 1108, 
and suggest that because the Board has one set of compliant procedures, 
it is now free to adopt procedures that ``differ from the 
requirements'' of 49 U.S.C. 11708. (Id. at 3, 19.) They argue that the 
specific elements of their proposed program will necessarily be legal 
so long as the parties voluntarily consent to the arbitration, and so 
long as the program ``is limited to deciding issues within the Board's 
jurisdiction to decide.'' (Id. at 19-20.)
---------------------------------------------------------------------------

    \18\ (See also Pet., App. A at 2-3 (relying on section 1321(a), 
5 U.S.C. 571, 49 U.S.C. 10101(15), and section 10701(d)(3) as the 
authorities for the proposed program).)
---------------------------------------------------------------------------

    Section 11708 requires that the Board promulgate regulations to 
establish a voluntary and binding arbitration process to resolve rail 
rate and practice complaints. 49 U.S.C. 11708(b)(1). Section 11708 
specifically covers the subject of Board-sponsored rail rate 
arbitration, whereas 49 U.S.C. 1321 covers the Board's general 
rulemaking authority.\19\ Thus, the Board finds that the most 
reasonable interpretation is that the authority for Board procedures 
for arbitrating rate cases derives from section 11708.\20\
---------------------------------------------------------------------------

    \19\ See Norwest Bank Minn. Nat'l Ass'n v. FDIC, 312 F.3d 447, 
451 (D.C. Cir. 2002) (``When both specific and general provisions 
cover the same subject, the specific provision will control, 
especially if applying the general provision would render the 
specific provision superfluous . . . .'') (citing Crawford Fitting 
Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 445 (1987)).
    \20\ This is not to say that parties may not voluntarily consent 
to private arbitration of rail rate and related disputes on terms 
differing from the requirements in 49 U.S.C. 11708. Indeed, by its 
terms, section 11708 does not prevent ``parties from independently 
seeking or utilizing private arbitration services to resolve any 
disputes the parties may have.'' 49 U.S.C. 11708(b)(3).
---------------------------------------------------------------------------

    However, there is no language in section 11708 prohibiting the 
Board from establishing more than one arbitration program that complies 
with the requirements of the statute. As relevant here, the statute 
merely requires that the Board establish a ``voluntary and binding 
arbitration process to resolve rail rate and practice complaints 
subject to the jurisdiction of the Board.'' 49 U.S.C. 11708(a). 
Accordingly, a dual-track arbitration program--i.e., a program under 49 
CFR part 1108, subpart A, and another under proposed 49 CFR part 1108, 
subpart B--is permissible. Cf. Simplified Standards for Rail Rate Cases 
(Simplified Standards), 72 FR 51375 (Sept. 7, 2007), EP 646 (Sub-No. 
1), slip op. at 52 (STB served Sept. 5, 2007) (stating that a three-
tiered system for rate review fulfilled the directive in 49 U.S.C. 
10701(d)(3) to establish ``a simplified and expedited method'' for 
determining rate reasonableness), aff'd sub nom. CSX Transp., Inc. v. 
STB, 568 F.3d 236 (D.C. Cir.), vacated in part on reh'g, 584 F.3d 1076 
(D.C. Cir. 2009).
    The Board concludes that the arbitration program proposed in this 
decision is consistent with section 11708. It is therefore not 
necessary to consider proposing rate case arbitration rules under other 
potential sources of authority.

II. Program Participation, Withdrawal Rights, and FORR Exemption

    Petitioners have proposed an arbitration program, like that at 49 
CFR part 1108, in which by agreeing to participate on a programmatic 
basis (i.e., opting in) as opposed to a case-by-case basis, a carrier 
will be required to arbitrate eligible cases for so long as it is 
participating within the program. The Board has explained above the 
importance of all Class I railroads agreeing to participate in the 
arbitration program for a term of five years. Accordingly, the Board 
will not allow for at-will participation as Petitioners have proposed, 
and will only permit term participation, with the initial term due to 
expire five years from the effective date of the arbitration 
program.\21\
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    \21\ Participation on an ``at will'' basis means that the 
carrier reserves the right to withdraw from the proposed program at 
any time for any reason, while participation on a ``term'' basis 
means that the carrier agrees to participate in the program for a 
specific length of time and can only opt out under certain 
conditions. (See Pet. 16-17, App. A at 3.) Under Petitioners' 
proposal, upon expiration of any such ``term,'' a participating 
carrier remains within the program on an at-will basis. (Id., App. A 
at 3, 4.)
---------------------------------------------------------------------------

    Petitioners also propose triggers that would allow a participating 
carrier to withdraw from the proposed arbitration program. Because the 
participation of all Class I railroads is an important aspect of the 
arbitration program, the Board proposes more narrow withdrawal rights 
that would allow withdrawal from the program only if there is a 
material change in law. However, the Board emphasizes the importance of 
a readily accessible small rate case review process as a backstop in 
the event a carrier is no longer participating in the arbitration 
program.\22\ Indeed, in determining final action in this docket, the 
Board will continue to prioritize the aforementioned goal of enhancing 
shippers' access to rate relief. Accordingly, the Board seeks comment 
specifically on whether its consideration of carriers' withdrawal 
rights, as set forth in the following subsections, should take into 
account the availability of other readily accessible rate review 
processes, including whether any such mechanism is adopted concurrently 
with the adoption of any voluntary, small rate case arbitration 
program.
---------------------------------------------------------------------------

    \22\ The Board notes that Petitioners themselves appear to have 
contemplated such a backstop by effectively conditioning carrier 
participation in the arbitration program on an exemption from FORR.
---------------------------------------------------------------------------

    To account for the possibility that the Board might adopt FORR 
either concurrently with the adoption of a voluntary arbitration 
program or during the pendency of such a program, the Board will 
propose at this time--without deciding the ultimate outcome of that 
proceeding--that participation in arbitration exempts participating 
carriers from FORR, as explained further below.

A. Program Participation

    Petitioners propose that parties would ``opt into'' the proposed 
program; however, unlike under the Board's existing arbitration 
program, carriers participating in the proposed program would not be 
allowed to limit their participation to only certain types of disputes 
or disputes meeting additional criteria (such as a lower monetary 
relief cap).\23\ (Pet., App. A at 3-4.) Also, unlike 49 CFR 
1108.3(a)(2), Petitioners propose that railroads would not be able to 
participate on a case-by-case basis but instead would be required to 
opt into the program in advance, either on an at-will or term basis. 
(Id. at App. A at 3.) Shippers would be allowed to opt into the 
proposed program on a case-by-case basis. (Id.) As in 49 CFR 1108.4(c), 
the Petition provides that the Board would maintain on its website a 
list of railroads that have opted into the program. (Id.)
---------------------------------------------------------------------------

    \23\ Under the existing arbitration program, a party may limit 
its participation to certain types of disputes or certain monetary 
relief caps. See 49 CFR 1108.3(a)(1).
---------------------------------------------------------------------------

    As explained above, the Board will propose allowing carriers to opt 
into the proposed program only on a term basis of five years. To allow 
a shipper to potentially challenge rates for multi-carrier moves 
between a Class I and Class II or III carrier, the Board will also 
propose that Class II or III carriers can choose to voluntarily 
participate on a

[[Page 67593]]

case-by-case basis. See proposed Sec.  1108.23(a)(4). The Board will 
propose that shippers may opt in on a case-by-case basis, as 
Petitioners have suggested.
    The Board's proposal that both carriers and shippers opt-in 
voluntarily complies with section 11708, which requires that the 
Board's rate case arbitration procedures be ``voluntary'' but does not 
specify a mechanism for participation. For cases in which a movement 
involves the participation of multiple railroads, arbitration could 
only be used if all carriers involved in the movement have opted in 
(which the Class I carriers will have already done) or consented to 
participate for a particular dispute (in the case of Class II or III 
carriers \24\).
---------------------------------------------------------------------------

    \24\ As noted above, nothing in this proposal would prohibit 
Class II and Class III carriers from voluntarily participating in 
the arbitration process on a term basis.
---------------------------------------------------------------------------

    To distinguish between parties that opt into the existing 
arbitration process created in Docket No. EP 699 (as modified in Docket 
No. EP 730), the Board will propose requiring that railroads opting 
into the proposed program file their opt-in notices under Docket No. EP 
765, which will also be posted on the arbitration page of the Board's 
website. See proposed Sec.  1108.23(a).

B. Withdrawal Rights

    Petitioners propose that a carrier participating in the proposed 
arbitration program should be permitted to withdraw from the program 
if: (1) The Board adopts the FORR process but does not exempt carriers 
participating in arbitration from that process; (2) there is a change 
in the law regarding rate disputes or the arbitration program; or (3) 
the number of arbitrations exceeds a designated limit.\25\ Each of 
these bases for withdrawal is discussed in turn.\26\
---------------------------------------------------------------------------

    \25\ The Petition also proposes that carriers participating in 
the program on an at-will basis would be permitted to withdraw any 
time at the carriers' discretion. Because the Board does not propose 
at-will participation, it need not address the Petition's proposed 
at-will withdrawal right.
    \26\ As noted above, the Board seeks comment specifically on 
whether its consideration of carriers' withdrawal rights should take 
into account the availability of other rate review processes.
---------------------------------------------------------------------------

1. Adoption of FORR/FORR Exemption
    Petitioners propose that a participating carrier be allowed to 
withdraw from the small rate case arbitration program if the Board 
adopts FORR in Docket No. EP 755 but does not exempt carriers 
participating in the program from the FORR process. (Pet. 17.) 
Petitioners state that, by agreeing to arbitrate under the program, 
they will be limiting their ability to appeal an adverse decision and, 
as such, it is essential that they have the right to exit the program 
if they become subject to what they describe as the ``untested'' FORR 
process. (Id. at 26.)
    As noted above, several parties object to this aspect of the 
Petition. The Joint Shippers, USDA, and AFPM argue that a FORR 
exemption would allow railroads to force shippers to use arbitration 
regardless of whether the shippers prefer FORR, even though the 
Petitioners' proposed arbitration process cuts many of the elements of 
the FORR process that make it accessible. (Joint Shippers Reply 1; USDA 
Reply 2; AFPM Reply 4.) NGFA also objects, noting that an exemption 
from FORR would prevent its members from being able to ``test'' the 
reasonableness of rail rates under that process and proposes several 
alternatives (discussed above). (NGFA Reply 5.) NGFA and USDA suggest 
that the Board seek input on potential ways to resolve this particular 
issue. (Id. at 6-7; USDA Reply 2.)
    In their supplemental filing, Petitioners assert that shippers 
opposed to this aspect of the proposed program overlook the fact that 
the RRTF identified arbitration as the ideal mechanism for resolving 
small rate cases, and argue that FORR was conceived as a workaround in 
the event that the Board did not obtain the statutory authority to 
require arbitration. (Pet'rs Suppl. 2.) As noted above, they also 
assert that the proposed arbitration program would be lawful and 
economically sound. (Id. at 2, 13.)
    The Board will propose that any carrier that opts into the 
voluntary, small rate case arbitration program would be exempt from any 
final FORR rule adopted in Docket No. EP 755.\27\ To be clear, 
inclusion of an exemption from FORR is not meant to indicate--one way 
or another--a commitment that the Board will adopt FORR at the same 
time as the small rate case arbitration program, or at some point 
thereafter, but instead simply accounts for the possibility of such an 
occurrence. Indeed, as explained above, the Board is seeking comments 
on the backstop issue and the circumstances under which it would be 
advisable to permit a carrier to withdraw from the arbitration program.
---------------------------------------------------------------------------

    \27\ Petitioners do not propose specific language for an 
exemption from FORR in their Petition. As noted, they instead 
propose this as a withdrawal option. Accordingly, the Board is 
proposing its own FORR exemption language. See proposed Sec.  
1108.33. In response to a concern from NGFA, (see NGFA Reply 13), 
the Board will propose language that makes clear that carriers would 
only be exempt from the FORR process and shippers could continue to 
seek rate relief using the Board's other methodologies.
---------------------------------------------------------------------------

    The Board understands the concern of the shippers who argue that 
allowing railroads to be exempt from FORR would eliminate shippers' 
ability to pursue resolution using FORR, if the Board were to adopt it. 
However, as explained above, the Board has long favored the resolution 
of disputes using alternative dispute resolution whenever possible and 
the RRTF found that arbitration would be an important means of 
providing shippers with access to potential rate relief, particularly 
in small cases. Creating a program in which carriers can obtain an 
exemption from any process adopted in the FORR docket in exchange for 
agreeing to arbitrate smaller rate disputes would incentivize railroads 
to participate, and, in turn, create a means for shippers to obtain 
resolution through arbitration.\28\ As such, the Board will propose--as 
part of this proposed rule--that participation in the proposed 
voluntary arbitration program would exempt a participating carrier from 
any process adopted in the FORR docket while the carrier is 
participating in the new arbitration program. The exemption would 
thereby terminate, for example, upon the effective date of carrier 
withdrawal, per exercise of the rights described below (if such 
withdrawal rights are adopted), or upon the effective date of any Board 
termination of the arbitration program, following the assessment 
proposed at Sec.  1108.32 (see infra, Section XIII). An express 
exemption along these lines obviates the need to include the carriers' 
proposed opt-out provision as described above.
---------------------------------------------------------------------------

    \28\ Although parties can use the Board's existing arbitration 
process under 49 CFR part 1108 to resolve rate disputes, no parties 
have voluntarily opted into that process for purposes of arbitrating 
a rate dispute.
---------------------------------------------------------------------------

2. Change in Law
    Petitioners propose that both railroads and shippers \29\ may 
withdraw their consent to arbitrate under the proposed program if there 
is a change in law; specifically, if the Board adopts a material change 
to its existing rate reasonableness methodologies, creates a new rate 
reasonableness methodology, or adopts a material change to the proposed 
arbitration program. (Pet. 17.) Petitioners contend that, because 
section 11708 requires that the arbitration panel consider the Board's 
methodologies for setting maximum

[[Page 67594]]

lawful rates and appellate review of the panel's decision (discussed 
below) would be limited, ``it is essential that parties have the right 
to opt out'' of the proposed program should the Board either change the 
rules of the program or add to, or materially change, its rate 
reasonableness methodologies. (Id.) Petitioners propose that a 
participating carrier would file a withdrawal notice no later than 30 
days after the qualifying event and that the notice would result in the 
immediate dismissal of any pending small rate case arbitration in which 
the arbitration panel has not yet issued an arbitration decision. (Id. 
at 17-18.)
---------------------------------------------------------------------------

    \29\ Even though shippers would only participate in the proposed 
program on a case-by-case basis, it appears that Petitioners propose 
allowing shippers this withdrawal right to afford them the same 
ability to terminate pending arbitrations due to a change in the 
law.
---------------------------------------------------------------------------

    NGFA proposes several modifications. First, it notes that another 
new methodology (the Rate Increase Constraint) has been suggested to 
the Board,\30\ and that if this methodology were adopted after the 
proposed small rate case arbitration program is established, it would 
likely trigger the carriers' right to withdraw. (NGFA Reply 10-11.) 
NGFA argues that carriers participating in the proposed program should 
not be permitted to withdraw if this methodology is ultimately adopted. 
(Id. at 10-11, 13.) Second, NGFA argues that the Board should provide 
an opportunity for either party to challenge the other's contention 
that there has been a ``material change'' to the proposed program or to 
the agency's existing rate reasonableness methodologies. (Id. at 12-
13.) Third, NGFA argues that pending arbitrations should not be 
terminated under the ``change in law'' scenario. (Id. at 13.) Fourth, 
NGFA requests clarification that once a carrier has withdrawn, a 
shipper can challenge the rate under any methodology, including FORR. 
(Id. at 13-14; see also Joint Shippers Suppl. 15 (expressing support 
for NGFA's clarification).)
---------------------------------------------------------------------------

    \30\ The Rate Increase Constraint was proposed by the RRTF. See 
RRTF Report 36-39. The Board held a hearing on revenue adequacy 
issues raised in the RRTF Report on December 12-13, 2019, and asked 
parties to address the RRTF recommendations--including the Rate 
Increase Constraint--in their written testimony and at the hearing. 
See Hr'g on Revenue Adequacy, Docket No. EP 761 et al. (STB served 
Sept. 12, 2019).
---------------------------------------------------------------------------

    In their supplemental filing, Petitioners do not agree with NGFA's 
suggestion that pending arbitrations be allowed to continue if there is 
a withdrawal for a change in the law. (Pet'rs Suppl. 12.) However, they 
do not object to shippers being allowed to challenge whether a change 
in the law constitutes a ``material change,'' and do not object to 
clarifying that, once a carrier has withdrawn from the proposed 
program, a shipper would be allowed to challenge under any of the 
Board's then-available rate-challenge methodologies, including FORR, if 
the Board were to adopt that process. (Pet'rs Suppl. 6-7.) Petitioners 
propose that any party would have five business days to challenge the 
withdrawal, and the carrier would have 14 calendar days to file a 
reply. (Id., App. A at 5.) The Chairman or an administrative law judge 
(ALJ) would have 14 calendar days to issue a decision, and any pending 
arbitrations would be stayed until the withdrawal issue is resolved. 
(Id.)
    The Board will propose a provision allowing any party to withdraw 
due to a material change in the law. It would be reasonable for a 
carrier or shipper to withdraw from the proposed program, including any 
pending arbitration disputes, should the Board materially change the 
rules of that program or one of its methodologies, which could inform 
the arbitrators' decision.\31\ However, the Board will propose that 
this withdrawal right would not apply to the adoption of a FORR 
process. In other words, carriers could not exercise the right to 
withdraw due to change in law if FORR is adopted at some point after 
the arbitration program has begun. Under the Board's proposal, carriers 
participating in the arbitration program would be exempt from FORR; as 
such, the potential subsequent adoption of FORR would not amount to 
such a regulatory change that would warrant allowing railroads the 
ability to reconsider their participation in the arbitration 
program.\32\
---------------------------------------------------------------------------

    \31\ Although Petitioners propose the change-in-law opt-out 
right only for Board-enacted changes to the regulatory scheme, the 
Board sees no reason that the right should not also apply if there 
is a change in law resulting from Congressional or judicial action.
    \32\ Additionally, the proposed provision allowing for 
withdrawal where the Board materially changes an existing rate 
reasonableness methodology or creates a new rate reasonableness 
methodology would not be triggered where a litigant proposes and/or 
the arbitration panel adopts or applies any methodology--novel or 
otherwise--to resolve a particular arbitration brought under this 
proposed program. Nor would it be triggered where the arbitration 
panel adopts or applies such a methodology and its decision is 
affirmed by the Board under the limited grounds for appellate review 
described in Section XI, infra. As discussed in Section IX, infra, 
parties would be able to urge the arbitration panel to consider 
modified or entirely new rate review methodologies but, of course, 
would have to persuade the arbitrators that such methodologies 
comply with the statutory provisions governing both the panel's 
decision and reasonableness of rates.
---------------------------------------------------------------------------

    The Board disagrees with NGFA's suggestion that, if the Rate 
Increase Constraint is formally adopted by the Board as a rate review 
methodology, it should also not be considered a change in law allowing 
carriers to opt out. Adoption of this constraint would constitute a 
significant change in the regulatory scheme for railroad rates and, as 
such, the Board agrees that carriers should be given the opportunity to 
withdraw from the proposed small rate case arbitration program if the 
change were adopted. Similarly, the Board also will not propose NGFA's 
suggestion that all pending arbitrations continue if a carrier 
withdraws from the program due to a change in law. A change in the law 
that occurs after an arbitration has begun could impact how a party 
would have pleaded its case or whether it would have even participated 
in arbitration to begin with; accordingly, where there is a change in 
law falling under the applicable provision, pending arbitrations should 
be terminated if a party exercises its withdrawal right. However, 
parties are invited to comment on whether the Board should instead 
allow pending arbitrations to proceed, so long as the change in law is 
not applied to such pending arbitrations.
    The Board will also propose that, if a party seeks to withdraw from 
the small rate case arbitration program based on a change in the law, 
other parties be permitted to challenge the withdrawal on the ground 
that the change is not material. See proposed Sec.  1108.23(c)(2)(ii). 
There are many scenarios in which the materiality of a change in the 
law could be in dispute. Petitioners state that they have no objection 
to this proposed modification. (Pet'rs Suppl. 6.) However, the Board 
will make some adjustments to Petitioners' proposed procedures for 
challenging materiality. Instead of permitting a party 30 days to 
withdraw due to a change in law, the Board will propose a 10-day 
window.\33\ Parties should be able to decide whether to continue 
participating in the proposed small rate case arbitration program 
fairly quickly after a change in law is adopted. So that other parties 
are aware of a party's withdrawal, the Board will propose that it post 
a copy of the notice on its website and that the carrier serve a copy 
on any party with which it is currently engaged in arbitration.
---------------------------------------------------------------------------

    \33\ Unless otherwise specified, any reference to ``day'' in the 
decision or regulations refers to calendar days.
---------------------------------------------------------------------------

    Additionally, the Board will clarify that an objection to a party's 
withdrawal should be filed as a petition to the Board in a formal 
docket. Instead of providing five days for an opposing party to 
challenge a carrier's withdrawal due to a change in the law, the Board 
will propose a 10-day window. The Board will also propose that the 
withdrawing

[[Page 67595]]

party have five days to reply to the petition (instead of the 14 days 
proposed by Petitioners) and that the petition shall be resolved by the 
Board within 14 days from the filing deadline for the withdrawing 
party's reply. These timeframes are all reasonable and will provide for 
expeditious resolution of the relevant issues. The Board will also 
propose that such petitions be decided by the Board, rather than the 
Chairman or an ALJ, as the impacts of a decision regarding materiality 
could be widespread. The Board invites parties to comment on whether 
additional modifications are needed.
3. Case Volume
    Petitioners propose that a railroad that has opted into the 
proposed small rate case arbitration program on a term basis may also 
withdraw its consent to arbitrate under the program if it faces more 
than 25 arbitrations in a rolling 12-month period, or more than 10 
simultaneous arbitrations. (Pet. 18.) Petitioners note that they do not 
expect that volume, but they want to be able to reassess their long-
term commitment to the program should they face so many simultaneous 
arbitrations. (Id. at 26.) Under their proposal, withdrawal would not 
affect arbitration disputes under the proposed program in which the 
parties have at least started their first mediation session,\34\ but 
would result in the discontinuance of all disputes that have not yet 
progressed to that stage. In response, NGFA argues that withdrawal 
should not result in the dismissal of any pending arbitrations.\35\
---------------------------------------------------------------------------

    \34\ See infra Section IV.B.
    \35\ In its reply, NGFA does not specify if its objects to the 
termination of pending arbitrations based on withdrawal due to a 
change in the law or case volume. The Board assumes that it opposes 
termination of pending arbitrations in both instances.
---------------------------------------------------------------------------

    The Board will not propose a right to withdraw from the arbitration 
program based on case volume but will instead propose limiting the 
number of arbitrations that a carrier can be subject to during a 
rolling 12-month period. Because participation in Board-sponsored 
arbitration is voluntary, as required under 49 U.S.C. 11708, and 
because this program would be new, it is reasonable that a carrier who 
has agreed to participate for a term of years only be required to 
arbitrate a certain number of cases. However, rather than allowing 
carriers that reach such a limit to withdraw from the program, the 
Board believes that it would be more appropriate for carriers to remain 
in the program but without having to face additional arbitrations. 
Accordingly, the Board will propose that arbitrations that would exceed 
the 25-cases/12-month limit would be postponed until such time as they 
would not exceed the 25-case/12-month limit. In addition, under the 
Board's proposal, cases will only count towards the 25-arbitration/12-
month limit discussed above upon commencement of the first mediation 
session or, where one or both parties elect to forgo mediation (as 
discussed below in Section IV.B), submission of the joint notice of 
intent to arbitrate to the Board. See infra Section IV.C. The Board 
sees no reason an arbitration should count toward the case limit if it 
is concluded before parties have expended much time or resources.
    Regarding the Petitioners' proposal to allow carriers to withdraw 
after reaching 10 simultaneous arbitrations, this strikes the Board as 
a far lesser threshold and a more likely occurrence. Accordingly, the 
Board will not include a right to withdraw for instances in which there 
are 10 simultaneous arbitrations (or require that any additional 
arbitrations above this amount be postponed). The one-case per shipper 
restriction (discussed below in Section III) and the 25-case limit 
within a 12-month period should be sufficient to ensure that a carrier 
is not inundated with arbitrations, while also providing shippers 
access to an alternative dispute resolution process.
    To implement the 25-case/12-month limit, the Board will propose 
that where a carrier receives a notice of intent to arbitrate from a 
shipper that would initiate an arbitration exceeding the limit, the 
carrier may inform the Board's Office of Public Assistance, 
Governmental Affairs, and Compliance (OPAGAC), as well as inform the 
shipper who initiated the arbitration. Under the proposal, that 
arbitration (and any arbitrations that are subsequently initiated) 
would be postponed until the number of arbitrations is once again below 
the 25-case/12-month limit. OPAGAC would notify the shippers whose 
arbitrations are postponed.

III. One-Case Limit

    Petitioners propose that a shipper not be permitted to bring more 
than one arbitration at a time against a participating railroad. (Pet. 
11.) Petitioners contend that this limitation is needed to prevent 
shippers from avoiding the relief cap by splitting or 
``disaggregating'' a case that could be brought as a single rate 
challenge into multiple cases. (Id. at 11, 27.) They propose that 
shippers would, however, be permitted to challenge rates for multiple 
traffic lanes in the same arbitration. (Id. at 11.) They propose that 
once the arbitration panel issues its decision, the shipper would be 
free to bring another small rate case arbitration against that same 
participating carrier. (Id. at App. A at 5.)
    Olin and U.S. Wheat argue that the one-case limitation is one of 
several reasons why proceeding with FORR is preferable. (Olin Reply 11; 
U.S. Wheat Suppl. 7.) Olin notes that, because of this limitation, 
shippers would have to aggregate separate claims, yet the rate cap 
would apply regardless of whether a shipper is challenging a single 
rate or multiple rates, whereas the proposed FORR process includes no 
such limitations. (Olin Reply 11.) In their supplemental filing, 
Petitioners respond that shippers are not required to aggregate claims, 
and that the one-case limit is intended instead to prevent the improper 
disaggregation of large rate claims to take advantage of the 
arbitration process. (Pet'rs Suppl. 18-19.) \36\
---------------------------------------------------------------------------

    \36\ NGFA states that the Board should clarify that the one-case 
limit prevents the filing of an additional case against the same 
carrier only up until the point at which the original arbitration 
decision in the first case is issued, regardless of whether that 
decision is appealed. (NGFA Reply 12; see also Joint Shippers Suppl. 
10.) The text of Petitioners' proposed regulations (which the Board 
includes in its proposal) states that the limit resets ``when the 
arbitral panel issues its arbitration decision.'' (Pet., App. A at 
5.) Accordingly, NGFA's request for further clarification does not 
appear to be necessary. However, the Board will propose language 
stating that the limit also resets when an arbitration is withdrawn 
or dismissed, including instances in which the parties reach a 
settlement. See proposed Sec.  1108.24(c).
---------------------------------------------------------------------------

    The Board will propose a one-case limit as part of the proposed 
arbitration program. The Board has noted its concern about the 
possibility of shippers filing a number of small rate cases when it 
would be more appropriate for those rates to be challenged as part of 
one larger case. See Simplified Standards, EP 646 (Sub-No. 1), slip op. 
at 32-33 (``The Board has ample discretion to protect the integrity of 
its processes from abuse, and we should be able to readily detect and 
remedy improper attempts by a shipper to disaggregate a large claim 
into a number of smaller claims, as the shipper must bring these 
numerous smaller cases to the Board.''); see also E.I. DuPont de 
Nemours & Co. v. CSX Transp., Inc., Docket No. NOR 42099 et al., slip 
op. at 3 (STB served Jan. 22, 2008). In those cases, the Board 
indicated that it would monitor shipper filings to ensure that no such 
abuse of its processes occurs. In the arbitration context, however, 
this would not be possible. As discussed below (see infra Section XI), 
arbitrations would be kept confidential from the Board (at least until 
an appeal), so the Board would be

[[Page 67596]]

unaware of what rates a shipper has currently challenged. It would also 
be impractical to leave such oversight to arbitration panels. Again, 
arbitrations would be confidential and presumably handled by different 
arbitration panels, making it difficult for any given panel to assess 
aggregation issues.
    Concerns over disaggregation of rate challenges aside, a one-case 
limit would be beneficial by ensuring that more shippers have the 
opportunity to participate in the arbitration program. For example, if 
a single shipper were to file 25 rate arbitrations against a carrier 
simultaneously and thus reach the volume cap (discussed above), that 
would delay other shippers from pursuing their own arbitrations against 
that carrier because those cases would be postponed. In general, 
limiting the number of cases brought would also allow the Board and 
stakeholders to develop familiarity with the arbitration process 
gradually.
    The Board acknowledges that a one-case per-carrier-limit would 
affect the relief available to shippers (at any given time) that want 
to bring multiple cases against the same carrier simultaneously. 
However, the Board anticipates that the shippers most likely to use 
this arbitration process, including its limitations on relief, may be 
less likely to bring multiple cases against the same carrier. As the 
Joint Shippers state, ``many small shippers probably would not have 
enough qualifying captive lanes to bring multiple disputes.'' (Joint 
Shippers Suppl. 6.) Moreover, shippers would still be able to arbitrate 
multiple cases against different carriers at the same time. Finally, 
for those shippers that want to bring multiple cases for rates charged 
by the same carrier, the Board's formal rate reasonableness procedures 
remain available, including those designed for smaller disputes.
    However, the Board invites parties to comment on the impact and 
appropriateness of the proposed one-case limit and whether there are 
other methods of dealing with the issue of disaggregation. For example, 
other possible approaches include allowing a shipper to bring two (or 
more) concurrent arbitrations so long as the lanes at issue do not 
share facilities, or permitting a second arbitration to be brought 
after the close of the evidentiary record--rather than awaiting the 
decision of the arbitration panel--in a pending arbitration (thereby 
allowing a second arbitration to be brought sooner).\37\
---------------------------------------------------------------------------

    \37\ The Board notes that although shippers would not be able to 
challenge rates in simultaneous arbitrations under the one-case 
limit, there would be no limit on the number of rates they could 
challenge within a single arbitration, though the $4 million/two-
year relief cap would apply. The Board further notes that shippers 
are not prohibited from challenging multiple rates charged by the 
same carrier in sequential arbitrations.
---------------------------------------------------------------------------

IV. Pre-Arbitration Procedures and Timelines

A. Initial Notice

    Petitioners propose that a shipper wishing to arbitrate a small 
rate dispute using the proposed program submit to the participating 
carrier a written notice of its intent to arbitrate, which must include 
information sufficient to indicate the dispute's eligibility for 
arbitration.
    The Board agrees, and it will propose that the arbitration process 
be initiated by a shipper's submission of a written notice (referred to 
herein as the Initial Notice) to the participating carrier that 
includes information demonstrating that the dispute qualifies for the 
proposed small rate case arbitration program. The Initial Notice would 
serve as the formal initiation of the arbitration process and would 
also ensure that shippers are participating in arbitration voluntarily, 
consistent with section 11708. (Carriers' voluntary participation would 
be evidenced through their opt-in notice, see supra Section II.A.)
    However, unlike Petitioners' proposal, the Board will propose that 
the shipper also submit a copy of the Initial Notice to OPAGAC. This 
would allow OPAGAC, which oversees the agency's alternative dispute 
resolution processes, to be informed when the arbitration process is 
being used as it happens (rather than learning about it after the 
fact). As noted above, this would also help OPAGAC monitor the number 
of pending arbitrations to determine if the 25-cases/12-month limit has 
been reached.\38\ However, specific information regarding pending 
arbitrations, including the identity of the parties, would not be 
disseminated within the Board beyond the alternative dispute resolution 
functions within OPAGAC. The Board will propose that the Initial Notice 
be submitted by email to [email protected].
---------------------------------------------------------------------------

    \38\ As noted above, in instances where the Initial Notice 
initiates an arbitration exceeding the 25-case/12-month cap, the 
Board will propose that the carrier may notify OPAGAC, as well as 
the shipper who submitted the Initial Notice to the carrier. Under 
the Board's proposal, OPAGAC would then confirm that the cap has 
been reached and inform the shipper (and any other subsequent 
shippers) that the arbitration is being postponed, along with an 
approximation of when the arbitration can proceed and instructions 
for reactivating the arbitration once the carrier is again below the 
cap.
---------------------------------------------------------------------------

    The Board also will propose that OPAGAC provide a letter to the 
parties confirming initiation of the process. As discussed in more 
detail below, the Board will further propose that the Initial Notice 
and the OPAGAC confirmation letter be kept confidential.

B. Mediation

    Petitioners propose that, following the shipper's submission of the 
Initial Notice, the parties then engage in pre-arbitration mediation, 
conducted outside of any Board process and directed by a mediator 
designated by the parties. Under Petitioners' proposal, the mediation 
period would be 30 calendar days, beginning on the date of the first 
mediation session. (Pet., App. A at 5.) Olin responds that requiring 
mediation would only serve to establish another roadblock to timely 
rate relief, and notes that the Board only proposed requiring mediation 
under the FORR process if both parties consent. (Olin Reply 10.) NGFA 
proposes that parties be allowed to agree by mutual consent to waive 
mediation. (NGFA Reply 9.) It also proposes that mediation last no more 
than 30 days, whereas Petitioners suggest that it last a minimum of 30 
days. (Id.) Lastly, NGFA proposes that the Board liberally grant 
requests to extend the mediation period if the parties agree. (Id.) In 
its supplement, Petitioners agree with NGFA's proposed changes, but 
note their belief that it would not be necessary for the parties to 
obtain extensions of the mediation period from the Board. (Pet'rs 
Suppl. 5.)
    The Board observes that a mediation requirement may help facilitate 
settlement. If a dispute can be settled through mediation, it would 
allow parties to avoid the expense of arbitration. However, the Board 
also agrees with several shipper interests that, in some instances, the 
parties may have already engaged in extensive negotiations and 
therefore may wish to proceed directly to arbitration. (NGFA Reply 9; 
Olin Reply 10.) The Board will propose allowing parties to engage in 
mediation prior to the arbitration phase if they mutually agree, but 
they will not be required to do so. If one or both parties decide that 
they do not want to mediate, they may proceed directly to arbitration. 
The Board notes that this approach does not mirror the proposal in 
FORR, where the agency is proposing that mediation be mandatory, 
consistent with existing rate reasonableness procedures used in 
adjudications before the Board. See FORR SNPRM, EP 755, slip op. at 38 
(STB served Nov. 15, 2021). However, arbitration, like mediation, is 
itself a form of alternative dispute resolution, and requiring parties 
to engage serially in two forms of alternative dispute resolution as an 
alternative to adjudication could

[[Page 67597]]

discourage parties from using the arbitration process in some 
instances. In addition, allowing parties the option of bypassing 
mediation would expedite the process, which is one of the central goals 
of arbitration. Parties are invited to comment on whether, 
alternatively, the mediation phase should be eliminated entirely.
    The Board also agrees that, as a default, a 30-day mediation period 
would provide sufficient time for the parties to mediate while also 
ensuring that the overall arbitration process progresses. Accordingly, 
the Board will propose that the default mediation period shall be 30 
days, measured from the date of the first mediation session, but that 
the parties may agree to a longer or shorter mediation period. As for 
timing, the Petition does not state how long after the Initial Notice 
is filed that mediation should begin. Accordingly, the Board will 
propose that the parties would be required to schedule their first 
mediation session ``promptly and in good faith'' after the Initial 
Notice is submitted to the participating carrier. See proposed Sec.  
1108.25(b). Parties are invited to comment on whether a more defined 
period should be adopted. As for extensions of the mediation phase, 
because the mediation would not be conducted by the Board, there would 
be no need for the parties to seek Board approval of an extension of 
the mediation period.

C. Joint Notice To Arbitrate

    Petitioners propose that, if mediation is unsuccessful, the parties 
submit to OPAGAC a joint notice of their intent to arbitrate under the 
proposed program. (Pet., App. A at 5.) The Board will propose that the 
parties file a joint notice to arbitrate (referred to herein as the 
Joint Notice)--which would include the basis for the Board's 
jurisdiction over the dispute and the basis for the parties' 
eligibility to participate in the proposed small rate case arbitration 
program \39\--with the Board when mediation is unsuccessful or if the 
parties do not agree to mediate. As with the Initial Notice, specific 
information regarding pending arbitrations that is contained in the 
Joint Notice, including the identity of the parties, would not be 
disseminated within the Board beyond the alternative dispute resolution 
functions within OPAGAC. The Board will also propose that the Initial 
Notice be submitted by email to [email protected].
---------------------------------------------------------------------------

    \39\ Because the Board will propose that parties not be required 
to participate in mediation, the Board does not propose to require 
that the parties state in the Joint Notice that they have engaged in 
mediation.
---------------------------------------------------------------------------

    Petitioners further propose that the Joint Notice include ``the 
parties' agreement to arbitrate under the rules of this part.'' (Pet., 
App. A at 6.) It is unclear if the Petitioners intended for this 
requirement to simply mean a general statement that they agree to 
arbitrate or a written arbitration agreement, as is required in the 
existing arbitration regulations. See 49 CFR 1108a.5(g). Regardless, 
the Board will not propose that either requirement be part of the Joint 
Notice, so as to maintain the confidentiality of the Joint Notice. (See 
infra Section XI-B.)
    Petitioners also propose that the Joint Notice indicate the 
``requested relief,'' which presumably would include whether the 
parties have agreed to a different relief cap than set forth in the 
regulations. (Pet., App. A at 5-6.) As discussed in Section IX below, 
the Board will propose a relief cap of $4 million per arbitration. The 
parties' decision on whether to agree to a different relief cap may not 
be known at the time they submit the Joint Notice. Accordingly, the 
Board will propose that any agreement to a different relief cap be 
noted in the confidential summary filed at the conclusion of the 
arbitration (see infra Section XI), rather than in the Joint Notice.
    The Petition includes no deadline for filing the Joint Notice after 
mediation has concluded. The Board will propose that the Joint Notice 
be submitted not later than two business days following the end of 
mediation (even if mediation concludes before the end of the 30-day 
mediation period). See proposed Sec.  1108.25(c)(1). This would ensure 
that the process under the arbitration program continues to move 
forward in a timely manner. The Board will propose that the Joint 
Notice be submitted by email to [email protected].

V. Arbitration Panel Selection and Commencement

    The Petition proposes that arbitration under the proposed program 
be conducted by a panel of three arbitrators, the selection of which 
would not be limited to the arbitration roster established at 49 CFR 
1108.6(b). (Pet. 12.) Petitioners acknowledge that the existing 
arbitration program at part 1108 requires selection of an arbitrator 
from the Board's arbitration roster, but contend that permitting 
parties to select arbitrators not on the Board's roster would allow 
them to select an arbitrator with particular expertise in the market 
for the relevant commodity, an arbitrator with whom the party had a 
good experience in a previous non-rate arbitration, or another 
qualified individual that a party believes would be qualified to 
arbitrate the case, regardless of that person's inclusion on the 
Board's arbitration roster. (Id. at 23-24.) Petitioners believe that 
such flexibility would remove a potential barrier to parties wishing to 
arbitrate their rate dispute. (Id. at 24.)
    Under Petitioners' proposal, each party would select one 
arbitrator, and the two party-selected arbitrators would then select 
the third arbitrator from a list compiled jointly by the parties. (Id.) 
The Petition proposes that each party may object to the other's 
selected arbitrator ``for cause,'' including, among other things, a 
conflict of interest or actual or perceived bias toward the objecting 
party. (Id.) The arbitrator selected by the two party-selected 
arbitrators would serve as the panel's lead arbitrator, and would be 
responsible for establishing all rules deemed necessary for each 
arbitration proceeding--including those with regard to discovery, the 
submission of evidence, and the treatment of confidential information--
as well as generally ensuring that the arbitration procedures are 
followed. (Id., App. A at 6-7.) Any disputes over the selection of 
party-appointed arbitrators or the lead arbitrator would be resolved by 
the Chairman. (Id.) These processes would also be used to replace an 
arbitrator unable to serve due to incapacitation. (Pet., App. A at 6-
7.) Each party would pay the cost of its selected arbitrator, and the 
parties would share the cost of the lead arbitrator. (Id.)
    Olin responds that the fact that the parties would have to pay for 
the arbitrators and could object to each other's arbitrators on grounds 
not provided for under the existing arbitration rules (such as 
``perceived bias or animosity'' and ``adverse business dealings'') make 
the proposed program inferior to FORR. (Olin Reply 11.) Similarly, U.S. 
Wheat argues that having to pay for arbitrators makes arbitration more 
costly than FORR. (U.S. Wheat Suppl. 6.)

A. Eligible Arbitrators

    The Board agrees that permitting parties to select arbitrators who 
are not on the Board's arbitration roster may better incentivize 
parties to participate in the small rate case arbitration program, and 
so will propose allowing parties to select arbitrators not on the 
Board's roster. Although section 11708 provides for the selection of 
arbitrators possessing certain qualifications from the Board's 
arbitration roster as a default, that default applies only where the 
parties have not ``otherwise agreed'' to a different selection process. 
In other words, as Petitioners point out, section

[[Page 67598]]

11708 explicitly permits the use of non-roster arbitrators by mutual 
consent. The Board will propose requiring carriers and shippers to 
affirmatively state their agreement to potentially use non-roster 
arbitrators in their opt-in notice and the Initial Notice, 
respectively.
    Under section 11708(f)(1), to be included on the Board's roster of 
arbitrators, a person must have ``rail transportation, economic 
regulation, professional or business experience, including agriculture, 
in the private sector.'' The Board's regulations further require that 
``[p]ersons seeking to be included on the roster must have training in 
dispute resolution and/or experience in arbitration or other forms of 
dispute resolution.'' 49 CFR 1108.6(b). However, as discussed above, 
because parties would not have to select arbitrators from the Board's 
roster under the proposed program, these requirements would not 
necessarily apply to arbitrations under proposed 49 CFR part 1108, 
subpart B. Although the proposed regulations do not include specific 
qualification requirements for non-roster arbitrators, the Board 
invites comment on whether the 49 CFR 1108.6(b) qualifications (or 
others) should be required for arbitrators under the proposed program, 
particularly for the lead arbitrator in light of their responsibilities 
concerning discovery, evidence, and confidentiality.

B. Arbitrator Selection

    The Board will propose allowing parties to object to the opposing 
side's selected arbitrator for cause. The bases for objection proposed 
by Petitioners would be consistent with section 11708. Moreover, 
because parties would not necessarily select arbitrators that have been 
approved by the Board via its roster, the parties should have the 
ability to seek to disqualify individuals where there are substantial 
and legitimate questions as to whether such persons can satisfy the 
independence requirements of section 11708(f)(2).\40\ In response to 
Olin's concern, the Board will propose language that specifically ties 
for-cause objections to the independence requirements of section 
11708(f)(2). See proposed Sec.  1108.26(b)(1).
---------------------------------------------------------------------------

    \40\ The Board notes that Petitioners propose that parties may 
choose party-appointed arbitrators ``without limitation.'' (Pet., 
App. A at 7.) Theoretically, this would allow a party to select one 
of its own employees. However, if a party were to do so, the 
opposing party could object and seek to have that individual 
stricken for cause over concerns about the individual's ability to 
``perform their duties with diligence, good faith, and in a manner 
consistent with the requirements of impartiality and independence.'' 
Section 11708(f)(2). Nonetheless, the Board expects that for-cause 
challenges would be invoked rarely, such as when an arbitrator has 
financial ties to a party.
---------------------------------------------------------------------------

    The Board will propose that any for-cause objections be ruled on by 
an ALJ rather than the Chairman.\41\ This would help ensure that the 
Chairman does not become aware of the arbitration during its pendency. 
The ALJ would also be well-equipped to rule on this matter. The Board 
will propose that the hearing before the ALJ can still be held 
telephonically (or virtually) and under the same expedited timelines 
proposed by Petitioners. Parties raising objections would inform 
OPAGAC, which will then help arrange the hearing with the ALJ.
---------------------------------------------------------------------------

    \41\ The Board has a Memorandum of Understanding with the 
Federal Mine Safety and Health Review Commission to employ the 
services of its ALJs on a case-by-case basis to perform discrete, 
Board-assigned functions such as adjudicating discovery disputes in 
pending Board cases.
---------------------------------------------------------------------------

    The Board will propose that the ALJ's ruling on the objections be 
issued in a short, written order rather than a ruling during the 
telephonic or virtual conference. As discussed in more detail in the 
section on confidentiality, see infra Section XI, the Board will 
propose that the ALJ's order be deemed confidential. The Board also 
invites parties to propose alternative means of addressing for-cause 
objections, such as having the objections ruled on by one of the 
agency's directors or if they would prefer such rulings to be made by 
the Chairman.
    Additionally, the Board will not include Petitioners' proposal that 
the Chairman select the lead arbitrator if the party-appointed 
arbitrators are unable to agree. Such a determination is best left to 
the party-appointed arbitrators and would ensure that the Chairman does 
not become aware of the arbitration during its pendency, as mentioned 
above. Accordingly, the Board will propose that, if the party-appointed 
arbitrators cannot agree, they shall select from the Board's roster of 
arbitrators using the alternating strike method set forth in 49 CFR 
1108.6(c). See proposed Sec.  1108.26(c)(2). Parties may suggest 
alternative methods in their comments.

C. Cost of Arbitrators

    Under section 11708(f)(4), ``[t]he parties shall share the costs 
incurred by the Board and arbitrators equally, with each party 
responsible for paying its own legal and other associated arbitration 
costs.'' As such, the Board will propose that parties pay the cost for 
their own arbitrator, consistent with the requirements of 49 U.S.C. 
11708(f)(4). Olin and U.S. Wheat argue that this is a cost that 
shippers would not incur in a FORR case. However, the Board notes that 
parties are required to pay the costs for arbitration under section 
11708(f)(4) and 49 CFR part 1108, subpart A. See 49 CFR 1108.12(b).\42\
---------------------------------------------------------------------------

    \42\ If the Board ultimately adopts this proposed arbitration 
program, it could consider the possibility of creating a system in 
which the agency pays the party-selected arbitrator's costs for 
parties that are able to demonstrate financial hardship.
---------------------------------------------------------------------------

    The statute does not specify how ``shar[ing] the costs . . . 
equally'' would apply in arbitrations in which there are three or more 
parties. Under Petitioners' proposal, the shipper and defendant 
``carrier(s)'' would each pay one-half of the cost of the lead 
arbitrator. This means that if a shipper challenges a multi-carrier 
rate, the shipper would bear 50% of the cost of the lead arbitrator 
while the defendant carriers would split the remaining 50% cost among 
themselves. However, this may be contrary to Congress' intent. For 
example, if a shipper challenges an interline rate by two carriers, 
``shar[ing] the costs . . . equally'' could be interpreted as meaning 
that the parties should divide the costs three ways (with each party 
paying an equal third). Given the ambiguity in the statute, the Board 
will propose that parties to arbitration ``will share the cost of the 
lead arbitrator equally,'' mirroring the language from the statute.\43\ 
See proposed Sec.  1108.26(c)(4). This language would give the parties 
in an arbitration with three or more parties flexibility to negotiate 
each party's share of the lead arbitrator's cost on either a per-side 
or per-party basis.
---------------------------------------------------------------------------

    \43\ See 49 CFR 1108.12(b) (adopting the exact text of the 
statutory language regarding arbitration costs).
---------------------------------------------------------------------------

D. Selection Period

    The Board will propose adopting Petitioners' suggested deadlines 
for arbitrator selection. (See proposed Sec.  1108.26.) The Board 
acknowledges that 49 U.S.C. 11708(e)(1) states that ``[a]n arbitrator 
or panel of arbitrators shall be selected not later than 14 days after 
the date of the Board's decision to initiate arbitration.'' Under the 
proposed program, arbitrator selection may not be complete within 14 
days if the parties choose to engage in mediation. However, 49 U.S.C. 
11708(e)(4) permits the Board to extend the timelines upon the 
agreement of all parties in the dispute. Accordingly, the Board will 
propose that, as part of its opt-in notice, a railroad provide the 
Board with a statement that it agrees to extend the 14-day deadline in 
any arbitration brought under the program. In addition, the

[[Page 67599]]

Board will propose that a shipper include, as part of the Initial 
Notice that is served on the participating carrier and OPAGAC, a 
statement that it likewise agrees to extend the arbitrator selection 
deadline. The letter from OPAGAC confirming initiation of the 
arbitration process (see supra Section IV-A) would include a 
confirmation of the parties' agreement to an extension (as well as 
their agreement to allow for the selection of non-roster arbitrators).

E. Arbitration Commencement

    The Board will propose that, within two business days after the 
arbitration panel is selected, the lead arbitrator shall commence the 
arbitration process in writing, consistent with Petitioners' proposal. 
(Pet., App. A at 7.) The Board notes that 49 U.S.C. 11708(c)(1)(D) 
requires that arbitration commence not later than 40 days after the 
date on which a written complaint is filed ``or through other 
procedures adopted by the Board in a rulemaking proceeding.'' Under the 
Board's proposal, it is possible that the arbitration phase may not 
begin within 40 days from the submission of the Initial Notice, due to 
the presumptive 30-day mediation requirement (which, again, the parties 
can forgo if they do not mutually consent). However, the Board finds no 
inconsistency with the 40-day statutory requirement, as it considers 
the mediation phase to be part of the overall ``arbitration process.''

F. Arbitration Agreement

    Petitioners propose a provision that would require that the rules 
of the Small Rate Case Arbitration Program be incorporated by reference 
into any arbitration agreement into which the parties enter. (Pet., 
App. A at 6 (proposed Sec.  1108a.5(d)).) Petitioners' proposal appears 
to make the need for an arbitration agreement discretionary. However, 
an agreement signed by all participants to the arbitration helps ensure 
that the issues for the arbitration panel are clear and the 
participants take the time to familiarize themselves with the 
arbitration rules. Accordingly, the Board will propose a requirement 
that the parties, with the help of the arbitration panel, create a 
written arbitration agreement. See proposed Sec.  1108.27(b). The Board 
has modeled this provision on the regulation from the existing 
arbitration process. See 49 CFR 1108.5(g).

VI. Record-Building Procedures

    Petitioners propose that, once the arbitrators are selected, there 
would be a 45-day period for the parties to engage in limited discovery 
and that the arbitration panel has discretion to set the schedule and 
prescribe the format of the parties' evidence. (Pet. 13, 15.) They also 
propose that the Board's Office of Economics (OE) provide unmasked 
confidential Carload Waybill Sample data--subject to certain commodity 
and time limitations--to each party within seven days of filing the 
Joint Notice with OPAGAC. (Id. at 13.)

A. Procedural Schedule

    There appear to be several inconsistencies between what Petitioners 
propose in the body of their Petition and the text of their proposed 
regulations in Appendix A of their Petition regarding the procedural 
schedule for arbitration. For example, with respect to the 45-day 
discovery process, the Petition is unclear as to when that 45-day 
period would commence. (Compare Pet. 13 (the date on which the Joint 
Notice is filed) with Pet., App. A at 7 (the arbitration commencement 
date, which is two business days after the arbitration panel is 
appointed). With respect to terminology, the Petition refers to a 45-
day period for discovery, (Pet. 13), but the proposed regulations 
themselves refer not to a discovery period but a 45-day ``evidentiary 
phase,'' (Pet., App. A at 7), which could presumably encompass more 
than just discovery (e.g., submission of pleadings and evidence). In 
addition, Petitioners state that the procedural schedule for the 
submission of pleadings or evidence will be set by the ``arbitration 
panel,'' (Pet. 15), even though they have indicated that the ``lead 
arbitrator'' shall establish all rules deemed necessary for 
arbitration, including with regard to ``the submission of evidence,'' 
(Pet., App. A at 6-7).
    The Board will propose a procedural schedule, consistent with 
section 11708, beginning with a 90-day evidentiary phase comprised of 
45 days for discovery and an additional 45 days for the submission of 
pleadings or evidence. Although the arbitration panel may extend the 
``discovery sub-phase'' upon request, the Board will propose that this 
would not automatically extend the entire evidentiary phase beyond 90 
days. See proposed Sec.  1108.27(c). In other words, if the ``discovery 
sub-phase'' were extended, the ``submission sub-phase'' would be 
correspondingly shortened. However, the parties may agree to extend the 
entire evidentiary phase or a party may request an extension from the 
arbitration panel.\44\ Furthermore, the discovery/evidentiary phase 
would run from commencement of the arbitration (i.e., two business days 
after the arbitration panel is appointed), not from the submission of 
the Joint Notice. See proposed Sec.  1108.27(c)(2). This would ensure 
that the days needed for arbitration panel selection are not counted as 
part of the discovery/evidentiary phase. Accordingly, because the 
Board's proposed procedural schedule may not conclude within the 
timeline set forth in section 11708 if the parties engage in mediation, 
the Board will require carriers and shippers that utilize the proposed 
small rate case arbitration process to provide their consent to extend 
these deadlines in their opt-in notice and Initial Notice, 
respectively.
---------------------------------------------------------------------------

    \44\ Petitioners propose that the evidentiary phase only be 
extended upon mutual agreement of the parties. (Pet., App. A at 7.) 
This may have been an effort by Petitioners to subject arbitration 
to rigid deadlines comparable to those proposed in Final Offer Rate 
Review, EP 755 (STB served Sept. 12, 2019). However, section 
11708(e)(2) permits parties to make, and for the arbitration panel 
to grant, unilateral requests for an extension. In keeping with the 
statute, the Board will permit unilateral requests for extension, 
but notes its expectation that the arbitration panel will grant such 
extensions only in extraordinary circumstances and should attempt to 
adhere to the 90-day default evidentiary period set forth in the 
statute to the greatest extent practicable.
---------------------------------------------------------------------------

    Olin states in its reply that Petitioners ``seek to enable a 
defendant a fair opportunity to respond to the complainant shipper's 
case-in-chief, but fail to provide for shipper rebuttal and the right 
to be able to close the record,'' as provided for under the proposed 
FORR process. (Olin Reply 12.) It is the Board's view that the lead 
arbitrator should set the schedule and format of the parties' evidence, 
as is currently provided for in the existing arbitration regulations. 
See 49 CFR 1108.7(b). Arbitration is intended to be a flexible process, 
and the lead arbitrator will be able to set rules for the presentation 
that best suit the nature of the dispute, with the input of the 
parties. The lead arbitrator may, of course, confer with the other 
arbitrators on the panel regarding these matters.

B. Discovery Limits

    The Board will propose limiting discovery to 20 written document 
requests, five interrogatories, and no depositions, as suggested by 
Petitioners. These limits would be broad enough to allow each party to 
obtain the information necessary to make its case to the arbitration 
panel, but not so broad as to place an extensive burden on the opposing 
party and necessitate a prolonged discovery phase.
    Olin argues that discovery limitations are another instance where 
the proposed program would be inferior to the FORR

[[Page 67600]]

process which, as proposed, includes no limitations on discovery. (Olin 
Reply 11.) However, arbitration is intended to be a streamlined process 
that reduces the costs and time often associated with adjudication. The 
Board invites parties to comment on these proposed limits; in 
particular, parties are invited to comment on whether broader discovery 
should be allowed in light of the fact that the Board is proposing that 
shippers may use a non-streamlined presentation to establish market 
dominance. See infra Section VII.B.
    Again, the Board will propose that the lead arbitrator--not the 
arbitration panel--be responsible for managing discovery, the 
submission of evidence, and the treatment of confidential information, 
consistent with the requirements of the existing arbitration process. 
See 49 CFR 1108.7(b).

C. Waybill Data

    Petitioners propose that each party in the arbitration 
automatically be given access to Waybill data that contains: (a) The 
most recent year, (b) movements with a revenue to variable cost (R/VC) 
ratio above 180%, (c) movements on the defendant carrier, and (d) 
movements with the same five-digit Standard Transportation Commodity 
Code (STCC) as the challenged movements. They propose that, should a 
party need more data than provided in this automatic release, it may 
``seek broader release of the STB Waybill Sample pursuant to existing 
procedures'' or through discovery. (Pet. 13.)
    The Joint Shippers respond that automatic release of Waybill data 
should not be limited to only one year. They note that the Board allows 
the release of up to four years of data in Three-Benchmark cases, as 
one year of data was deemed insufficient in those cases to provide a 
meaningful benchmark for comparison purposes. (Joint Shippers Suppl. 
11.) The Joint Shippers also suggest that the Waybill data should not 
be limited to the same five-digit STCC as the commodity at issue. They 
note that some commodities, particularly chemicals, have similar 
characteristics and argue that guaranteeing access to Waybill Data at 
the two-digit STCC level will provide more relevant data for performing 
a comparative analysis. (Id. at 12.) The Joint Shippers further argue 
that the Waybill data should not be limited to only the defendant 
carrier but should be provided for all railroads, as limiting 
guaranteed access to only the defendant carrier's Waybill data could 
prevent shippers from relying on methodologies that consider movements 
on other railroads, including the ACC's proposed benchmarking 
methodology. (Id.) Finally, the Joint Shippers note that the carriers' 
suggestion that such Waybill data could be sought through the standard 
Waybill access procedures or discovery requests would ``defeat the 
advantages of arbitration by adding to the time and expense.'' (Id.)
    In their supplemental filing, Petitioners state that they disagree 
that more Waybill data should be required as a matter of right. (Pet'rs 
Suppl. 18 n.27.)
1. Waybill Data: Time Period, Commodity, and Carrier
    The Board will propose a provision that requires the automatic 
disclosure of confidential Waybill data to each party to an 
arbitration, but for the preceding four years rather than the one year 
proposed by Petitioners. See proposed Sec.  1108.27(g). The Joint 
Shippers correctly point out that the Board allows parties in Three-
Benchmark cases access to the unmasked Waybill Sample data of the 
defendant carrier for the four years that correspond with the most 
recently published Revenue Shortfall Allocation Methodology (RSAM) 
figures. See Waybill Data Released in Three-Benchmark Rail Rate Procs., 
77 FR 15969 (March 19, 2021), EP 646 (Sub-No. 3) (STB served Mar. 12, 
2012). As noted above, the arbitration panel would be required to 
consider the Board's methodologies for setting maximum lawful rates. 
Parties may wish to present arguments to the panel on what a reasonable 
rate would be under the Three-Benchmark methodology,\45\ which would 
require the same access to the Waybill sample as permitted in such 
proceedings. Moreover, the Board has previously indicated that there 
are additional benefits to providing four years of data. Waybill Data, 
EP 646 (Sub-No. 3), slip op. at 5, 9 (finding that more years of data 
would increase the number of observations of comparable traffic and 
allow for an assessment of changes in railroad pricing over a period of 
years).
---------------------------------------------------------------------------

    \45\ See Waybill Data, EP 646 (Sub-No. 3), slip op. at 5 (``[A] 
party may, for example, select its comparison group from data across 
all four years and argue that a group selected from all four years 
is the most comparable to the movements at issue.'').
---------------------------------------------------------------------------

    The Board will not, however, propose that the Waybill data that is 
automatically disclosed include commodities at the two-digit STCC level 
or railroads that are not parties to the arbitration. While arbitration 
disputes may involve attempts by shippers to demonstrate rate 
unreasonableness based on a comparison of rates between the arbitrating 
carrier and other carriers, not all arbitrations will involve such 
arguments. Given the importance of maintaining the confidentiality of 
the Waybill Sample, it would be imprudent to require the release of 
data that may not needed in some cases. Instead, if a party desires 
access to the Waybill Sample for data regarding other years, other 
commodity traffic of the defendant carrier, or other carriers, the 
Board will propose that the party file a request pursuant to 49 CFR 
1244.9(b)(4). As with requests for Waybill data in other contexts, see 
49 CFR 1244.9(a), the Director of OE will determine if the request 
satisfies the requirements of Sec.  1244.9(b)(4).\46\
---------------------------------------------------------------------------

    \46\ The Board does not permit complainants in Three Benchmark 
proceedings to include non-defendant carrier traffic in its 
comparison group. See Simplified Standards, EP 646 (Sub-No. 1), slip 
op. at 82-83. However, under the proposal here, shippers would be 
permitted to present new or modified rate reasonableness 
methodologies that consider additional market-based standards, among 
other factors. (See infra Section IX.A.1.) See also Expanding Access 
to Rate Relief, EP 665 (Sub-No. 2), slip op. at 14-15 (STB served 
Aug. 31, 2016) (seeking comment on whether to allow comparisons of 
non-defendant traffic). Accordingly, it is possible that requests 
for non-defendant carrier Waybill data could satisfy the criteria of 
49 CFR 1244.9(b)(4), including that ``[t]he STB Waybill Sample is 
the only single source of the data or obtaining the data from other 
sources is burdensome or costly, and the data is relevant to issues 
pending before the Board'' or arbitration panel. 49 CFR 
1244.9(b)(4)(i).
---------------------------------------------------------------------------

    Whether determinations by the Director of OE for Waybill data under 
Sec.  1244.9(b)(4) would be considered an ``opinion'' or ``order'' that 
must be made available for public inspection under the Freedom of 
Information Act (FOIA) is unclear. See 5 U.S.C. 552(a)(2). The Board 
will propose that the Director's determinations would not be posted in 
a formal docket (as such determinations are for formal proceedings and 
``other user'' requests), though parties are free to comment on whether 
or not publication is required under FOIA. It should be noted, however, 
that even if the Board were to conclude the Director's determinations 
do not need to be made public, such documents may nonetheless have to 
be made available in response to a FOIA request under 5 U.S.C. 
552(a)(3). (See infra Section XI.B for further discussion of issues 
with confidentiality and FOIA in this proposed arbitration process.)
    Lastly, the Board will not propose permitting shippers to obtain 
additional Waybill data through discovery, so that the Board can ensure 
that this data is properly protected.
2. Access to Waybill Data Under 49 CFR 1244.9
    To effectuate both the automatic disclosure of confidential Waybill 
data and the potential release of additional Waybill data, the Board 
will propose

[[Page 67601]]

amending its existing Waybill access procedures. See below. The 
procedures, which are set forth at 49 CFR 1244.9, describe five 
categories of users that can request access to Waybill data and the 
procedures for each category of user to do so. While there is a 
category of user for ``transportation practitioners, consulting firms, 
and law firms'' to obtain access to Waybill data, they may only use 
this data ``in preparing verified statements to be submitted in formal 
proceedings before the STB.'' 49 CFR 1244.9(b)(4). The other available 
procedures similarly do not permit shippers to obtain such data for use 
in an arbitration.\47\ Accordingly, the Board will propose modifying 
the language of Sec.  1244.9(b)(4) to include parties to a small rate 
case arbitration as a category of user that may request and use such 
data in arbitrations under the proposed program.
---------------------------------------------------------------------------

    \47\ Under 49 CFR 1244.9(b)(1), a railroad may obtain access to 
Waybill data for any traffic in which the carrier participated. 
Under 49 CFR 1244.9(c), ``other users'' may request access to the 
Waybill Sample, but that process requires the filing of a written 
request, publication of notice of the request in the Federal 
Register, an opportunity for the carriers' whose data is being 
sought to file protests, a determination by the OE Director, and a 
right of parties to appeal the Director's decision. Even if such a 
request were processed on an expedited basis, it could take some 
months to reach a final resolution.
---------------------------------------------------------------------------

3. Other Issues Related to Waybill Data Disclosure
    Petitioners propose that the Joint Notice be submitted to the 
Director of OE to facilitate timely preparation of the Waybill data. 
(Pet. 13; id., App. A at 6.) The Board will propose that the Joint 
Notice be submitted to the Director, along with a letter containing the 
five-digit STCC information necessary for OE to produce the 
confidential Waybill Sample data subject to automatic disclosure, and 
that OE would provide this data within seven days.
    Petitioners also propose that the parties to the arbitration would 
enter into a Confidentiality Agreement covering the arbitration 
generally, including access to the Waybill Sample. (Pet., App. A at 8.) 
\48\ However, the release of confidential data from the Waybill Sample 
requires an agreement with the Board. See 49 CFR 1244.9(b)(4)(v). 
Accordingly, the Board will propose that, as in formal proceedings and 
other waybill releases, OE provide to the parties a confidentiality 
agreement pursuant to 49 CFR 1244.9(b)(4)(v) that must be executed 
prior to release of any confidential Waybill data. Additionally, the 
Board will propose a requirement that the arbitrators sign their own 
agreement with the Board that would allow them to review confidential 
Waybill data that may be provided by the parties.
---------------------------------------------------------------------------

    \48\ The proposed Confidentiality Agreement provided by 
Petitioners appears to be modeled on a frequently used protective 
order issued by the Board in adjudication and rulemaking proceedings 
in which information is filed under seal. (See Pet., App. B.)
---------------------------------------------------------------------------

D. Admissible Evidence

    As discussed below (see infra Section VII.B), the Board will 
propose that evidence pertaining to product and geographic competition 
would be inadmissible, consistent with Board precedent regarding market 
dominance determinations. Mkt. Dominance Determinations--Prod. & 
Geographic Competition, 3 S.T.B. 937, 948 (1998) remanded sub nom. 
Ass'n of Am. R.Rs. v. STB, 237 F.3d 676 (D.C. Cir. 2001), pet. for 
review denied sub nom. Ass'n of Am. R.Rs. v. STB, 306 F.3d 1108 (D.C. 
Cir. 2002). As noted below, (see infra Section XII), the Board will 
also propose that arbitration decisions be deemed non-precedential, and 
likewise inadmissible.\49\ The Board will not, however, propose that 
evidence of revenue adequacy be inadmissible. As explained in detail 
below, (see infra Section VIII.A.2), the Board finds that section 11708 
requires that shippers be allowed to submit, and arbitrators to 
consider, certain revenue adequacy evidence.
---------------------------------------------------------------------------

    \49\ Petitioners include proposed regulatory language stating 
that non-precedential decisions include ``non-precedential decisions 
of the Board or of prior arbitrations.'' (Pet., App. A at 8 
(proposed Sec.  1108.27(e)(2)(ii)).) It is unclear to what ``non-
precedential decisions of the Board'' is referring and the Board's 
proposal does not include this language.
---------------------------------------------------------------------------

VII. Market Dominance

A. Determination by the Arbitration Panel

    The Petition proposes that, under the proposed program, the 
arbitration panel would determine whether the railroad has market 
dominance. Petitioners contend that a ``significant drawback'' of the 
existing arbitration requirements is that they require the Board to 
determine market dominance prior to the arbitrator considering rate 
reasonableness. (See Pet. 21-22.) They argue that, with respect to 
small rate cases, ``having to put rate reasonableness on hold while the 
Board decides market dominance could cause a significant delay and 
creates a disincentive for shippers to arbitrate.'' (Id.)
    Section 11708 provides that, ``with respect to rate disputes, [the 
Board] may make the voluntary and binding arbitration process available 
only to the relevant parties if the rail carrier has market dominance 
(as determined under section 10707).'' 49 U.S.C. 11708(c)(1)(C). 
Section 10707 provides that where a shipper challenges a rail 
transportation rate subject to the Board's jurisdiction as being 
unreasonably high, ``the Board shall determine whether the rail carrier 
proposing the rate has market dominance over the transportation to 
which the rate applies.'' 49 U.S.C. 10707(b).
    Petitioners argue that the Board is not prohibited from permitting 
the arbitration panel to determine market dominance in the small rate 
case arbitration program. Petitioners argue that while section 11708 
instructs the Board to make arbitration available only where the 
railroad has market dominance, it does not prohibit the Board from 
delegating the market dominance decision to the arbitration panel, 
provided the parties have voluntarily consented to that arrangement. 
(Pet. 22.) Petitioners also contend that, even if section 11708 forbids 
such delegation, the Board may use its exemption authority under 49 
U.S.C. 10502(a) to exempt small rate case arbitrations from that 
provision, on the ground that any such requirement is not necessary to 
carry out the rail transportation policy or protect shippers from an 
abuse of market power. (Id.) \50\
---------------------------------------------------------------------------

    \50\ Petitioners also contend that the Board is not constrained 
by section 11708 and may propose arbitration procedures that deviate 
from that statute under its general rulemaking authority at 49 
U.S.C. 1321(a), (Pet. 22), but as noted earlier, the Board is 
proposing a small rate case arbitration program in this decision 
pursuant to the requirements of section 11708.
---------------------------------------------------------------------------

    Olin objects to this aspect of the Petition, arguing, among other 
things, that the Board should not ``create a whole new alternative 
arbitration rate relief program in conflict with, but separate from the 
rate arbitration rules established by the Board under Sec.  11708.'' 
(Olin Reply 10.) It notes that this is another reason why the proposed 
program should not supplant FORR, which avoids this problem by having 
the Board determine market dominance. (Id.)
    The Board is skeptical of Petitioners' argument that, to the extent 
49 U.S.C. 11708 prohibits the arbitration panel from determining market 
dominance in a rate arbitration, the Board could simply exempt parties 
from that provision pursuant to 49 U.S.C. 10502(a). Section 10502(a) 
authorizes the Board to exempt ``person[s], class[es] of persons, or a 
transaction or service'' from the provisions of U.S. Code title 49, 
subtitle IV, part A, under certain circumstances. From a practical

[[Page 67602]]

standpoint, Petitioners appear to suggest that the Board may eliminate 
altogether a jurisdictional requirement for rate cases that Congress 
carried over to the arbitration context. Regardless, the Board need not 
reach that argument, as it now concludes that section 11708 does not 
prohibit an arbitration panel from determining market dominance.
1. Arbitrators Can Determine Market Dominance.
    As noted above, under 49 U.S.C. 11708(c)(1)(C), ``with respect to 
rate disputes, [the Board] may make the voluntary and binding 
arbitration process available only to the relevant parties if the rail 
carrier has market dominance (as determined under section 10707).'' In 
Revisions Final Rule, the Board adopted a final rule allowing parties 
to obtain the requisite market dominance determination by either 
requesting a ruling from the Board solely on the issue of market 
dominance or conceding market dominance and thereby ``forgoing the need 
for a determination by the Board.'' Revisions Final Rule, EP 730, slip 
op. at 6-7; see also Revisions to Arbitration Procs., 81 FR 30229 (May 
16, 2016), EP 730, slip op. at 2-3 (STB served May 12, 2016). While the 
Board's decisions in that proceeding did not undertake a detailed 
analysis of whether section 11708 permitted an arbitrator or 
arbitration panel to determine market dominance, the Board did state 
that ``the Board must determine if the rail carrier has market 
dominance before making the arbitration process available.'' Revisions 
to Arbitration Procs., EP 730, slip op. at 6; see also id. at 3 (noting 
that, ``as required by the statute,'' arbitration may be ``available 
only after [the Board] determines that a rail carrier has market 
dominance'').
    Here, the Board revisits this determination and now concludes that 
allowing arbitrators to determine market dominance is consistent with 
and permitted by the statutory language.\51\ Although section 
11708(c)(1)(c) requires that market dominance be determined under 
section 10707, and although section 10707 states that ``the Board shall 
determine whether the rail carrier . . . has market dominance over the 
transportation to which the rate applies,'' the overarching purpose of 
section 10707 is to define market dominance and set forth 
methodological requirements for its determination--e.g., a finding of 
R/VC greater than 180%, directions for determining variable costs, and 
the prohibition against certain presumptions. It seems likely that 
section 10707 refers to ``the Board'' determining market dominance 
merely because the section otherwise governs determinations made in 
rate reasonableness proceedings before the Board. See 49 U.S.C. 
10707(c) (``When the Board finds in any proceeding that a rail carrier 
proposing or defending a rate for transportation has market dominance 
over the transportation to which the rate applies, it may then 
determine that rate to be unreasonable if it exceeds a reasonable 
maximum for that transportation.'') (emphasis added)). It is 
reasonable, therefore, to conclude that the reference in section 
11708(c)(1)(C)--a provision pertaining to rate reasonableness 
proceedings before an arbitrator, not the Board--to section 10707 is to 
the definitional and substantive, methodological requirements set forth 
in that section, not to any requirement that the Board itself determine 
the presence of market dominance.\52\
---------------------------------------------------------------------------

    \51\ It is an axiom of administrative law that an agency's 
adoption of a particular statutory interpretation at one point in 
time does not preclude later different interpretations. See, e.g., 
Hinson v. NTSB, 57 F.3d 1144, 1149-50 (D.C. Cir. 1995). If an agency 
changes course, it must provide ``a reasoned analysis indicating 
that prior policies and standards are being deliberately changed and 
not casually ignored,'' Grace Petroleum Corp. v. FERC, 815 F.2d 589, 
591 (10th Cir. 1987) (citing Greater Bos. Television Corp. v. FCC, 
444 F.2d 841, 852 (D.C. Cir. 1970)), and its new interpretation must 
be permissible under the governing statute, see Chevron U.S.A., Inc. 
v. Nat. Res. Def. Council, 467 U.S. 837, 865 (1984).
    \52\ In Revisions Final Rule, EP 730, slip op. at 2-3, the Board 
allowed parties to concede market dominance in rate disputes 
arbitrated under section 11708, acknowledging that the arbitration 
process is voluntary and that market dominance determinations may 
significantly delay the process. But, if the reference within 
section 11708(c)(1)(C) to section 10707 requires that ``the Board'' 
determine market dominance as a prerequisite to arbitrating a ``rate 
dispute,'' that would seem to preclude any resolution of the market 
dominance issue other than by ``the Board,'' including by 
stipulation. It could be argued that it would also constrain parties 
from ``independently seeking or utilizing private arbitration 
services'' to resolve a market dominance dispute, which would 
conflict with section 11708(b)(3). Accordingly, the better reading 
of the statute is that it permits parties to (1) agree to concede 
market dominance, (2) agree to its determination by an arbitrator 
within an arbitration (be it one under the auspices of section 11708 
or otherwise), or (3) have that issue first be determined by the 
Board.
---------------------------------------------------------------------------

    The Board's modified interpretation that section 11708(c)(1)(C) 
permits the arbitration panel to determine market dominance in regard 
to arbitrated rate disputes also comports with the statute's objective 
of providing a voluntary arbitration process and advances Congress's 
stated goal when passing section 11708 of ``increas[ing] the efficiency 
of dispute resolution'' by ``expand[ing] existing work at the STB to 
encourage and provide arbitration for dispute resolution.'' S. Rep. No. 
114-52, at 7, 13 (2015). Nothing within section 11708's legislative 
history otherwise indicates that Congress expected that the Board 
itself would resolve market dominance before allowing the arbitration 
of rate disputes. The Board also recognizes, as it has in the past, 
that the arbitrators' inability to rule on market dominance is likely 
one hindrance to parties' willingness to use the arbitration process. 
See Revisions Final Rule, EP 730, slip op. at 6 (acknowledging that 
market dominance determinations being made by the Board ``may 
significantly delay the arbitration process''). These circumstances, 
and section 11708's objective of encouraging the use of arbitration to 
resolve disputes, support interpreting section 11708 to permit the 
arbitration panel to determine market dominance in rate disputes. See, 
e.g., Rux v. Republic of Sudan, 461 F.3d 461, 470 (4th Cir. 2006) 
(expressing the need to ``interpret statutory language in a manner that 
effectuates congressional intent''); Teva Pharms., USA, Inc. v. FDA, 
182 F.3d 1003 (D.C. Cir. 1999) (same).\53\
---------------------------------------------------------------------------

    \53\ In addition, parties have the right to appeal arbitration 
decisions to the Board under 49 U.S.C. 11708(f), which would include 
the arbitration panel's market dominance finding.
---------------------------------------------------------------------------

2. Market Dominance Does Not Have To Be Determined Before the 
Arbitration Process Begins.
    To the extent the Board's prior rulemaking can be read to suggest 
that section 10708(c)(1)(C) requires that any aspect of the 
``arbitration process'' be made available to resolve a ``rate dispute'' 
only after it has been determined that a carrier has market dominance--
either by the Board, an arbitrator, or by stipulation--it bears 
emphasizing that arbitration under the rule proposed here would 
function no differently than the Board's decision-making in a formal 
rate case. If the arbitrators conclude that there is no market 
dominance, that would end the arbitration; like the Board, the 
arbitrators would not proceed to rule on the merits of rate 
reasonableness. The Board concludes that section 11708(c)(1)(C) does 
not require market dominance and rate reasonableness issues to be 
litigated or arbitrated sequentially, only that a finding of market 
dominance must be made before the arbitration panel may determine rate 
reasonableness. A contrary reading of the statute would suffer from the 
same drawbacks discussed above and could contravene the stated goal in 
adopting the arbitration provision in the first place. See S. Rep. No. 
114-52 at 7 (stating that the STB Reauthorization

[[Page 67603]]

Act would expand existing work at the STB to encourage and provide 
arbitration for dispute resolution). By encouraging parties to resolve 
rate disputes through arbitration in lieu of adjudication but still 
requiring those parties to adjudicate market dominance before the Board 
or in a separate arbitration as a mandatory prerequisite, it could 
undermine the effectiveness of arbitration as an alternative to formal 
litigation.
    Given its modified interpretation of section 11708, the Board will 
propose that market dominance determinations be made by the arbitration 
panel under the proposed program.\54\ As with the procedures under the 
Board's current arbitration program, see Revisions Final Rule, EP 730, 
slip op. at 6-7, the carrier may concede market dominance, or the 
parties may jointly request that the Board determine market dominance. 
See proposed Sec.  1108.29(b)(1)(vi).
---------------------------------------------------------------------------

    \54\ The Board will determine whether an amendment to the market 
dominance determination in the existing arbitration procedures under 
49 CFR part 1108 should be made after the conclusion of this 
rulemaking.
---------------------------------------------------------------------------

B. Other Market Dominance Issues

    Petitioners propose that the arbitration panel be required to 
follow the streamlined market dominance approach that the Board adopted 
in EP 756. (See Pet. 13); see also Mkt. Dominance Streamlined Approach, 
EP 756 (STB served Aug. 3, 2020).\55\ However, in their supplemental 
filing, they indicate that they no longer object to allowing shippers 
to use the proposed arbitration process if they proceed under a non-
streamlined analysis. (Pet'rs Suppl. 5-6.) Petitioners also propose 
that when deciding market dominance, the arbitration panel not consider 
evidence of product and geographic competition, nor apply the limit 
price test as described in M&G Polymers USA, LLC v. CSX Transp., Inc., 
NOR 42123, slip op. at 11-18 (STB served Sept. 27, 2012). (See id. at 
13-14, 27.) They contend that the limit price test involves detailed 
policy and legal challenges not appropriate for litigation in a 
streamlined and expedited arbitration with limited appellate rights. 
(Id. at 27.)
---------------------------------------------------------------------------

    \55\ Because Petitioners submitted the Petition prior to the 
Board's adoption of the final rule in EP 756, they stated they 
reserved the right to revise this proposal in the event the Board 
adopted a final rule in EP 756 that deviated materially from the 
Board's original, proposed rule. (See Pet. 13 n.47.)
---------------------------------------------------------------------------

    The Board will propose that the complainant in a small rate case 
arbitration under these procedures may attempt to establish market 
dominance using either the streamlined or non-streamlined approach.\56\ 
Both the shipper interests and Petitioners appear to agree that there 
should be no restriction on which market dominance approach a shipper 
decides to utilize under the proposed program. The Board will also 
propose prohibiting arbitrators from considering evidence on product 
and geographic competition and the limit price test as part of the 
market dominance analysis. The Board does not consider product or 
geographic competition under either the streamlined or non-streamlined 
market dominance approach. See Mkt. Dominance Streamlined Approach, EP 
756, slip op. at 31-32 (STB served Aug. 3, 2020); Product & Geographic 
Competition, 5 S.T.B. 492, 499 (2001), corrected, EP 627, (STB served 
Apr. 6, 2001), aff'd sub nom. Ass'n of Am. R.Rs. v. STB, 306 F.3d 1108 
(D.C. Cir. 2002). Olin states that the limit price test is established 
precedent, and notes that the FORR proposal does not prohibit its use. 
(Olin Reply 10-11.) However, the limit price test has been the subject 
of controversy in rate cases and thus would only add time and 
complexity to small rate case arbitrations. Accordingly, the Board will 
propose that the arbitration panel cannot consider the Limit Price Test 
as part of its market dominance determination. See proposed Sec.  
1108.29(b)(1)(v).
---------------------------------------------------------------------------

    \56\ Because both the streamlined market dominance approach and 
non-streamlined approach comply with the requirements of 49 U.S.C. 
10707, use of either approach is permissible under section 11708. 
The Joint Shippers also argue if the Board were to adopt the 
``[aacute] la carte'' approach to determining market dominance they 
proposed in Mkt. Dominance Streamlined Approach, Docket No. EP 756, 
it would mitigate the time and expense of arbitrating market 
dominance. (Joint Shippers Suppl. 13.) The [aacute] la carte 
approach is the subject of the Joint Shippers' petition for 
reconsideration in that proceeding and will therefore not be 
addressed here.
---------------------------------------------------------------------------

VIII. Arbitration Decision

A. Rate Reasonableness Standard of Review

    Petitioners propose that, when determining rate reasonableness, the 
arbitration panel follow the standards prescribed in 49 U.S.C. 
11708(c)(3) and (d)(1). However, Petitioners also propose prohibiting 
the arbitration panel from ``considering any type of system-wide 
adequacy constraint, including the revenue adequacy constraint 
described in Coal Rate Guidelines, 1 I.C.C.2d 520, 535 (1985),'' and 
relatedly that ``any evidence related to the revenue adequacy of the 
defendant carrier'' be inadmissible. (Pet. 14-15; id., App. A at 8.) 
Shippers generally support use of the standards proposed by 
Petitioners, though some urge the Board to include more specificity 
regarding the ability of arbitrators to apply market-based factors. 
Shippers strongly oppose any restrictions on revenue adequacy 
considerations in arbitrations under the proposed small rate case 
program.
1. General Standard
    Under the statutory provisions of section 11708(c)(3) and (d)(1), 
when deciding whether a rate is reasonable, an arbitration panel must: 
(i) Consider the Board's methodologies for setting maximum lawful 
rates, giving due consideration to the need for differential pricing to 
permit a rail carrier to collect adequate revenues; and (ii) ensure 
that its decision is consistent with sound principles of rail 
regulation economics.
    NGFA suggests that the Board add language stating that arbitrators 
can consider ``flexible market-based standards,'' including ones that 
are incorporated in the NGFA's own private agreement to arbitrate with 
BNSF. (NGFA Reply 12.) NGFA states that such additional flexible 
market-based factors would include: (1) Rate levels on comparative 
traffic, (2) market factors for similar movements of the same 
commodity, and (3) overall costs of providing the rail service. (Id.) 
The Joint Shippers state that the Board should adopt the market-based 
factors proposed by NGFA, as providing arbitrators with such a list of 
would help arbitrators identify factors with a sound economic basis, 
which could increase the quality of panel decisions. (Joint Shippers 
Suppl. 13-14.) In their supplemental filing, Petitioners state that 
they have no objection to the Board explicitly permitting the 
arbitration panel to consider these market-based factors. (Pet'rs 
Suppl. 4.)
    The Board will propose the same general standards for rate 
reasonableness as suggested in the Petition, which closely follows the 
language of section 11708(c)(3) and (d)(1). The Board agrees with 
Petitioners that while section 11708(c)(3) requires that the 
arbitration panel ``consider'' the Board's existing methodologies, the 
statute does not require that the arbitration panel follow any 
particular methodology. As Petitioners note, this interpretation 
permits the arbitration panel flexibility by not requiring it ``to 
conform precisely to existing methodologies, but rather permits the 
panel to base its decision on alternative approaches so long as they 
are consistent with sound railroad economics.'' (Pet. 25.) This 
interpretation also is broadly similar to one of the key features of 
FORR, which would also allow parties flexibility to

[[Page 67604]]

choose how to present and support their offers, including the 
methodology used. See FORR SNPRM, EP 755, slip op. at 26-27 (STB served 
Nov. 15, 2021). Similar to the FORR proposal, here parties in 
arbitration would also be able to ``use their preferred methodologies, 
including revised versions of the Board's existing rate review 
methodologies or new methodologies altogether.'' Id. at 11. Moreover, 
because arbitration decisions broadly are to be ``consistent with sound 
principles of rail regulation economics,'' and are not to ``directly 
contravene[ ] statutory authority,'' the Board expects the arbitration 
panel to be informed by the rail transportation policy at 49 U.S.C. 
10101, to consider the Long-Cannon factors at 49 U.S.C. 10701(d)(2), 
and to use appropriate economic principles, as would the Board in a 
decision in a FORR proceeding. Compare 49 U.S.C. 11708(d)(1), (h) with 
FORR SNPRM, EP 755, slip op. at 27-28 (STB served Nov. 15, 2021). Also 
as was the stated intention in FORR, the arbitration program's use of 
principle-based, non-prescriptive review criteria should facilitate 
methodological innovation--albeit without the precedential effect 
anticipated in FORR--with overall complexity constrained by an 
abbreviated procedural schedule and a streamlined discovery process.
    Given the methodological flexibility described above, and because 
all parties appear to agree to include NGFA's proposed market-based 
factors in the text of the regulation, the Board will include them as 
part of its proposal. See proposed Sec.  1108.29(b)(2). Furthermore, 
parties arbitrating pursuant to 49 U.S.C. 11708 are free to present new 
or modified rate reasonableness methodologies that consider additional 
market-based factors.
2. Revenue Adequacy
    Petitioners also propose prohibiting the arbitration panel from 
considering any type of system-wide revenue adequacy constraint, 
including the revenue adequacy constraint described in Coal Rate 
Guidelines. (Pet. 14-15; id., App. A at 8.) They also propose that any 
evidence related to the revenue adequacy of the carrier be deemed 
inadmissible. (Id. at 15; id., App. A at 8.) Petitioners contend that 
over the past decade, they have raised ``serious legal, factual, and 
policy flaws with any constraint premised on the system-wide financial 
health of a carrier,'' which they characterize as an ``antiquated, 
utility-style concept of rate regulation that has long since been 
abandoned in other industries.'' (Id. at 14-15.) They state that they 
will not consent to a such a constraint applying in a small rate case 
arbitration, especially given the short deadlines and limited appeal 
rights. (Id. at 15.)
    Several shippers object to prohibiting the arbitration panel from 
considering the revenue adequacy constraint in reaching an arbitration 
decision. The Joint Shippers note that in Hearing on Revenue Adequacy, 
Docket No. EP 761, and Final Offer Rate Review, Docket No. EP 755, the 
ACC has submitted the prototype for a rate dispute methodology that 
implements the revenue adequacy constraint and that the carriers' 
proposed revenue adequacy constraint prohibition, combined with the 
proposed FORR exemption for participating carriers, would foreclose 
small rate case shippers from using this proposed methodology. (Joint 
Shipper Reply 5.) In their supplemental filing, the Joint Shippers 
argue that the revenue-adequacy constraint is especially relevant today 
because many railroads are reaching long-term revenue adequacy. (Joint 
Shipper Suppl. 4.) They further argue that Petitioners' assertion that 
the revenue adequacy constraint is highly contested and that the 
limited appellate standards governing arbitration decisions does not 
justify the prohibition. The Joint Shippers also argue that such a 
prohibition conflicts with Congress's directive in 49 U.S.C. 
11708(c)(3) that arbitrators consider revenue adequacy, specifically, 
that arbitrators ``giv[e] due consideration to the need for 
differential pricing to permit a rail carrier to collect adequate 
revenues.'' (Id. at 7.)
    Olin agrees with the Joint Shippers that the program as proposed by 
Petitioners would effectively insulate railroads from the revenue 
adequacy constraint, which it argues the Board has recognized as ``an 
essential first constraint in limiting the extent to which railroads 
can price their services,'' and which is established precedent. (Olin 
Reply 7-8; see also Joint Shippers Suppl. 4 (noting that the revenue 
adequacy constraint has long been established as a proper rate 
reasonableness standard by the Board).) Olin further notes that, by 
contrast, there is no such limit on revenue adequacy evidence under the 
proposed FORR process. (Olin Reply 11-12; see also U.S. Wheat Suppl. 
7.) USDA argues that, if Petitioners insist on limiting arbitrators 
from considering evidence on revenue adequacy, then shippers should 
have the option to use FORR or arbitration. (USDA Reply 2.) \57\
---------------------------------------------------------------------------

    \57\ NGFA states that it takes no position on the proposed 
exclusion of revenue adequacy considerations though, as discussed 
above, it argues that if the Board adopts the Rate Increase 
Constraint, carriers that participate in the proposed small rate 
case arbitration program should not be permitted to withdraw from 
the program on that basis alone. (NGFA Reply 10-11, 13.) NGFA 
further argues that, if adopted, the Rate Increase Constraint should 
be available for consideration in arbitrations under the proposed 
small rate case program. (Id. at 11.)
---------------------------------------------------------------------------

    In their supplemental filing, Petitioners reiterate their position 
that controversial issues like revenue adequacy should not be litigated 
for the first time in small case arbitrations with limited appellate 
rights. (Pet'rs Suppl. 2.) They emphasize that use of ``any regulatory 
adequacy constraint'' in rate reasonableness determinations, including 
ACC's proposed benchmark method, represents a ``grave regulatory 
misstep.'' (Id. at 15.) They further state that, even if revenue 
adequacy were a lawful method of constraining rates (which they claim 
it is not), the application of the concept is currently undefined, and 
allowing arbitrators to define it ``risks departure from sound 
principles of rail transportation economics.'' (Id.) As such, they 
reiterate that they will not agree to arbitrate rate disputes where 
shippers are permitted to use a revenue adequacy constraint. (Id.)
    The Board finds that Petitioners have not sufficiently justified 
their proposed methodological and evidentiary restrictions pertaining 
to revenue adequacy, and they will not be included as part of the 
Board's proposal. Regarding the evidentiary restriction, the regulatory 
text proposed by Petitioners prohibiting ``any evidence relat[ing]'' to 
``the revenue adequacy of the defendant carrier,'' (see Pet., App. A at 
8 (proposed Sec.  1108.27(e)(2)(iii)), conflicts with section 
11708(c)(3)'s requirement that arbitrators give ``due consideration to 
the need for differential pricing to permit a rail carrier to collect 
adequate revenues (as determined under section 10704(a)(2)).'' It is 
unclear how the arbitrators could comply with their statutory 
obligations if absolutely prohibited from considering any evidence 
concerning revenue adequacy.
    Petitioners' proposal that arbitrators be prohibited ``from 
considering any type of system-wide revenue adequacy-based constraint'' 
raises similar concerns.\58\ For example, the Three-

[[Page 67605]]

Benchmark methodology uses the Revenue Shortfall Allocation Method 
(RSAM) benchmark to ``account[ ] for a railroad's need to earn adequate 
revenues, as required by 49 U.S.C. 10704(a)(2).'' Rate Guidelines--Non-
Coal Procs., 1 S.T.B. 1004, 1027 (1996). Indeed, where the revenue a 
carrier collects from its captive traffic (i.e., the R/
VC>180 benchmark) exceeds RSAM, use of the Three-Benchmark 
methodology may operate to constrain a carrier's rates based on its 
revenue requirements. See id. at 1043 (``The greater the difference 
between the two benchmarks [where RSAM is lower than R/
VC>180 benchmark], the greater the downward adjustment to 
the carrier's average rates on its >180 traffic that would still permit 
it to meet the RSAM revenue need standard.'') Under the regulatory 
language proposed by Petitioners, the use of RSAM--and hence the entire 
Three-Benchmark methodology--could arguably be considered outside the 
bounds of the arbitrators' consideration. Yet Petitioners appear to 
have no objection to arbitrators relying on the Three-Benchmark 
methodology for determining the reasonableness of the rate. By 
contrast, Petitioners object to the arbitrators considering ACC's 
proposed benchmark method despite it bearing certain similarities to 
the Three-Benchmark methodology.\59\
---------------------------------------------------------------------------

    \58\ Petitioners phrase this restriction more narrowly than 
their proposed evidentiary restriction, which would more broadly 
prohibit ``any evidence relat[ing] to the revenue adequacy of the 
defendant carrier.'' (Pet., App. A at 8 (proposed Sec.  
1108.27(e)(2)(i).) However, when the two provisions are considered 
together, Petitioners appear to intend the restriction on ``any 
system-wide revenue adequacy constraint'' as a broad exclusion of 
any methodology involving revenue adequacy, as evidenced by their 
objection to the use of ACC's proposed benchmark method.
    \59\ As ACC has described it, the benchmark method relies upon a 
model to predict competitive benchmark rates for captive rail 
movements using certain competitive rail movements, which are then--
through application of a ``multiplier''--adjusted to ``determine the 
appropriate degree of differential pricing consistent with the 
Board's rail revenue adequacy standard.'' Joint Shippers Comment 20, 
Nov. 12, 2019, Final Offer Rate Rev., EP 755.
---------------------------------------------------------------------------

    Additionally, it is possible that the market-based factors proposed 
by NGFA--which Petitioners agree arbitrators may consider--could 
require the consideration of the carrier's capital requirements, which 
in turn would also run afoul of Petitioners' proposed revenue adequacy 
prohibitions. Generally speaking, it is difficult to reconcile the 
methodological flexibility afforded to arbitrators by section 11708 (as 
attested to by Petitioners, see supra Section VIII.A.1) and section 
11708's requirement that arbitrators consider the need for differential 
pricing to attain revenue adequacy with the seemingly expansive 
limitation on the use of ``any system-wide revenue adequacy 
constraint'' as proposed by Petitioners.
    Accordingly, the Board's proposed regulations do not include a 
general prohibition on revenue adequacy evidence or methodologies. In 
addition, the Board will propose adding the phrase ``as determined 
under section 10704(a)(2)'' to Petitioners' suggested provision 
mandating that the arbitration panel consider the need for differential 
pricing to permit a rail carrier to collect adequate revenues.\60\ 
Petitioners' provision is based on language taken directly from section 
11708 but omits this phrase. Compare Pet., App. A at 9 with 49 U.S.C. 
11708(c)(3). The reference to section 10704(a)(2) is specifically 
stated in the statute and therefore should not be excluded from the 
regulatory text.
---------------------------------------------------------------------------

    \60\ See proposed Sec.  1108.29(b)(2).
---------------------------------------------------------------------------

B. Arbitration Decision Timeline

    Petitioners propose that the arbitration panel issue its decision 
within 120 days, but again, propose varying starting points; they 
propose in the body of the Petition that this period would start on the 
date that the Joint Notice is filed, but propose in the appendix that 
it would start from the commencement of arbitration (i.e., two business 
days after the arbitration panel is appointed).
    The Board will propose that the arbitration panel issue its 
decision no later than 30 days after close of the evidentiary phase, 
rather than within 120 days from either the submission of the Joint 
Notice or commencement of arbitration. See proposed Sec.  
1108.27(c)(3). This accounts for the potential extension or shortening 
of the evidentiary phase deadline and comports with section 
11708(e)(3), which requires that the arbitration panel shall issue a 
decision not later than 30 days after the date on which the evidentiary 
record is closed.

IX. Relief

    Petitioners propose that any relief awarded in a single arbitration 
be capped at $4 million (indexed for inflation annually using the 
Consumer Price Index and a 2020 base year) over two years. (Pet. 11.) 
This monetary cap would apply to prospective relief, retroactive 
relief, or a combination of the two. (Id.) They further propose that 
any prospective relief in the form of rate prescriptions be limited to 
one year. (Id.) Petitioners state that a $4 million relief cap would 
capture the majority of potential rate litigants and that relief under 
the proposed program would be higher, on an annualized basis, than what 
was originally proposed in Simplified Standards, Docket No. EP 646 
(Sub-No. 1). (Pet. 27 n.56.)
    NGFA states that it agrees with the $4 million/two-year relief cap, 
but it stipulates that the cap should be reconsidered if the Board 
adopts a higher cap in FORR. (NGFA Reply 8-9.) Olin argues that the 
proposed one-year limit on rate prescriptions cuts in half the two-year 
limit on rate prescriptions proposed under FORR. (Olin Reply 11.) The 
Joint Shippers note this in their supplemental filing as well, pointing 
out that Petitioners fail to explain why prescriptive relief should be 
limited to one year. (Joint Shippers Suppl. 9.) While the Joint 
Shippers further note that complainants are entitled to four years of 
relief in any combination of reparations and prescription in a Three-
Benchmark proceeding, they state that they do not oppose a general two-
year relief period. (Id.)

A. Prescription Amount and Length

    The Board will propose a relief cap of $4 million and a relief 
period of two years. An award of $4 million, covering a period of two 
years (applied to a combination of retroactive and prospective relief), 
should be of sufficient value to incentivize shippers to use the 
proposed program while also addressing the carriers' concern that the 
proposed program remains limited to only smaller rate disputes. The $4 
million cap also parallels the relief that is proposed in the FORR 
process.\61\
---------------------------------------------------------------------------

    \61\ U.S. Wheat argues that the arbitration proposal appears to 
be a strategic move to stop any increase in the recovery cap in 
FORR. (U.S. Wheat Suppl. 7.) If the Board proceeds with FORR and 
considers raising the relief cap there, it can also address whether 
to make a corresponding change to the relief cap for the proposed 
small rate case arbitration program at that time.
---------------------------------------------------------------------------

    The Board will not, however, propose a one-year cap on 
prescriptions. Here, Petitioners propose that the total relief period--
which could include either reparations for past movements or a 
prescription for future movements, or both--should be two years. 
However, they also propose (without explanation) that any prescription 
be limited to a single year. The Joint Shippers correctly point out 
that this could unfairly limit a shipper's relief.\62\ Thus, under the 
Board's proposal, the length of the prescription could be as long as 
the total period for relief, which here would be two years. See 
proposed Sec.  1108.28(b). As the Joint Shippers note, this would be 
consistent with the Board's treatment of relief periods in other 
contexts. See Rate Regulation Reforms, 78 FR 44459

[[Page 67606]]

(July 24, 2013), EP 715, slip op. at 22-25.
---------------------------------------------------------------------------

    \62\ For example, if a shipper initiates arbitration immediately 
after a rate takes effect, the arbitration process lasts six months 
(consistent with the timelines proposed here), and the shipper is 
successful, it would receive six months of reparations for the 
period in which the arbitration was conducted. However, if there was 
a one-year prescription cap, the shipper would be artificially 
limited to 18 months of total relief even if it had successfully 
demonstrated that two years of relief was warranted.
---------------------------------------------------------------------------

B. Preclusive Effect of Arbitration Decision

    Petitioners' proposed regulations would preclude shippers from 
bringing a rate complaint or other proceeding for the same traffic for 
the later of (a) two years from the filing of the joint notice to 
arbitrate or (b) expiration of any rate prescription imposed. (Pet., 
App. A at 9.) The Board notes that Petitioners' proposal does not seem 
to account for a situation in which the carrier increases the rate at 
issue after the arbitration decision. Specifically, if a shipper is 
unsuccessful in arbitration, Petitioners' proposal would preclude the 
shipper from challenging the rate for two years, even if the carrier 
were to raise the rate immediately after the panel rendered its 
decision. Under Board and court precedent, shippers that have lost a 
formal rate case may not challenge the same rate for the same traffic, 
but they may challenge a new rate for the same traffic. See Mkt. 
Dominance Streamlined Approach, EP 756, slip op. at 44 (citing 
Burlington N. & Santa Fe Ry. v. STB, 403 F.3d 771, 778 (D.C. Cir. 
2005); Intermountain Power Agency v. Union Pac. R.R., NOR 42127, slip 
op. 4 (STB served Nov. 2, 2012)).
    A similar situation would occur if the shipper is awarded a 
prescription shorter than two years. For example, if a shipper is 
awarded a six-month prescription, under Petitioners' proposal, the 
shipper would be barred from challenging the rate for the 18 months 
following expiration of the prescription even if the railroad increases 
the rate during those 18 months. This is again inconsistent with how 
the Board treats the effect of a rate decision in other contexts. With 
regard to Three-Benchmark proceedings, the Board has held that ``[i]f . 
. . a carrier establishes a new common carrier rate once the rate 
prescription expires, and the new rate exceeds the inflation-adjusted 
challenged rate, the shipper may bring a new complaint against the 
newly established common carrier rate.'' Rate Regulation Reforms, EP 
715, slip op. at 12.
    Accordingly, the Board will propose language that makes clear that 
the preclusive effect of an arbitration decision is terminated if the 
carrier increases the rate. See proposed Sec.  1108.29(d)(3). 
Specifically, the proposed language would allow a shipper that has 
either lost an arbitration or prevailed in arbitration but exhausted 
its prescription to bring a new arbitration for the same traffic if the 
carrier increases the rate. This modification would ensure fairness and 
comport with precedent in other contexts, as noted above.

C. Agreements To Modify Relief Cap

    The Board will propose permitting carriers and shippers to agree in 
an individual case to arbitrate under the proposed procedures for a 
lesser or higher amount and/or a shorter or longer relief period, not 
to exceed the $25 million cap or five-year period set forth in 49 
U.S.C. 11708. See proposed Sec.  1108.28(c). As noted above, the Board 
will propose that any such agreement be noted in the confidential 
summary that is filed at the conclusion of the arbitration. See 
proposed Sec.  1108.29(e)(1).

X. Appeals and Enforcement

    Petitioners propose that the Board include appellate procedures and 
standards. An appeal would be initiated by the appellant filing a 
notice, which would allow the Board to formally docket the proceeding. 
(Pet., App. A at 10.) Petitioners include a proposed notice of appeal 
form. (Pet., App. C.) This notice would provide only basic information 
about the appeal, including the date of the arbitration decision and 
the name of the appealing party; the opposing side would not be named. 
(Id.) The subsequent appellate procedures proposed by Petitioners would 
closely follow those of 49 CFR 1108.11. (Pet., App. A at 10.)
    Petitioners further propose that the Board's standard of review for 
arbitration decisions would be limited to the same criteria as those 
governing the existing arbitration process in 49 CFR 1108.11(b). (Pet. 
15.) \63\ Petitioners propose that the Board's decision would be 
public, but that the Board should ``maintain the confidentiality of the 
arbitration decision to the maximum extent possible'' by redacting 
certain information. (Pet., App. A at 11 (proposed Sec.  1108.31(d).)
---------------------------------------------------------------------------

    \63\ Specifically, the Board would only review whether: (a) The 
decision is consistent with sound principles of rail regulation 
economics; (b) a clear abuse of arbitral authority or discretion 
occurred; (c) the decision directly contravenes statutory authority; 
or (d) the arbitral award limit was violated. 49 U.S.C. 11708(h).
---------------------------------------------------------------------------

    Lastly, Petitioners propose that the Board's decision on appeal 
would be judicially reviewable under the Hobbs Act, 28 U.S.C. 2321 and 
2342; stays of arbitration decisions would not be automatic, though 
could be sought pursuant to 49 CFR 1115.3(f); and enforcement of an 
arbitration decision would have to be sought in a court of appropriate 
jurisdiction under the Federal Arbitration Act, 9 U.S.C. 9-13. (Pet. 
15.)
    The Board will propose appellate and enforcement procedures similar 
to those proposed by Petitioners. Olin argues that the ability of 
parties to appeal to either the Board or a court serves as a 
``roadblock[ ] to relief with an extra layer of appeals than that 
provided under FORR.'' (Olin Reply 11; see also U.S. Wheat Suppl. 6 
(arguing that a railroad will probably always appeal if they lose a 
case).) However, section 11708(h) sets forth a party's right to appeal 
an arbitration decision to the Board, and the Board does not determine 
the federal courts' jurisdiction to review or enforce the Board's 
decisions. Moreover, the bases for appeal to the Board and the courts 
are both narrow, a fact which, when coupled with the many other 
benefits that small rate case arbitration could provide, outweighs this 
concern.
    The Board will propose some modifications to the carriers' proposed 
confidentiality provisions relating to appeals of the arbitration 
decision, which are discussed in detail in the following section.\64\ 
In addition, the Board will propose adding a provision stating that 
parties may seek judicial review of arbitration awards in a court of 
appropriate jurisdiction pursuant to the Federal Arbitration Act, 9 
U.S.C. 9-13, in lieu of seeking Board review. See proposed Sec.  
1108.31(f).\65\ This provision already exists for the current 
arbitration process. See 49 CFR 1108.11(b)(1). The Federal Arbitration 
Act allows parties the right to seek: (i) An order confirming an 
arbitration award, or (ii) direct judicial review of an arbitration 
award for ``egregious departures from the parties' agreed-upon 
arbitration.'' Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576 
(2008). The Board sees no reason to exclude arbitrations under the 
proposed program from the provisions of the Federal Arbitration 
Act.\66\
---------------------------------------------------------------------------

    \64\ It appears that Petitioners propose that the appealing 
party file its notice of appeal as a means of providing public 
notice that the appeal had become an official proceeding before the 
Board, given that they also propose that all filings to the Board 
concerning the arbitration be kept confidential. As discussed in the 
following section, the Board proposes that a public version of those 
filings must be submitted. Accordingly, a notice of appeal would be 
unnecessary.
    \65\ Petitioners propose regulatory language stating that ``A 
party to an arbitration proceeding under this part may appeal the 
arbitration decision only to the Board.'' (Pet., App. A at 10.) As 
explained above, the Board will not include this in its proposed 
regulations.
    \66\ Additionally, some courts have held that these provisions 
of the Federal Arbitration Act cannot be waived. See In re Wal-Mart 
Wage & Hour Empl. Pracs. Litig. v. Class Couns. & Party to Arb., 737 
F.3d 1262, 1267 (9th Cir. 2013) (``Just as the text of the [Federal 
Arbitration Act] compels the conclusion that the grounds for vacatur 
of an arbitration award may not be supplemented, it also compels the 
conclusion that these grounds are not waivable, or subject to 
elimination by contract.'').

---------------------------------------------------------------------------

[[Page 67607]]

XI. Confidentiality

    Petitioners characterize confidentiality as a ``key requirement for 
future arbitrations.'' (Pet. 22.) They contend that if arbitration 
decisions are made public, they could influence the marketplace and 
drive up the stakes for railroads with similarly situated customers and 
shippers that often move traffic over more than one railroad. (Id. at 
22-23.) They suggest that this would be unfair given the expedited 
timelines of the proposed program and the limited grounds for appellate 
review. (Id.) They further contend that a confidential process would 
focus the parties on the present dispute without the risk of setting 
precedent in other cases or affecting the market expectations of other 
entities in the supply chain. (Id.; see also Pet'rs Suppl. 8-9 
(``[Petitioners] believe that confidentiality of arbitration decisions 
will help railroads and shippers focus on a swift and amicable solution 
to the rate dispute at hand, without having to worry about broader 
implications.'')). Finally, they also contend that, under federal law, 
there is a presumption of privacy and confidentiality in arbitrations. 
(Id. (first citing Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 
U.S. 662, 686 (2010); and then citing Janvey v. Alguire, 847 F.3d 231, 
248 (5th Cir. 2017)).)
    As such, Petitioners propose that the ``entirety of the arbitration 
process'' be deemed confidential. (Pet. 16, 23; id., App. A at 6-8.) 
They propose that confidentiality would be effectuated through a 
Confidentiality Agreement, and they include a proposed version of the 
Confidentiality Agreement with the Petition. (Id. at 16; id., App. A at 
8; id., App. B.) Petitioners further propose that the arbitration 
decision would not be submitted to the Board as a matter of course, 
which is required under the existing arbitration program (49 CFR 
1108.9(e)), though a copy would be provided to the Board in the event 
of an appeal. (Pet. 23, App. A at 9.) Petitioners also propose that 
under no circumstances would the Board make publicly available a 
redacted version of the arbitration decision, as currently required 
under 49 CFR 1108.9(g). (Id., App. A at 9.)
    Petitioners propose that, should there be an appeal, the notice of 
appeal would be formally docketed and made public, but that it would 
contain limited information. (Id. at 16; id., App. A at 10.) 
Petitioners include a proposed version of the notice of appeal form 
with the Petition. (Id., App. C.) Under Petitioners' proposal, parties 
would be required to file all appellate submissions--including the 
arbitration decision, the petition to vacate or modify the arbitration 
award, and any reply--under seal, and no public versions would be 
filed. (Id. at 16; id., App. A at 9-11.) They further propose that the 
Board's appellate decision would be public but would require the Board 
to maintain the confidentiality of the arbitration decision to the 
``maximum extent possible,'' with particular attention paid to 
``avoiding the disclosure of information that would have an effect or 
impact on the marketplace.'' (Id., App. A at 11.) In addition, they 
propose that in ``no event'' would the Board--in its decision ``or 
otherwise''--disclose: ``(i) the specific relief awarded by the 
arbitration panel, if any, or by the Board; or (ii) the Origin-
Destination pair(s) involved in the arbitration.'' (Id.) They also 
propose a procedure by which parties would have the opportunity to 
request redactions of the Board's decision prior to its public release. 
(Id.)
    To permit the Board to monitor the proposed small rate case 
arbitration program, Petitioners propose that the parties would submit 
a confidential summary to OPAGAC within 14 days after either receiving 
the arbitration decision, the dispute settles, or the dispute is 
withdrawn. (Id., App. A at 9-10.) The Petition includes a provision for 
the Board to publish public quarterly reports on the final disposition 
of arbitrated rate disputes under the proposed program, using only the 
categories of information contained in the confidential summaries, and 
not disclosing the identity of the parties to the arbitration. (Id., 
App. A at 10.) Petitioners propose that the summaries and quarterly 
reports include only: (i) The geographic region of the movement(s) at 
issue; (ii) the commodities at issue; (iii) the number of days from the 
commencement of the arbitration proceeding to the final arbitration 
decision; and (iv) a high-level, generic description of the resolution 
(e.g., settled, withdrawn, dismissed on market dominance, or challenged 
rates found unreasonable/reasonable). (Pet. 16.)
    The USDA and shipper interests object to the idea that arbitration 
decisions would be kept confidential. USDA states that Petitioners' 
rationale for keeping decisions confidential is ``vague, unsupported by 
any data, and, therefore, highly speculative (at best).'' (USDA Reply 
2.) As noted above, it further states that ``[t]he fact that 
transparency might `drive up the stakes' because railroads `may have 
similarly situated customers' (i.e., other customers with unreasonable 
rates) should be a reason for transparency, not a reason for secrecy.'' 
(Id. at 3.) NGFA also objects to keeping arbitration decisions 
confidential, which it notes is contrary to NGFA's own private 
arbitration program with BNSF and the regulations adopted by the Board 
in Assessment of Mediation & Arbitration Procedures, EP 699 (STB served 
May 13, 2013). (NGFA Reply 7-8); see also 49 CFR 1108.9(e), (g). NGFA 
states that, in its experience, the prospect of a public decision often 
incentivizes parties to settle. (NGFA Reply 8; see also Joint Shippers 
Suppl. 9.) \67\ Olin argues that in prior arbitration rulemakings, 
railroad interests opposed the idea of confidential arbitration 
decisions. (Olin Reply 5.) It claims the fact that FORR decisions would 
not be confidential is another reason why that approach is preferable 
to arbitration. (Id. at 12; see also U.S. Wheat Suppl. 6.) In their 
supplemental filing, the Joint Shippers argue that, if arbitration 
decisions are kept confidential and railroads who participate in 
arbitration are exempt from FORR, meaningful oversight would be nearly 
impossible. (Joint Shippers Suppl. 8-9.)
---------------------------------------------------------------------------

    \67\ NGFA indicates, however, that it would support redacting 
confidential information from arbitration decisions, as provided in 
the Board's existing regulations. (Id.)
---------------------------------------------------------------------------

    Petitioners reiterate the need for confidentiality in their 
supplemental filing. They argue that, without confidentiality, they 
would not be willing to submit a complex rate reasonableness claim to 
an arbitration panel using an expedited process with limited discovery 
and appellate rights. (Pet'rs Suppl. 7.) They contend that 
confidentiality is not a one-sided benefit to the railroads, as it 
creates an environment in which railroads are willing to agree to 
arbitrate small rate disputes quickly and with increased flexibility--
the very result shippers have been requesting, and the Board has been 
seeking, for years. (Id. at 8.) They argue that if arbitration 
decisions were public, parties ``would be motivated to throw the 
proverbial kitchen sink into the arbitration'' rather than tailor the 
scope of litigation to the amount immediately in controversy (even if 
the decisions were deemed non-precedential). (Id. at 10.)
    In response to NGFA's assertion that making arbitrations public is 
in the public interest, Petitioners argue that the public interest is 
better served by having an effective arbitration program, which can 
only be accomplished through confidentiality. (Id.) Petitioners

[[Page 67608]]

also argue that the value of confidentiality in arbitration is not 
disproven because some railroads expressed a different view in comments 
on an arbitration program that proved to be unsuccessful. (Id. at 9 
n.9.) Lastly, they state that the fact that the arbitration process 
would be confidential does not implicate concerns about the integrity 
of the process, as there are other safeguards in the proposed program, 
most notably the arbitrator selection process and appellate process. 
(Id. at 10.)

A. Confidentiality in General

    Having considered the arguments, it appears that keeping 
arbitration decisions issued under the proposed program confidential 
would be more likely to serve as an incentive for carriers to 
participate in the program.\68\ All else being equal, if a carrier has 
the option between litigating the merits of a rate case before the 
Board or arbitrating, with the decision in each being public, it is 
reasonable to find the carrier is more likely to choose litigation, 
where it has the benefit of more formal legal procedures. In addition, 
as Petitioners note, one of the key benefits of the arbitration process 
is its informal nature, which should make it more accessible to 
parties, particularly small shippers. However, the benefits of 
informality could be significantly undermined if the arbitration 
decisions were made public. Specifically, the importance of a public 
arbitration decision would be greatly elevated, as it could impact not 
just the dispute at issue, but a broad range of other rate negotiations 
and disputes. As such, each side would be much more likely to treat the 
arbitration like litigation, which could have the effect of raising 
costs to all parties. Further, even though arbitration decisions are 
non-precedential, confidentiality may further encourage settlement in 
some cases, as parties will not have to worry about the impact a 
settlement may have on other rate negotiations.
---------------------------------------------------------------------------

    \68\ Notably, section 11708 does not address confidentiality 
specifically, although the provision at section 11708(c)(1) 
authorizing the Board to make arbitration available through 
procedures adopted in a rulemaking plainly permits imposition of 
such a requirement.
---------------------------------------------------------------------------

    The Board acknowledges Olin's point that the Board adopted 49 CFR 
1108.9(g), which requires the public posting of arbitration decisions 
under the existing program, at the urging of certain parties--including 
rail carriers--that there be greater transparency. See Assessment of 
Mediation & Arb. Procs., EP 699, slip op. at 15 (summarizing arguments 
by AAR and UP advocating that the publicity of arbitration awards would 
ensure transparency, discourage extreme positions, and incentivize 
well-reasoned arbitration decisions, among other things). The Board 
also understands the argument from USDA and NGFA that the fact that an 
arbitration decision might impact other rate negotiations could be 
considered more of a reason to make arbitration decisions public. 
However, as with many other aspects of the proposed small rate case 
arbitration program, there are trade-offs to both approaches. 
Understanding that Petitioners have identified confidentiality as a 
``key element'' of their proposal, and to encourage their 
participation, the Board will propose that the arbitration process here 
be kept confidential. Even though there were sound reasons for 
requiring greater transparency in Assessment of Mediation & Arbitration 
Procedures, Docket No. EP 699, the Board understands that a voluntary 
arbitration program can only be successful if carriers and shippers are 
willing to use it. The Board finds that the confidentiality trade-off 
here (designed to incentivize the railroads to participate) is balanced 
by other aspects of the Board's proposed program (designed to encourage 
shipper participation), such as affirming a standard that gives the 
arbitration panel flexibility in deciding what the rate should be and 
allowing arbitrators to consider revenue adequacy evidence.\69\
---------------------------------------------------------------------------

    \69\ As with market dominance determinations, see infra note 50, 
the Board will determine whether an amendment to the confidentiality 
regulations of the existing arbitration procedures should be made 
after the completion of this rulemaking.
---------------------------------------------------------------------------

    To allow the Board to monitor the proposed program, the Board will 
propose that parties file confidential summaries of each arbitration. 
The summaries should include the list of information proposed by 
Petitioners,\70\ as well as whether the parties agreed to a different 
relief cap or period than set forth in the regulations. The Board will 
propose that the confidential summaries not be published, but that the 
agency would issue a public quarterly report providing information 
contained in the confidential summaries, which would not include the 
identity of the parties to the arbitration. It is unclear whether 
Petitioners intended for the summary to be shared within the Board, 
including with the Board Members. The Board will propose that the Board 
Members be permitted to review the summaries so that they would be able 
to monitor how the arbitration program is being used in individual 
cases. Moreover, there would no requirement that the identity of the 
parties be revealed in the confidential summary, ensuring that that key 
aspect of confidentiality would be maintained. Lastly, the Board will 
clarify that parties would have to provide a confidential summary for 
any matter in which a shipper has submitted an Initial Notice to the 
carrier. See proposed Sec.  1108.29(e). This would ensure that the 
Board is apprised of matters that are withdrawn or settled during the 
mediation period. As noted, the Board will also propose a provision 
requiring the agency to conduct an assessment of the effectiveness of 
the program in the future. (See infra Section XIII.)
---------------------------------------------------------------------------

    \70\ Specifically, the summaries should include: (i) The 
geographic region of the movement(s) at issue; (ii) the commodities 
at issue; (iii) the number of days from the commencement of the 
arbitration proceeding to the final arbitration decision; and (iv) a 
high-level, generic description of the resolution (e.g., settled, 
withdrawn, dismissed on market dominance, or challenged rates found 
unreasonable/reasonable).
---------------------------------------------------------------------------

    However, as noted above, the Board will propose some modifications 
to Petitioners' confidentiality provisions, specifically regarding 
appeals of the arbitration decision to the Board. The Board discusses 
how confidentiality would apply to the different aspects of the 
proposed small rate case arbitration program below.

B. Arbitration Process and Decisions

    The Board will propose that the arbitration process be 
confidential, including discovery, filings to the arbitrators, the 
Initial Notice and OPAGAC confirmation letter, the Joint Notice, and 
confidentiality agreements concerning Waybill Sample data. By proposing 
to treat these materials as confidential, the Board would not publish 
them on its website or otherwise make them publicly available. The 
Board will also propose that any telephonic or virtual conference 
between the parties and the ALJ to resolve an objection to a party-
appointed arbitrator, and rulings by the ALJ on for-cause objections, 
also be deemed confidential. Parties are invited to comment on whether 
such communications would constitute ``dispute resolution 
communications'' as defined by 5 U.S.C. 571(5), and as such would be 
exempt from disclosure under FOIA pursuant to 5 U.S.C. 574(j).
    In regard to the Joint Notice, the definition of ``dispute 
resolution communication'' in 5 U.S.C. 571(5) does not include a 
``written agreement to enter into a dispute resolution proceeding.'' To 
ensure the confidentiality of the Joint Notice, the Board will not 
propose that the parties include an express statement that the parties 
agree to arbitrate in the Joint Notice. The fact that the parties agree 
to

[[Page 67609]]

arbitrate is evidenced by their participation in the program. The Joint 
Notice would merely be a means to inform OPAGAC when the arbitration 
phase is underway regarding a dispute, as well as to notify the 
Director of OE to release the Waybill Sample data to which parties are 
entitled. As noted above, the Board will propose that specific 
information regarding pending arbitrations contained in both the 
Initial Notice and Joint Notice, including the identity of the parties, 
would not be disseminated within the Board beyond the alternative 
dispute resolution functions within OPAGAC.
    As noted above, however, there is uncertainty about whether the 
Board would be required to publish and/or release the rulings from the 
Director of OE on requests for Waybill Sample data. See 49 CFR 1001.1 
(specifying which Board records are available for public inspection); 
49 U.S.C. 1306(b) (stating that rail matters require a ``written 
statement of that action''); 5 U.S.C. 552(a)(2)(A) (requiring agencies 
to make certain documents available to the public under FOIA). These 
materials may not be produced in every arbitration, but for ones in 
which they are, their release could result in the disclosure of the 
existence of the arbitration and the identity of the participating 
parties. Parties are invited to comment on whether such materials 
require publication and/or whether there are alternative means of 
preserving the confidentiality of these materials.
    Finally, under the Board's proposed procedures, neither the 
arbitration panel nor the parties would submit the arbitration decision 
to the Board unless it were appealed. Accordingly, in the absence of an 
appeal, the Board will not propose posting a redacted version of the 
arbitration decision on its website, as it does for arbitrations under 
the existing arbitration program. (See 49 CFR 1108.9(g).) (The extent 
to which the arbitration decision can be kept confidential in the event 
of an appeal is discussed in the following section.)
    The Board will also propose a requirement that parties enter into a 
Confidentiality Agreement, a model of which is included in Appendix A.

C. Appeals of Arbitration Decisions

    The Board will propose that all subsequent appellate submissions--
including the arbitration decision, the petition to vacate or modify 
the arbitration award, and any reply--be filed under seal. However, the 
Board finds that Petitioners' proposal to have all appellate 
submissions remain under seal is inconsistent with 49 CFR 1104.14, 
which requires that ``[w]hen confidential documents are filed, redacted 
versions must also be filed.'' In addition, while Petitioners have 
cited authority for the proposition that privacy and confidentiality 
can be important components of arbitration, there are countervailing 
concerns once a party seeks judicial or administrative review of 
arbitration decisions. Cf. Baxter v. Abbott Labs., 297 F.3d 544, 548 
(7th Cir. 2002) (holding that parties' agreement to keep arbitration 
confidential does not confer the ``right to keep third parties from 
learning what th[e] litigation is about''). In addition, Petitioners 
implicitly acknowledge that FOIA requires that Federal agencies make 
publicly available both ``final opinions'' as well as ``orders'' made 
in the ``adjudication of cases.'' 5 U.S.C. 552(a)(2)(A). The fact that 
Board decisions would be public and precedential also weighs in favor 
of requiring public versions of the filings that led to and support the 
Board's decision.
    Moreover, Petitioners have not explained (let alone acknowledged) 
whether and to what extent the Board could withhold these submissions 
should a third party seek access to them under the requestor provisions 
of FOIA. See 5 U.S.C. 552(a)(3) (requiring that agencies make records 
available to persons upon request). The Board can withhold certain 
commercial information under the FOIA exemption at 5 U.S.C. 
552(b)(4),\71\ but that exemption may not be broad enough to cover the 
appellate submissions in their entirety, especially since certain 
aspects of the arbitration award may not be commercial (such as the 
arbitrator's reasoning).\72\ Having the parties prepare public versions 
of their appellate submissions with commercial or financial information 
redacted would likely obviate at least some FOIA requests and place the 
Board in a more informed position to respond to any such request that 
is made.
---------------------------------------------------------------------------

    \71\ This exemption specifically exempts from FOIA ``trade 
secrets and commercial or financial information obtained from a 
person and privileged or confidential.''
    \72\ Indeed, the Administrative Dispute Resolution Act expressly 
carves out final arbitration decisions from its definition of 
``dispute resolution communications,'' which accordingly subjects 
any such decisions in the government's possession to FOIA, provided 
another FOIA exemption does not apply. See 5 U.S.C. 571(5), 574(j).
---------------------------------------------------------------------------

    The Board will therefore propose a process by which, following the 
filing of sealed appellate submissions--including the arbitration 
decision--the filing party would prepare a redacted, public version of 
those documents; provide the other party an opportunity to request 
further redactions; and submit the public version to the Board for 
filing. See proposed Sec.  1108.31(a)(3).\73\ Any such public version, 
and the material redacted therein, would be subject to a determination 
by the Board that the redacted information was not properly designated 
confidential or highly confidential, and an order from the Board that 
the public version be resubmitted without the unsupported redactions.
---------------------------------------------------------------------------

    \73\ As noted above, see supra note 60, Petitioners' proposal 
that parties file a notice of appeal is not necessary, as appellate 
filings to the Board would be publicly filed.
---------------------------------------------------------------------------

D. Board Decision of Arbitration Appeal

    The Board will propose procedures for making publicly available a 
redacted version of the Board's decision on appeal largely along the 
lines proposed by Petitioners, including a requirement that the Board 
pay particular attention to avoiding disclosure that would have an 
effect on the marketplace. The Board agrees that confidentiality would 
be a key component of the voluntary arbitration program and, as such, 
would strive to keep any redacted commercial or financial material 
within the underlying arbitration decision confidential, including, as 
appropriate, through redactions to the public version of the Board's 
decision. The Board notes, however, that it has modified the regulatory 
text suggested by Petitioners. The language proposed by Petitioners 
states that a ``Board decision that denies the petition to modify or 
vacate will do so in a way that maintains the complete confidentiality 
of the arbitration decision.'' (Pet., App. A at 11.) \74\ As explained 
above, however, parties will be required to prepare a redacted, public 
version of the arbitration decision for filing in the Board's docket, 
and hence the arbitration decision will necessarily not be 
``complete[ly] confidential[ ].''
---------------------------------------------------------------------------

    \74\ Petitioners also propose a provision which states that, 
``[i]n the event an arbitration decision is appealed to the Board . 
. . , the arbitration decision shall be filed under seal and . . . 
shall remain confidential on appeal.'' (Pet., App. A at 9.)
---------------------------------------------------------------------------

    Petitioners further propose that the Board shall ``[i]n no event'' 
disclose the specific relief awarded by the arbitration panel or by the 
Board, or the origin-destination pair involved in the arbitration. 
Although in most instances the Board would be able to rule on the 
appeal without having to disclose the arbitrators' award or origin-
destination pair, the Board cannot be certain that this will always be 
possible, as it may need to address these aspects of the underlying 
arbitration decision to provide a clear explanation of its appellate 
ruling. For these reasons, the

[[Page 67610]]

Board has modified Petitioners' proposed language to state that the 
Board will maintain the confidentiality of the arbitration decision--
including the award and origin-destination pair--to the ``maximum 
extent possible.'' Parties are invited to comment on whether the Board, 
should it have to reference the arbitrators' award and/or origin-
destination pair in its decision, should redact this information from 
any decision that it makes publicly available, including whether and to 
what extent it would be permitted to do so under FOIA.\75\ In addition, 
the Board invites parties to comment on whether there are other 
categories of information that should not be publicly disclosed in its 
decision, beyond the specific relief awarded and any origin-destination 
pairs. See Food Mktg. Inst. v. Argus Leader Media, 139 S. Ct. 2356, 
2363 (2019) (suggesting that confidentiality under the FOIA exemption 
at 5 U.S.C. 552(b)(4) may turn on whether the government promises to 
keep the information private).
---------------------------------------------------------------------------

    \75\ It should also be noted that, even if the Board were to 
redact this information, it is not the final arbiter in FOIA matters 
and thus cannot guarantee the continued confidentiality of material 
that Petitioners propose not be disclosed. See 5 U.S.C. 552(a)(4)(B) 
(authorizing federal district courts to review FOIA matters ``de 
novo'' and order production of agency records withheld under a FOIA 
exemption).
---------------------------------------------------------------------------

XII. Precedential Value

    Petitioners propose that arbitration decisions issued under the 
proposed program would have no precedential value and, as such, that 
past arbitration decisions would be deemed inadmissible. NGFA states it 
does not object to decisions having no precedential value. (NGFA Reply 
8.) This would also be consistent with section 11708(d)(5), which 
expressly provides that arbitration decisions have no precedential 
effect in any other or subsequent arbitration dispute, as well as the 
Board's existing arbitration program at 49 CFR 1108.10. Accordingly, 
the Board will propose that arbitration decisions have no precedential 
value. The Board will also propose that any such decisions are 
inadmissible in other arbitrations.

XIII. Program Review

    Finally, the Board agrees with those shippers who have argued that 
there would be benefits to a review of the proposed small rate case 
arbitration program after a period of time to ensure that the program 
is working as intended and proving effective. (USDA Reply 3; NGFA Reply 
5.) Petitioners have stated that they would agree to the Board 
conducting such an assessment at the end of a three-year term. (Pet'rs 
Suppl. 5.) Accordingly, the Board will propose a provision that a 
review of the proposed program be conducted in the future. The Board 
will propose that the review occur after a reasonable number of 
arbitrations have been conducted, though not later than three years 
after start of the program. See proposed Sec.  1108.32. Depending on 
the outcome of such review, the Board may determine that the 
arbitration program will continue or that the arbitration program 
should be terminated or modified at that time.
    The Board seeks comment on how it would conduct such a review and 
the nature of the information it should seek to collect from those who 
have participated in the arbitration program, including whether the 
Board should require or request the submission of arbitration decisions 
as part of its review process.

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 notice of proposed rulemaking, the agency must either include an 
initial regulatory flexibility analysis, section 603(a), or certify 
that the proposed rule would not have a ``significant impact on a 
substantial number of small entities,'' section 605(b). Because the 
goal of the RFA is to reduce the cost to small entities of complying 
with federal regulations, the RFA requires an agency to perform a 
regulatory flexibility analysis of small entity impacts only when a 
rule directly regulates those entities. In other words, 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).
    This proposal would not have a significant economic impact on a 
substantial number of small entities within the meaning of the RFA.\76\ 
The proposal imposes upon small railroads no new record-keeping or 
reporting requirements. Nor does this proposed rule circumscribe or 
mandate any conduct by small railroads; participation in the 
arbitration program proposed here is strictly voluntary. To the extent 
that the rules have any impact, it would be to provide faster 
resolution of a controversy at a lower cost, especially relative to the 
Board's existing Stand-Alone Cost, Simplified-SAC, and Three-Benchmark 
tests. The $4 million relief cap and two-year prescription period would 
also limit a participating small railroad's total potential liability. 
Moreover, the purpose of the proposed rules is to create an arbitration 
process to resolve smaller rate disputes, but as the Board has 
previously concluded, the majority of railroads involved in rate 
proceedings are not small entities within the meaning of the RFA. 
Simplified Standards, EP 646 (Sub-No. 1), slip op. at 33-34. Since the 
inception of the Board in 1996, only three of the 51 cases challenging 
the reasonableness of freight rail rates have involved a Class III rail 
carrier as a defendant. Those three cases involved a total of 13 Class 
III rail carriers. The Board estimates that there are today 
approximately 656 Class III rail carriers. Therefore, the Board 
certifies under 5 U.S.C. 605(b) that this proposed rule, if 
promulgated, would not have a significant economic impact on a 
substantial number of small entities as defined by the RFA.
---------------------------------------------------------------------------

    \76\ For the purpose of RFA analysis for rail carriers subject 
to the Board's jurisdiction, the Board defines a ``small business'' 
as only including those carriers classified as Class III rail 
carriers under 49 CFR 1201.1-1. See Small Entity Size Standards 
Under the Regul. Flexibility Act, 81 FR 42566 (June 30, 2016), EP 
719 (STB served June 30, 2016) (with Board Member Begeman 
dissenting).
---------------------------------------------------------------------------

    This decision will be served upon the Chief Counsel for Advocacy, 
Office of Advocacy, U.S. Small Business Administration, Washington, DC 
20416.

Paperwork Reduction Act

    Pursuant to the Paperwork Reduction Act (PRA), 44 U.S.C. 3501-3521, 
Office of Management and Budget (OMB) regulations at 5 CFR 
1320.8(d)(3), and Appendix B, the Board seeks comments about the impact 
of the new collection for the Arbitration Program for Small Rate Cases 
(OMB Control No. 2140-XXXX), concerning: (1) Whether the collections of 
information, as added in the proposed rule, and further described 
below, are necessary for the proper performance of the functions of the 
Board, including whether the collections have practical utility; (2) 
the accuracy of the Board's burden estimates; (3) ways to enhance the 
quality, utility, and clarity of the information collected; and (4) 
ways to minimize the burden of the collection of information on the 
respondents,

[[Page 67611]]

including the use of automated collection techniques or other forms of 
information technology, when appropriate.
    The Board estimates that the proposed new requirements would add a 
total hour burden of 273 hours. There are no non-hourly burdens 
associated with these collections. The Board welcomes comment on the 
estimates of actual time and costs of the collection of (a) Arbitration 
``Opt-In'' Notices (b) Notices of Intent to Arbitrate, (c) Joint 
Notices to Arbitrate, (d) Post-Arbitration Summaries, and (e) Appeals 
of Arbitrators' Decision, as detailed below in Appendix B. Other 
information pertinent to these collections is also included in Appendix 
B. The proposed rule will be submitted to OMB for review as required 
under 44 U.S.C. 3507(d) and 5 CFR 1320.11. Comments received by the 
Board regarding these information collections will also be forwarded to 
OMB for its review when the final rule is published.

List of Subjects

49 CFR Part 1011

    Administrative practice and procedure, Authority delegations 
(Government agencies), Organization and functions (Government 
agencies).

49 CFR Part 1108

    Administrative practice and procedure, Railroads.

49 CFR Part 1115

    Administrative practice and procedure.

49 CFR Part 1244

    Freight, Railroads, Reporting and recordkeeping requirements.

    It is ordered:
    1. The Board proposes to amend its rules as detailed in this 
decision. Notice of the proposed rules will be published in the Federal 
Register.
    2. Comments are due by January 14, 2022. Reply comments are due by 
March 15, 2022.
    3. A copy of this decision will be served upon the Chief Counsel 
for Advocacy, Office of Advocacy, U.S. Small Business Administration.
    4. This decision is effective on its service date.
    Decided: November 12, 2021.
    By the Board, Board Members Begeman, Fuchs, Oberman, Primus, and 
Schultz. Board Member Begeman concurred in part with a separate 
expression. Board Member Primus concurred with a separate expression.
BOARD MEMBER BEGEMAN, concurring in part:
    I am convinced that a voluntary arbitration program could provide a 
rate review alternative to litigation that some stakeholders might 
prefer. In fact, I have repeatedly voted to improve the Board's 
existing voluntary arbitration program, yet that program remains 
unused. That is why I welcomed Petitioners' proposal and supported 
instituting this proceeding under my Chairmanship, even planning that 
the Board would work to propose a rule by March of this year. See 
Report on Pending STB Regul. Proc. Fourth Quarter 2020 at 9 (Jan. 4, 
2021).
    While I generally support the Board's attempt here to try yet again 
to establish a voluntary arbitration program that will be utilized, 
this time one designed for smaller rate disputes (and am pleased that 
the notice of proposed rulemaking is finally being issued and will 
provide the opportunity for public input), I do not support every 
aspect of this proposal. Most significantly, I strongly disagree with 
the decision calling into question whether the Board will ever adopt a 
rate review process to ensure shippers with smaller disputes have a 
means to formally challenge the reasonableness of a rate before the 
Board.
    The Board's existing rate review processes are unworkable for 
shippers with smaller disputes, and frankly many with larger ones. As 
Olin Corporation correctly points out in its August 20, 2020 reply, the 
Board has an obligation to establish effective rate relief rules for 
all shippers, and that obligation is not discretionary.
BOARD MEMBER PRIMUS, concurring:
    While I support the concept of arbitration and concur in this 
decision, regrettably, I do not believe the proposal will do enough on 
its own to adequately mitigate the small rate disputes that continue to 
negatively impact our national rail network. My doubts center on the 
railroads' history, or lack thereof, of participation in voluntary 
Board-sponsored arbitration.
    On its face, arbitration can be a very useful tool to settle 
disputes between conflicting parties. However, it seems as if the 
railroads believe arbitration is a tool better kept unused and locked 
in the toolbox. Since the Board's implementation of arbitration nearly 
twenty-five years ago, there has not been one instance where the 
railroads have utilized the voluntary program. Even after the program 
was expanded five years ago to include matters involving rate disputes, 
there continued to be no real desire to participate.
    The railroads' hesitation to participate in arbitration seemed to 
have lessened with the establishment of the Board's Rate Reform Task 
Force in 2018 and the subsequent proposal of a new tool to address 
small rate disputes: Final Offer Rate Review (FORR). While forcefully 
condemning FORR, the railroads were quick to suggest that voluntary 
arbitration--the same tool that has yet to be used by a single Class 
I--should be the primary method with which to address small rate 
disputes. This significant change of heart would have been otherwise 
noteworthy had the railroads not followed it up by petitioning an 
unbalanced and essentially unworkable arbitration proposal to the 
Board.
    It is critical the Board equip itself with the tools necessary to 
address the issues challenging our national rail network. A balanced 
and robust small rate case arbitration program is one such tool and can 
be extremely effective--if it is used. But given the railroads' lack of 
appetite for arbitration, I strongly feel it is now time to add FORR to 
the Board's toolbox as well. FORR is the perfect complement to 
arbitration and should not be seen as a competing interest, as both 
offer different methods to solve small rate case disputes. Accordingly, 
I concur with this decision with the hope that the implementation of 
FORR is not far behind.

Jeffrey Herzig,
Clearance Clerk.

    For the reasons set forth in the preamble, the Surface 
Transportation Board proposes to amend parts 1011, 1108, 1115, and 1244 
of title 49, chapter X, of the Code of Federal Regulations as follows:

PART 1011--BOARD ORGANIZATION; DELEGATIONS OF AUTHORITY

0
1. The authority citation for part 1011 continues to read as follows:

    Authority: 5 U.S.C. 553; 31 U.S.C. 9701; 49 U.S.C. 1301, 1321, 
11123, 11124, 11144, 14122, and 15722.

0
2. Amend Sec.  1011.7 by revising paragraph (a)(2)(xix) and adding 
paragraph (b)(7) to read as follows:


Sec.  1011.7   Delegations of authority by the Board to specific 
offices of the Board.

    (a) * * *
    (2) * * *
    (xix) To order arbitration of program-eligible matters under the 
Board's regulations at 49 CFR part 1108, subpart A, or upon the mutual 
request of parties to a proceeding before the Board.

[[Page 67612]]

    (b) * * *
    (7) Perform any arbitration duties specifically assigned to the 
Office of Public Assistance, Governmental Affairs, and Compliance or 
its Director in 49 CFR part 1108, subpart B.

PART 1108--ARBITRATION OF CERTAIN DISPUTES SUBJECT TO THE STATUTORY 
JURISDICTION OF THE SURFACE TRANSPORTATION BOARD

0
3. The authority citation for part 1108 continues to read as follows:

    Authority: 49 U.S.C. 11708, 49 U.S.C. 1321(a), and 5 U.S.C. 571 
et seq.


Sec. Sec.  1108.1 through 1108.13   [Designated as Subpart A]

0
4. Designate Sec. Sec.  1108.1 through 1108.13 as subpart A and add a 
heading for subpart A to read as follows:

Subpart A--General Arbitration Procedures


Sec.  1108.1   [Amended]

0
5. Amend Sec.  1108.1 by:
0
a. Removing the word ``part'' wherever it appears and adding 
``subpart'' in its place; and
0
b. In paragraphs (a) and (b), removing ``these rules'' and adding 
``this subpart'' in its place.


Sec. Sec.  1108.3, 1108.7, and 1108.8   [Amended]

0
6. In addition to the amendments set forth above, in 49 CFR part 1108, 
remove the word ``part'' and add in its place the word ``subpart'' in 
the following places:
0
a. Section 1108.3(a)(1)(ii);
0
b. Section 1108.7(d); and
0
c. Section 1108.8(a).
0
7. Add subpart B to read as follows:
Subpart B--Voluntary Program for Arbitration of Small Freight Rail Rate 
Disputes
Sec.
1108.21 Definitions.
1108.22 Statement of purpose, organization, and jurisdiction.
1108.23 Participation in the Small Rate Case Arbitration Program.
1108.24 Use of the Small Rate Case Arbitration Program.
1108.25 Arbitration initiation procedures.
1108.26 Arbitrators.
1108.27 Arbitration procedures.
1108.28 Relief.
1108.29 Decisions.
1108.30 No precedent.
1108.31 Enforcement and appeals.
1108.32 Assessment of the Small Rate Case Arbitration Program.
1108.33 Exemption from Final Offer Rate Review.

Subpart B--Voluntary Program for Arbitration of Small Freight Rail 
Rate Disputes


Sec.  1108.21   Definitions.

    As used in this subpart:
    (a) Arbitrator means a single person appointed to arbitrate under 
this subpart.
    (b) Arbitration panel means a group of three people appointed to 
arbitrate under this subpart.
    (c) Small Rate Case Arbitration Program means the program 
established by the Surface Transportation Board in this subpart.
    (d) Arbitration decision means the decision of the arbitration 
panel served on the parties as set forth in Sec.  1108.27(c)(3).
    (e) Final Offer Rate Review means the Final Offer Rate Review 
process for determining the reasonableness of railroad rates.
    (f) Lead arbitrator means the third arbitrator selected by the two 
party-appointed arbitrators or, if the two party-appointed arbitrators 
cannot agree, an individual selected from the Board's roster of 
arbitrators using the alternating strike method set forth in Sec.  
1108.6(c).
    (g) Limit Price Test means the methodology for determining market 
dominance described in M&G Polymers USA, LLC v. CSX Transp., Inc., NOR 
42123, slip op. at 11-18 (STB served Sept. 27, 2012).
    (h) Participating railroad or participating carrier means a 
railroad that has voluntarily opted into the Small Rate Case 
Arbitration Program pursuant to Sec.  1108.23(a).
    (i) Party-appointed arbitrator means the arbitrator selected by 
each party pursuant to the process described in Sec.  1108.26(b).
    (j) Pending arbitration means an arbitration under this subpart in 
which the arbitration panel has not yet issued the arbitration 
decision, including a dispute being mediated in the pre-arbitration 
mediation permitted under Sec.  1108.25(b).
    (k) Rate disputes are disputes involving the reasonableness of a 
rail carrier's rates.
    (l) STB or Board means the Surface Transportation Board.
    (m) STB-maintained roster means the roster of arbitrators 
maintained by the Board, as required by Sec.  1108.6(b), under the 
Board's arbitration program established pursuant to 49 U.S.C. 11708 and 
set forth in subpart A of this part.
    (n) Streamlined market dominance test means the methodology set 
forth in 49 CFR 1111.12.


Sec.  1108.22   Statement of purpose, organization, and jurisdiction.

    (a) The Board's intent. The Board favors the resolution of disputes 
through the use of mediation and arbitration procedures, in lieu of 
formal Board proceedings, whenever possible. This subpart establishes a 
binding and voluntary arbitration program, the Small Rate Case 
Arbitration Program, that is tailored to rate disputes and open to all 
parties eligible to bring or defend rate disputes before the Board.
    (1) The Small Rate Case Arbitration Program serves as an 
alternative to, and is separate and distinct from, the broader 
arbitration program set forth in subpart A of this part.
    (2) By participating in the Small Rate Case Arbitration Program, 
parties consent to arbitrate rail rate disputes subject to the limits 
on potential liability set forth in Sec.  1108.28.
    (b) Limitations to the use of the Small Rate Case Arbitration 
Program. The Small Rate Case Arbitration Program may be used only for 
rate disputes within the statutory jurisdiction of the Board.
    (c) No limitation on other avenues of arbitration. Nothing in this 
subpart shall be construed in a manner to prevent parties from 
independently seeking or utilizing private arbitration services to 
resolve any disputes they may have.


Sec.  1108.23   Participation in the Small Rate Case Arbitration 
Program.

    (a) Railroad opt-in procedures--(1) Opt-in notice. To opt into the 
Small Rate Case Arbitration Program, a railroad may file a notice with 
the Board under Docket No. EP 765, notifying the Board of the 
railroad's consent to participate in the Small Rate Case Arbitration 
Program. Such notice may be filed at any time and shall be effective 
upon receipt by the Board or at another time specified in the notice. 
The notice should also include:
    (i) A statement that the carrier agrees to an extension of the 
timelines set forth in 49 U.S.C. 11708(e) for any arbitrations 
initiated under this subpart; and
    (ii) A statement that the carrier agrees to the appointment of 
arbitrators that may not be on the STB-maintained roster of arbitrator 
established under Sec.  1108.6(b).
    (2) Participation for a specified term. By opting into the Small 
Rate Case Arbitration Program, the carrier consents to participate in 
the program for a term expiring [five years after the effective date of 
the final rule]. A carrier may withdraw from the Program prior to [five 
years after the effective date of the

[[Page 67613]]

final rule], only pursuant to paragraph (c) of this section.
    (3) Public notice of railroad participants. The Board shall 
maintain a list of railroads who have opted into the Small Rate Case 
Arbitration Program on its website at www.stb.gov.
    (4) Class II and Class III carrier participation. Class II or Class 
III rail carriers may consent to use the Small Rate Case Arbitration 
Program to arbitrate an individual rate dispute, even if the Class II 
or Class III has not opted into the process under paragraph (a)(1) of 
this section. If a Class II or Class III carrier intends to participate 
for an individual rate dispute, a letter from the Class II or Class III 
carrier should be submitted with the notice of intent to arbitrate 
dispute required under Sec.  1108.25(a). The letter should indicate 
that the carrier consents to participate in the Small Rate Case 
Arbitration Program and include the statements required under 
paragraphs (a)(1)(i) and (ii) of this section.
    (b) Shipper/complainant participation. A shipper or other 
complainant seeking to challenge the reasonableness of carrier's rate 
may participate in the Small Rate Case Arbitration Program on a case-
by-case basis by notifying a participating carrier that it wishes to 
arbitrate an eligible dispute under the Small Rate Case Arbitration 
Program by filing a written notice of intent to arbitrate with the 
participating carrier, as set forth in Sec.  1108.25(a).
    (c) Withdrawal for change in law--(1) Basis for withdrawal. A 
carrier or shipper/complainant participating in the Small Rate Case 
Arbitration Program may withdraw its consent to arbitrate under this 
subpart if either: The Board makes any material change(s) to the Small 
Rate Case Arbitration Program under this subpart after a shipper/
complainant or railroad has opted into the Small Rate Case Arbitration 
Program; or the Board makes any material change(s) to its existing rate 
reasonableness methodologies or creates a new rate reasonableness 
methodology after a shipper/complainant or railroad has opted into the 
Small Rate Case Arbitration Program. However, the Board's adoption of 
the Final Offer Rate Review process would not be considered a change in 
law.
    (2) Procedures for withdrawal for change in law. A participating 
carrier or shipper/complainant may withdraw its consent to arbitrate 
under this subpart by filing with the Board a notice of withdrawal for 
change in law within 10 days of an event that qualifies as a basis for 
withdrawal as set forth in paragraph (c)(1) of this section.
    (i) The notice of withdrawal for change in law shall state the 
basis or bases under paragraph (c)(1) of this section for the party's 
withdrawal of its consent to arbitrate under this part. A copy of the 
notice should be served on any parties with which the carrier is 
currently engaged in arbitration. A copy of the notice will also be 
posted on the Board's website.
    (ii) Any party may challenge the withdrawing party's withdrawal for 
change in law on the ground that the change is not material by filing a 
petition with the Board within 10 days of the filing of the notice of 
withdrawal being challenged. The withdrawing party may file a reply to 
the petition within 5 days from the filing of the petition. The 
petition shall be resolved by the Board within 14 days from the filing 
deadline for the withdrawing party's reply.
    (iii) Subject to the stay provision of paragraph (c)(3)(ii) of this 
section, the notice of withdrawal for change in law shall be effective 
on the day of its filing.
    (3) Effect of withdrawal for change in law--(i) Arbitrations with 
decision. The withdrawal of consent for change in law by either a 
shipper/complainant or carrier shall not affect arbitrations in which 
the arbitration panel has issued an arbitration decision.
    (ii) Arbitrations without decision. A carrier or shipper/
complainant filing a withdrawal of consent for change in law shall 
immediately inform the arbitration panel and opposing party. The 
arbitration panel shall immediately stay the arbitration. If no 
objection to the withdrawal of consent is filed with the Board or the 
Board issues a decision granting the withdrawal request, the 
arbitration panel shall dismiss any pending arbitration under this 
part, unless the change in law will not take effect until after the 
arbitration panel is scheduled to issue its decision pursuant to the 
schedule set forth in Sec.  1108.27(c). If an objection to the 
withdrawal of consent is filed and the Board denies the withdrawal, the 
arbitration panel shall lift the stay, the arbitration shall continue, 
and all procedural time limits will be tolled.
    (d) Limit on the number of arbitrations. A carrier participating in 
the Small Rate Case Arbitration Program is only required to participate 
in 25 arbitrations during a rolling 12-month period. Any arbitrations 
initiated by the submission of the notice of intent to arbitrate a 
dispute to the rail carrier (pursuant to Sec.  1108.25(a)) that has 
reached this limit can be postponed until the carrier is once again 
below the limit.
    (1) A carrier that has reached the limit may notify the Board's 
Office of Public Assistance, Governmental Affairs, and Compliance by 
email (to [email protected]), as well as the shipper who submitted the 
notice of intent to arbitrate to the carrier. The Office of Public 
Assistance, Governmental Affairs, and Compliance shall confirm that the 
limitation has been reached and inform the shipper (and any other 
subsequent shippers) that the arbitration is being postponed, along 
with an approximation of when the arbitration can proceed and 
instructions for reactivating the arbitration once the carrier is again 
below the limit.
    (2) An arbitration will only count toward the 25-arbitration limit 
upon commencement of the first mediation session or, where one or both 
parties elect to forgo mediation, submission of the joint notice of 
intent to arbitrate to the Board under Sec.  1108.25(c).


Sec.  1108.24   Use of the Small Rate Case Arbitration Program.

    (a) Eligible matters. The arbitration program under this subpart 
may be used only in the following instances:
    (1) Rate disputes involving shipments of regulated commodities not 
subject to a rail transportation contract are eligible to be arbitrated 
under this subpart. If the parties dispute whether a challenged rate 
was established pursuant to 49 U.S.C. 10709, the parties must petition 
the Board to resolve that dispute, which must be resolved before the 
parties initiate the arbitration process under this part.
    (2) A shipper may challenge rates for multiple traffic lanes within 
a single arbitration under this part, subject to the relief cap in 
Sec.  1108.28 for all lanes.
    (3) For movements in which more than one carrier participates, 
arbitration under this subpart may be used only if all carriers agree 
to participate (pursuant to Sec.  1108.23(a)(1) or (4)).
    (b) Eligible parties. Any party eligible to bring or defend a rate 
dispute before the Board is eligible to participate in the arbitration 
program under this part.
    (c) Use limits. A shipper/complainant may bring a maximum of one 
arbitration per individual railroad at a time. For purposes of this 
paragraph (c), an arbitration under this subpart is final, and a new 
arbitration may be brought against the defendant carrier by the 
shipper/complainant, when the arbitration panel issues its arbitration 
decision, or if an arbitration is dismissed or withdrawn, including due 
to settlement.
    (d) Arbitration clauses. Nothing in the Board's regulations in this 
part shall preempt the applicability of, or

[[Page 67614]]

otherwise supersede, any new or existing arbitration clauses contained 
in agreements between shippers/complainants and carriers.


Sec.  1108.25   Arbitration initiation procedures.

    (a) Notice of shipper/complainant intent to arbitrate dispute. To 
initiate the arbitration process under this subpart against a 
participating railroad, a shipper/complainant must notify the railroad 
in writing of its intent to arbitrate a dispute under this part. The 
notice must include: A description of the dispute sufficient to 
indicate that the dispute is eligible to be arbitrated under this part; 
a statement that the shipper/complainant consents to extensions of the 
timelines set forth in forth in 49 U.S.C. 11708(e); and a statement 
that the shipper/complainant consents to the appointment of arbitrators 
that may not be on the STB-maintained roster of arbitrators established 
under Sec.  1108.6(b). The shipper/complainant must also submit a copy 
of the notice to the Board's Office of Public Assistance, Governmental 
Affairs, and Compliance by email to [email protected]. Upon receipt of the 
notice of intent to arbitrate, the Office of Public Assistance, 
Governmental Affairs, and Compliance will provide a letter to both 
parties confirming that the arbitration process has been initiated, and 
that the parties have consented to extension of the timelines set forth 
in 49 U.S.C. 11708(e) and the potential appointment of arbitrators not 
on the Board's roster. The notice and confirmation letter from the 
Office of Public Assistance, Governmental Affairs, and Compliance will 
be confidential and specific information regarding pending 
arbitrations, including the identity of the parties, would not be 
disseminated within the Board beyond the alternative dispute resolution 
functions within the Office of Public Assistance, Governmental Affairs, 
and Compliance.
    (b) Pre-arbitration mediation. (1) Prior to commencing arbitration, 
the parties to the dispute may engage in mediation if they mutually 
agree.
    (2) Such mediation will not be conducted by the STB. The parties to 
the dispute must jointly designate a mediator and schedule the 
mediation session(s).
    (3) Mediation shall be initiated by the shipper/complainant's 
notice of intent to arbitrate under this part. The parties must 
schedule mediation promptly and in good faith after the shipper/
complainant has submitted its notice of intent to arbitrate to the 
participating carrier. The mediation period shall end 30 days after the 
date of the first mediation session, unless both parties agree to a 
different period.
    (c) Joint Notice of Intent to Arbitrate. (1) To arbitrate a rate 
dispute under this subpart, the parties must submit a Joint Notice of 
Intent to Arbitrate with the Board's Office of Public Assistance, 
Governmental Affairs, and Compliance, indicating the parties' intent to 
arbitrate under the Small Rate Case Arbitration Program. The parties 
should submit a copy of the notice to the Board's Office of Public 
Assistance, Governmental Affairs, and Compliance by email to 
[email protected]. The joint notice must be filed not later than two 
business days following the date on which mediation ends or, in cases 
in which the parties mutually agree not to engage in mediation, two 
business days after the shipper/complainant submits its notice of 
intent to arbitrate (required by paragraph (a) of this section) to the 
carrier.
    (2) The joint notice shall set forth the following information:
    (i) The basis for the Board's jurisdiction; and
    (ii) The basis for the parties' eligibility to use the Small Rate 
Case Arbitration Program, including: That the dispute being arbitrated 
is solely a rate dispute involving shipments of regulated commodities 
not subject to a rail transportation contract; that the railroad has 
opted into the Small Rate Case Arbitration Program; that the shipper/
complainant has elected to use the Small Rate Case Arbitration Program 
for this particular rate dispute; and that the shipper/complainant does 
not have any other pending arbitrations at that time against the 
defendant railroad.
    (3) The joint notice shall be confidential and will not be 
published on the Board's website and specific information regarding 
pending arbitrations, including the identity of the parties, would not 
be disseminated within the Board beyond the alternative dispute 
resolution functions within the Office of Public Assistance, 
Governmental Affairs, and Compliance.
    (4) Unless the parties have agreed not to request the Waybill 
Sample data pursuant allowed under Sec.  1108.27(g), the parties must 
also submit a copy of the Joint Notice of Intent to Arbitrate on the 
Director of the Board's Office of Economics, along with a letter 
providing the five-digit Standard Transportation Commodity Code 
information necessary for the Office of Economics to produce the 
unmasked confidential Waybill Sample. Parties may submit the letter and 
copy of the joint notice by email to [email protected].


Sec.  1108.26   Arbitrators.

    (a) Decision by arbitration panel. All matters arbitrated under 
this subpart shall be resolved by a panel of three arbitrators.
    (b) Party-appointed arbitrators. Within two business days of filing 
the Joint Notice of Intent to Arbitrate, each side shall select one 
arbitrator as its party-appointed arbitrator and notify the opposing 
side of its selection.
    (1) For-cause objection to party-appointed arbitrator. Each side 
may object to the other side's selected arbitrator within two business 
days and only for cause. A party may make a for-cause objection where 
it has reason to believe a proposed arbitrator cannot act with the good 
faith, impartiality, and independence required of 49 U.S.C. 11708, 
including due to a conflict of interest, adverse business dealings with 
the objecting party, or actual or perceived bias or animosity toward 
the objecting party.
    (i) The parties must confer over the objection within two business 
days.
    (ii) If the objection remains unresolved after the parties confer, 
the objecting party shall immediately file an Objection to Party-
Appointed Arbitrator with the Office of Public Assistance, Governmental 
Affairs, and Compliance. The Office of Public Assistance, Governmental 
Affairs, and Compliance shall arrange for a telephonic or virtual 
conference to be held before an Administrative Law Judge within two 
business days, or as soon as is practicable, to hear arguments 
regarding the objection(s). The Administrative Law Judge will provide 
its ruling in an order to all parties by the next business day after 
the telephonic or virtual conference.
    (iii) The Objection to Party-Appointed Arbitrator filed with Office 
of Public Assistance, Governmental Affairs, and Compliance and the 
telephonic or virtual conference including any ruling on the objection, 
shall be confidential.
    (2) Costs for party-appointed arbitrators. Each side is responsible 
for the costs of its own party-appointed arbitrator.
    (c) Lead arbitrator--(1) Appointment. Once appointed, the two 
party-appointed arbitrators shall, without delay, select a lead 
arbitrator from a joint list of arbitrators provided by the parties.
    (2) Disagreement selecting the lead arbitrator. If the two party-
appointed arbitrators cannot agree on a selection for the lead 
arbitrator, the party-appointed arbitrators will select the lead 
arbitrator from the STB-maintained roster of arbitrators using the 
process set forth in Sec.  1108.6(c).

[[Page 67615]]

    (3) Lead arbitrator role. The lead arbitrator will be responsible 
for ensuring that the tasks detailed in Sec. Sec.  1108.27 and 1108.29 
are accomplished. The lead arbitrator shall establish all rules deemed 
necessary for each arbitration proceeding, including with regard to 
discovery, the submission of evidence, and the treatment of 
confidential information, subject to the requirements of the rules of 
this subpart.
    (4) Costs. The parties to the arbitration will share the cost of 
the lead arbitrator equally.
    (d) Arbitrator choice. The parties may choose their arbitrators 
without limitation, provided that any arbitrator chosen must be able to 
comply with paragraph (f) of this section. The arbitrators may, but are 
not required to, be selected from the STB-maintained roster described 
in Sec.  1108.6(b).
    (e) Arbitrator incapacitation. If at any time during the 
arbitration process an arbitrator becomes incapacitated or is unwilling 
or unable to fulfill his or her duties, a replacement arbitrator shall 
be promptly selected by the following process:
    (1) If the incapacitated arbitrator was a party-appointed 
arbitrator, the appointing party shall, without delay, appoint a 
replacement arbitrator pursuant to the procedures set forth in 
paragraph (b) of this section.
    (2) If the incapacitated arbitrator was the lead arbitrator, a 
replacement lead arbitrator shall be appointed pursuant to the 
procedures set forth in paragraph (c) of this section.
    (f) Arbitrator duties. In an arbitration under this subpart, the 
arbitrators shall perform their duties with diligence, good faith, and 
in a manner consistent with the requirements of impartiality and 
independence.


Sec.  1108.27   Arbitration procedures.

    (a) Appointment of arbitration panel. Within two business days 
after all three arbitrators are selected, the parties shall appoint the 
arbitration panel in writing. A copy of the written appointment should 
be submitted to the Director of the Board's Office of Economics. The 
Director shall promptly provide the arbitrators with the 
confidentiality agreements that are required under Sec.  1244.9(b)(4) 
of this chapter to review confidential Waybill Sample data.
    (b) Commencement of arbitration process; arbitration agreement. 
Within two business days after the arbitration panel is appointed, the 
lead arbitrator shall commence the arbitration process in writing. 
Shortly after commencement, the parties, together with the panel of 
arbitrators, shall create a written arbitration agreement, which at a 
minimum will state with specificity the issues to be arbitrated and the 
corresponding monetary award cap to which the parties have agreed. The 
arbitration agreement shall also incorporate by reference the rules of 
this subpart. The agreement may also contain other mutually agreed upon 
provisions.
    (c) Expedited timetables--(1) Discovery phase. The parties shall 
have 45 days from the written commencement of arbitration by the lead 
arbitrator to complete discovery. The arbitration panel may extend the 
discovery phase upon an individual party's request, but such extension 
shall not operate to extend the overall duration of the evidentiary 
phase under paragraph (c)(2) of this section, unless separately agreed 
to pursuant to paragraph (c)(2) of this section.
    (2) Evidentiary phase. The evidentiary phase consists of the 45-day 
discovery phase described in paragraph (c)(1) of this section and an 
additional 45 days for the submission of pleadings or evidence, based 
on the procedural schedule adopted by the lead arbitrator, for a total 
duration of 90 days. The evidentiary phase (including the discovery 
phase) shall begin on the written commencement of the arbitration 
process under paragraph (b) of this section. The parties may mutually 
agree to extend the entire evidentiary phase or a party may 
unilaterally request an extension from the arbitration panel.
    (3) Decision. The unredacted arbitration decision, as well as any 
redacted version(s) of the arbitration decision as required by Sec.  
1108.29(a)(2), shall be served on the parties within 30 days from the 
end of the evidentiary phase.
    (d) Limited discovery. Discovery under this subpart shall be 
limited to 20 written document requests and 5 interrogatories. 
Depositions shall not be permitted.
    (e) Evidentiary guidelines--(1) Principles of due process. The lead 
arbitrator shall adopt rules that comply with the principles of due 
process, including but not limited to, allowing the defendant carrier a 
fair opportunity to respond to the shipper/complainant's case-in-chief.
    (2) Inadmissible evidence. The following evidence shall be 
inadmissible in an arbitration under this part:
    (i) On the issue of market dominance, any evidence that would be 
inadmissible before the Board; and
    (ii) Any non-precedential decisions, including prior arbitrations.
    (f) Confidentiality agreement. All arbitrations under this subpart 
shall be governed by a confidentiality agreement, unless the parties 
agree otherwise. With the exception of the Waybill Sample provided 
pursuant to paragraph (g) of this section, the terms of the 
confidentiality agreement shall apply to all aspects of an arbitration 
under this part, including but not limited to discovery, party filings, 
and the arbitration decision.
    (g) Waybill Sample. (1) The Board's Office of Economics shall 
provide unmasked confidential Waybill Sample data to each party to the 
arbitration proceeding within seven days of the filing of a copy Joint 
Notice of Intent to Arbitrate with the Director and accompanying letter 
containing the relevant five-digit Standard Transportation Commodity 
Code information. Such data to be provided by the Office of Economics 
shall be limited to only the following data:
    (i) The most recent four years;
    (ii) Movements with revenue to variable cost (R/VC) ratio above 
180%;
    (iii) Movements on defendant carrier(s); and
    (iv) Movements with same five-digit Standard Transportation 
Commodity Code as the challenged movements.
    (2) Parties may request additional Waybill Sample data pursuant to 
Sec.  1244.9(b)(4) of this chapter.


Sec.  1108.28   Relief.

    (a) Relief available. Subject to the relief limits set forth in 
paragraph (b) of this section, the arbitration panel under this subpart 
may grant relief in the form of monetary damages or a rate 
prescription.
    (b) Relief limits. Any relief awarded by the arbitration panel 
under this subpart shall not exceed $4 million (as indexed annually for 
inflation using the Consumer Price Index and a 2020 base year) over two 
years, inclusive of prospective rate relief, reparations for past 
overcharges, or any combination thereof, unless otherwise agreed to by 
the parties. Reparations or prescriptions may not be set below 180% of 
variable cost, as determined by unadjusted Uniform Railroad Costing 
System (URCS).
    (c) Agreement to a different relief cap. For an individual dispute, 
parties may agree by mutual written consent to arbitrate an amount 
above or below the monetary cap in paragraph (b) of this section, up to 
$25 million, or for shorter or longer than two years, but no longer 
than 5 years. Parties should inform the Board of such agreement in the 
confidential summary filed at the

[[Page 67616]]

conclusion of the arbitration, as required by Sec.  1108.29(e)(1).
    (d) Relief not available. No injunctive relief shall be available 
in arbitration proceedings under this part.


Sec.  1108.29   Decisions.

    (a) Technical requirements--(1) Findings of fact and conclusions of 
law. An arbitration decision under this subpart shall be in writing and 
shall contain findings of fact and conclusions of law.
    (2) Compliance with confidentiality agreement. The unredacted 
arbitration decision served on the parties in accordance with Sec.  
1108.27(c)(3) shall comply with the confidentiality agreement described 
in Sec.  1108.27(f). As applicable, the arbitration panel shall also 
provide the parties with a redacted version(s) of the arbitration 
decision that redacts or omits confidential and/or highly confidential 
information as required by the governing confidentiality agreement.
    (b) Substantive requirements. The arbitration panel under this 
subpart shall decide the issues of both market dominance and maximum 
lawful rate.
    (1) Market dominance. (i) The arbitration panel shall determine if 
the railroad whose rate is the subject of the arbitration has market 
dominance based on evidence submitted by the parties, unless paragraph 
(b)(1)(vi) of this section applies.
    (ii) Subject to Sec.  1108.27(e)(2), in determining the issue of 
market dominance, the arbitration panel under this subpart shall 
follow, at the complainant's discretion, either the streamlined market 
dominance test or the non-streamlined market dominance test.
    (iii) The arbitration panel shall issue its decision on market 
dominance as part of its final arbitration decision.
    (iv) The arbitration panel shall not consider evidence of product 
and geographic competition when deciding market dominance.
    (v) The arbitration panel shall not consider evidence on the Limit 
Price Test when deciding market dominance.
    (vi) If a carrier concedes that it possesses market dominance, the 
arbitration panel need not make a determination on market dominance and 
need only address the maximum lawful rate in the arbitration decision. 
Additionally, the parties may jointly request that the Board determine 
market dominance prior to initiating arbitration under this part.
    (2) Maximum lawful rate. Subject to the requirements on 
inadmissible evidence in Sec.  1108.27(e)(2), in determining the issue 
of maximum lawful rate, the arbitration panel under this subpart shall 
consider the Board's methodologies for setting maximum lawful rates, 
giving due consideration to the need for differential pricing to permit 
a rail carrier to collect adequate revenues (as determined under 49 
U.S.C. 10704(a)(2)). The arbitration panel may otherwise base its 
decision on the Board's existing rate review methodologies, revised 
versions of those methodologies, new methodologies, or market-based 
factors, including: Rate levels on comparative traffic; market factors 
for similar movements of the same commodity; and overall costs of 
providing the rail service. The arbitration panel's decision must be 
consistent with sound principles of rail regulation economics.
    (3) Agency precedent. Decisions rendered by the arbitration panel 
under this subpart may be guided by, but need not be bound by, agency 
precedent.
    (c) Confidentiality of arbitration decision. The arbitration 
decision under this part, whether redacted or unredacted, shall be 
confidential, subject to the limitations set forth in Sec.  1108.31(d).
    (1) No copy of the arbitration decision shall be served on the 
Board except as is required under Sec.  1108.31(a)(1).
    (2) The arbitrators and parties shall have a duty to maintain the 
confidentiality of the arbitration decision, whether redacted or 
unredacted, and shall not disclose any details of the arbitration 
decision unless, and only to the extent, required by law.
    (d) Arbitration decisions are binding. (1) By arbitrating pursuant 
to the procedures under this part, each party to the arbitration agrees 
that the decision and award of the arbitration panel shall be binding 
and judicially enforceable in any court of appropriate jurisdiction, 
subject to the rights of appeal provided in Sec.  1108.31.
    (2) An arbitration decision under this subpart shall preclude the 
shipper(s)/complainant(s) from filing any rate complaint for the 
movements at issue in the arbitration or instituting any other 
proceeding regarding the rates for the movements at issue in the 
arbitration, with the exception of appeals under Sec.  1108.31. This 
preclusion shall last until the later of:
    (i) Two years after the Joint Notice of Intent to Arbitrate; or
    (ii) The expiration of the term of any prescription imposed by the 
arbitration decision.
    (3) The preclusion will cease if the carrier increases the rate 
either: After a shipper/complainant is unsuccessful in arbitration or 
after a shipper/complainant has been awarded a prescription and the 
prescription has expired.
    (e) Confidential summaries of arbitrations; quarterly reports. To 
permit the STB to monitor the Small Rate Case Arbitration Program, the 
parties shall submit a confidential summary of the arbitration to the 
Board's Office of Public Assistance, Governmental Affairs, and 
Compliance (OPAGAC) within 14 days after either the arbitration 
decision is issued, the dispute settles, or the dispute is withdrawn. A 
confidential summary must be filed for any instance in which a shipper/
complainant has submitted to the participating carrier a notice of 
intent to arbitrate, even if the parties did not reach the arbitration 
phase. The confidential summary itself shall not be published. OPAGAC 
will provide copies of the confidential summaries to the Board Members 
and other appropriate Board employees.
    (1) Contents of confidential summary. The confidential summary 
shall provide only the following information to the Board with regard 
to the dispute arbitrated under this part:
    (i) Geographic region of the movement(s) at issue;
    (ii) Commodities shipped;
    (iii) Number of calendar days from the commencement of the 
arbitration proceeding to the conclusion of the arbitration;
    (iv) Resolution of the arbitration, limited to the following 
descriptions: Settled, withdrawn, dismissed on market dominance, 
challenged rate(s) found unreasonable/reasonable; and
    (v) Any agreement to a different relief cap or period than set 
forth in Sec.  1108.28(b).
    (2) STB quarterly reports on Small Rate Case Arbitration Program. 
The STB may publish public quarterly reports on the final disposition 
of arbitrated rate disputes under the Small Rate Case Arbitration 
Program.
    (i) If issued, the Board's quarterly reports on the Small Rate Case 
Arbitration Program shall disclose only the five categories of 
information listed in paragraph (e)(1) of this section. The parties to 
the arbitration who filed the confidential summary shall not be 
disclosed.
    (ii) If issued, the Board's quarterly reports on the Small Rate 
Case Arbitration Program shall be posted on the Board's website.


Sec.  1108.30   No precedent.

    Arbitration decisions under this subpart shall have no precedential 
value, and their outcomes and reasoning may not be submitted into 
evidence or

[[Page 67617]]

argued in subsequent arbitration proceedings conducted under this 
subpart or in any Board proceeding, except an appeal of the arbitration 
decision under Sec.  1108.31.


Sec.  1108.31   Enforcement and appeals.

    (a) Appeal to the Board--(1) Petition to vacate or modify 
arbitration decision. A party appealing the arbitration decision shall 
file under seal a petition to modify or vacate the arbitration 
decision, setting forth its full argument for vacating or modifying the 
decision. The petition to vacate or modify the arbitration decision 
must be filed within 20 days from the date on which the arbitration 
decision was served on the parties. The party appealing must include 
both a redacted and unredacted copy of the arbitration decision.
    (2) Replies. Replies to the petition shall be filed under seal 
within 20 days of the filing of the petition to vacate or modify with 
the Board. Replies shall be subject to the page limitations of Sec.  
1115.2(d) of this chapter.
    (3) Confidentiality of filings; public docket. All submissions for 
appeals of the arbitration decision to the Board shall be filed under 
seal. After the party has submitted a filing to the Board, the party 
shall prepare a public version of the filing with confidential 
commercial information redacted and provide the opposing party an 
opportunity to request further redactions. After consulting with the 
opposing party on redactions, the party shall file the public version 
with the Board for posting on its website.
    (4) Page limitations. The petition shall be subject to the page 
limitations of Sec.  1115.2(d) of this chapter.
    (5) Service. Copies of the petition to vacate or modify and replies 
shall be served upon all parties in accordance with the Board's rules 
at part 1104 of this chapter. The appealing party shall also serve a 
copy of its petition to vacate or modify upon the arbitration panel.
    (b) Board's standard of review. The Board's standard of review of 
arbitration decisions under this subpart shall be limited to 
determining only whether:
    (1) The decision is consistent with sound principles of rail 
regulation economics;
    (2) A clear abuse of arbitral authority or discretion occurred;
    (3) The decision directly contravenes statutory authority; or
    (4) The award limitation was violated.
    (c) Relief available on appeal to the Board. Subject to the Board's 
limited standard of review as set forth in paragraph (b) of this 
section, the Board may affirm, modify, or vacate an arbitration award 
in whole or in part, with any modifications subject to the relief 
limits set forth in Sec.  1108.28.
    (d) Confidentiality of Board's decision on appeal--(1) Scope of 
confidentiality. The Board's decision will be public but shall maintain 
the confidentiality of the arbitration decision to the maximum extent 
possible, giving particular attention to avoiding the disclosure of 
information that would have an effect or impact on the marketplace, 
including the specific relief awarded by the arbitration panel, if any, 
or by the Board; or the origin-destination pair(s) involved in the 
arbitration.
    (2) Opportunity to propose redactions to the Board decision. Before 
publishing the Board's decision, the Board shall serve only the parties 
with a confidential version of its decision in order to provide the 
parties with an opportunity to file confidential requests for redaction 
of the Board's decision.
    (i) A request for redaction may be filed under seal within 5 days 
after the date on which the Board serves the parties with the 
confidential version of its decision.
    (ii) The Board will publish its decision(s) on any requests for 
redaction in a way that maintains the confidentiality of any 
information the Board determines should be redacted.
    (e) Reviewability of Board decision. Board decisions affirming, 
vacating, or modifying arbitration awards under this subpart are 
reviewable under the Hobbs Act, 28 U.S.C. 2321 and 2342.
    (f) Appeals subject to the Federal Arbitration Act. Nothing in this 
subpart shall prevent parties to arbitration from seeking judicial 
review of arbitration awards in a court of appropriate jurisdiction 
pursuant to the Federal Arbitration Act, 9 U.S.C. 9-13, in lieu of 
seeking Board review.
    (g) Staying arbitration decision. The timely filing of a petition 
with the Board to modify or vacate the arbitration decision will not 
automatically stay the effect of the arbitration decision. A stay may 
be requested under Sec.  1115.3(f) of this chapter.
    (h) Enforcement. A party seeking to enforce an arbitration decision 
under this subpart must petition a court of appropriate jurisdiction 
under the Federal Arbitration Act, 9 U.S.C. 9-13.


Sec.  1108.32   Assessment of the Small Rate Case Arbitration Program.

    The Board will conduct an assessment of the Small Rate Case 
Arbitration Program to determine if the program is providing an 
effective means of resolving rate disputes for small cases. The Board's 
assessment will occur upon the completion of a reasonable number of 
arbitration proceedings such that the Board can conduct a comprehensive 
assessment, though not later than three years after start of the 
program. In conducting this assessment, the Board will obtain feedback 
from parties that have used the arbitration process. Depending on the 
outcome of such review, the Board may determine that the arbitration 
program will continue or that the arbitration program should be 
terminated or modified at that time.


Sec.  1108.33   Exemption from Final Offer Rate Review.

    Railroads that opt into the arbitration program under Sec.  
1108.23(a) will be exempt from having their rates challenged under 
Final Offer Rate Review (if in effect). The exemption will terminate 
upon the effective date of the participating carrier no longer 
participating in the arbitration program under this part, including, 
due to withdrawal from the arbitration program, as set forth in Sec.  
1108.23(c), or termination by the Board of the arbitration program 
following an assessment under Sec.  1108.32. Upon termination of the 
exemption, parties are permitted to challenge a carrier's rate using 
Final Offer Rate Review (if in effect).

PART 1115--APPELLATE PROCEDURES

0
8. The authority citation for part 1115 continues to read as follows:

    Authority:  5 U.S.C. 559; 49 U.S.C. 1321; 49 U.S.C. 11708.

0
9. Revise the third sentence of Sec.  1115.8 to read as follows:


Sec.  1115.8   Petitions to review arbitration decisions.

    * * * For arbitrations authorized under part 1108, subparts A and 
B, of this chapter, the Board's standard of review of arbitration 
decisions will be narrow, and relief will only be granted on grounds 
that the decision is inconsistent with sound principles of rail 
regulation economics, a clear abuse of arbitral authority or discretion 
occurred, the decision directly contravenes statutory authority, or the 
award limitation was violated. * * *

PART 1244--WAYBILL ANALYSIS OF TRANSPORTATION OF PROPERTY--
RAILROADS

0
10. The authority citation for part 1244 continues to read as follows:

    Authority:  49 U.S.C. 1321, 10707, 11144, 11145.

0
11. Revise Sec.  1244.9(b)(4) to read as follows:

[[Page 67618]]

Sec.  1244.9   Procedures for the release of waybill data.

* * * * *
    (b) * * *
    (4) Transportation practitioners, consulting firms, and law firms--
specific proceedings. Transportation practitioners, consulting firms, 
and law firms may use data from the STB Waybill Sample in preparing 
verified statements to be submitted in formal proceedings before the 
STB and/or State Boards (Board), or in preparing documents to be 
submitted in arbitration matters under part 1108, subpart B, of this 
chapter, subject to the following requirements:
    (i) The STB Waybill Sample is the only single source of the data or 
obtaining the data from other sources is burdensome or costly, and the 
data is relevant to issues in a pending formal proceeding before the 
Board or in arbitration matters under part 1108, subpart B, of this 
chapter (when seeking data beyond the automatic waybill data release 
under Sec.  1108.27(g) of this chapter).
    (ii) The requestor submits to the STB a written waybill request 
that complies with paragraph (e) of this section or is part of the 
automatic waybill data release under Sec.  1108.27(g) of this chapter 
for use in arbitrations pursuant to part 1108, subpart B, of this 
chapter.
    (iii) All waybill data must be returned to the STB, and the 
practitioner or firm must not keep any copies.
    (iv) A transportation practitioner, consulting firm, or law firm 
must submit any evidence drawn from the STB Waybill Sample only to the 
Board or to an arbitration panel impaneled under part 1108, subpart B, 
of this chapter, unless the evidence is aggregated to the level of at 
least three shippers and will prevent the identification of an 
individual railroad. Nonaggregated evidence submitted to the Board will 
be made part of the public record only if the Board finds that it does 
not reveal competitively sensitive data. However, evidence found to be 
sensitive may be provided to counsel or other independent 
representatives for other parties subject to the usual and customary 
protective order issued by the Board or appropriate authorized 
official.
    (v) When waybill data is provided for use in a formal Board 
proceeding, a practitioner or firm must sign a confidentiality 
agreement with the STB agreeing to the restrictions specified in 
paragraphs (b)(4)(i) through (iv) of this section before any data will 
be released. This agreement will govern access and use of the released 
data for a period of one year from the date the agreement is signed by 
the user. If the data is required for an additional period of time 
because a proceeding is still pending before the Board or a court, the 
practitioner or firm must sign a new confidentiality agreement covering 
the data needed for each additional year the proceeding is opened.
    (vi) When waybill data is provided for use in arbitrations pursuant 
to part 1108, subpart B, of this chapter, the transportation 
practitioners, consulting firms, or law firms representing parties to 
the arbitration and each arbitrator must sign a confidentiality 
agreement with the STB agreeing to the restrictions specified in 
paragraphs (b)(4)(i) through (iv) of this section before any data will 
be released. The agreement with practitioners and firms will govern 
access and use of the released data for a period of one year from the 
date the agreement is signed by the user. If the data is required for 
an additional period of time because an arbitration or appeal of an 
arbitration is still pending before the Board or a court, the 
practitioner or firm must sign a new confidentiality agreement covering 
the data needed for each additional year the arbitration or appeal is 
pending. The agreement with each arbitrator will allow that arbitrator 
to review any evidence that includes confidential waybill data in a 
particular arbitration matter.
* * * * *

    Note:  The following appendices will not appear in the Code of 
Federal Regulations.

Appendix A--Model Confidentiality Agreement for Small Rate Case 
Arbitration Program Proceedings

ARBITRATION NO.___

[NAME OF COMPLAINANT] v. [NAME OF DEFENDANT RAIL CARRIER]

    1. Pursuant to 49 CFR 1108.27(f), all information, data, 
documents, or other material (hereinafter collectively referred to 
as ``material'') that is produced in discovery to another party to 
this proceeding or submitted in pleadings will be designated 
``CONFIDENTIAL,'' and such material must be treated as confidential. 
Such material, any copies, and any data or notes derived therefrom:
    a. Shall be used solely for the purpose of this proceeding and 
any STB or judicial review or enforcement proceeding arising 
herefrom, and not for any other business, commercial, or competitive 
purpose.
    b. May be disclosed only to employees, counsel, or agents of the 
party requesting such material who have a need to know, handle, or 
review the material for purposes of this proceeding and any STB or 
judicial review or enforcement proceeding arising herefrom, and only 
where such employee, counsel, or agent has been given and has read a 
copy of this Confidentiality Agreement, agrees to be bound by its 
terms, and executes the attached Undertaking for Confidential 
Material prior to receiving access to such materials.
    c. Must be destroyed by the requesting party, its employees, 
counsel, and agents at the completion of this proceeding and any STB 
or judicial review or enforcement proceeding arising herefrom. 
However, counsel and consultants for a party are permitted to retain 
file copies of all pleadings which they were authorized to review 
under this Confidentiality Agreement, including under Paragraph 10.
    d. Shall, in order to be kept confidential, be filed with the 
arbitration panel only in a package clearly marked on the outside 
``Confidential Materials Subject to Confidentiality Agreement.''
    2. Any party producing material in discovery to another party to 
this proceeding, or submitting material in pleadings, may in good 
faith designate and stamp particular material, such as material 
containing shipper-specific rate or cost data, or other 
competitively sensitive information, as ``HIGHLY CONFIDENTIAL.'' If 
any party wishes to challenge such designation, the party may bring 
such matter to the attention of the arbitration panel. Material that 
is so designated may be disclosed only to outside counsel in this 
arbitration, transportation practitioners, and those individuals 
working with or assisting such counsel or practitioners who are not 
regular employees of the party represented, who have a need to know, 
handle, or review the materials for purposes of this proceeding and 
any STB or judicial review or enforcement proceeding arising 
herefrom, provided that such individuals have been given and have 
read a copy of this Confidentiality Agreement, agree to be bound by 
its terms, and execute the attached Undertaking for Highly 
Confidential Material prior to receiving access to such materials. 
Material designated as ``HIGHLY CONFIDENTIAL'' and produced in 
discovery under this provision shall be subject to all of the other 
provisions of this Confidentiality Agreement, including without 
limitation Paragraph 1.
    3. In the event that a party produces material which should have 
been designated as ``CONFIDENTIAL'' or ``HIGHLY CONFIDENTIAL'' and 
inadvertently fails to designate the material as ``CONFIDENTIAL'' or 
``HIGHLY CONFIDENTIAL,'' the producing party may notify the other 
party in writing within 5 days of discovery of its inadvertent 
failure to make the ``CONFIDENTIAL'' or ``HIGHLY CONFIDENTIAL'' 
designation. The party who received the material without the 
``CONFIDENTIAL'' or ``HIGHLY CONFIDENTIAL'' designation will agree 
to treat the material as highly confidential, unless that party 
wishes to challenge that designation as set forth in Paragraph 2.
    4. In the event that a party inadvertently produces material 
that is protected by the attorney-client privilege, work product 
doctrine, or any other privilege, the producing party may make a 
written request within a reasonable time after the producing party 
discovers the inadvertent disclosure that the other party return the 
inadvertently produced privileged document. The party

[[Page 67619]]

who received the inadvertently produced document will either return 
the document to the producing party or destroy the document 
immediately upon receipt of the written request, as directed by the 
producing party. By returning or destroying the document, the 
receiving party is not conceding that the document is privileged and 
is not waiving its right to later challenge the substantive 
privilege claim, provided that it may not challenge the privilege 
claim by arguing that the inadvertent production waived the 
privilege.
    5. If any party intends to use ``HIGHLY CONFIDENTIAL'' material 
at oral arguments or presentations in this arbitration, or in any 
STB or judicial review or enforcement proceeding arising herefrom, 
the party so intending shall submit any proposed exhibits or other 
documents setting forth or revealing such ``HIGHLY CONFIDENTIAL'' 
material to the arbitration panel, the Board, or the court, as 
appropriate, with a written request that the arbitration panel, 
Board, or court: (a) Restrict attendance at the hearings during 
discussion of such ``HIGHLY CONFIDENTIAL'' material; and (b) 
restrict access to the portion of the record or briefs reflecting 
discussion of such ``HIGHLY CONFIDENTIAL'' material in accordance 
with the terms of this Confidentiality Agreement.
    6. Except for this proceeding, the parties agree that if a party 
is required by law or order of a governmental or judicial body to 
release ``CONFIDENTIAL'' or ``HIGHLY CONFIDENTIAL'' material 
produced by the other party or copies or notes thereof as to which 
it obtained access pursuant to this Confidentiality Agreement, the 
party so required shall notify the producing party in writing within 
3 business days of the determination that such material is to be 
released, or within 3 business days prior to such release, whichever 
is soonest, to permit the producing party the opportunity to contest 
the release.
    7. Information that is publicly available or obtained outside of 
this proceeding from a person with a right to disclose it publicly 
shall not be subject to this Confidentiality Agreement even if the 
same information is produced and designated as ``CONFIDENTIAL'' or 
``HIGHLY CONFIDENTIAL'' in this proceeding.
    8. Each party has a right to view its own data, information and 
documentation (i.e., information originally generated or compiled by 
or for that party), even if that data, information and documentation 
has been designated as ``HIGHLY CONFIDENTIAL'' by a producing party, 
without securing prior permission from the producing party. If a 
party (the ``submitting party'') submits and serves upon the other 
party (the ``reviewing party'') a written submission or evidence 
containing the ``HIGHLY CONFIDENTIAL'' material of the submitting 
party, the submitting party shall also contemporaneously provide to 
outside counsel for the reviewing party a ``CONFIDENTIAL'' version 
of such filing that redacts any ``HIGHLY CONFIDENTIAL'' information 
of the filing party that cannot be viewed by the in-house personnel 
of the reviewing party. Such Confidential Version may be provided in 
a .pdf or other electronic format.
    9. At the conclusion of the arbitration, the parties shall make 
no public statements or representations about the arbitration, 
except for the confidential summary provided to the STB pursuant to 
49 CFR 1108.29(e).
    10. Appeals of the arbitration decision to the STB shall be 
subject to the confidentiality provisions of 49 CFR 1108.31(a) and 
(d). Parties may designate portions of their pleadings in such a 
proceeding to be CONFIDENTIAL or HIGHLY CONFIDENTIAL, pursuant to 
the provisions of Paragraph 2.

Appendix B--Information Collection Under the Paperwork Reduction Act

    As part of its continuing effort to reduce paperwork burdens, 
and as required by the Paperwork Reduction Act of 1995 (PRA), 44 
U.S.C. 3501-3521, the Surface Transportation Board (Board) gives 
notice that it is requesting from the Office of Management and 
Budget (OMB) approval for the new information collection, 
Arbitration Program for Small Rate Cases, encompassing (a) 
Arbitration ``Opt-In'' Notices, (b) Initial Notices of Intent to 
Arbitrate, (c) Joint Notices to Arbitrate, (d) Post-Arbitration 
Summaries, and (e) Appeals of Arbitrators' Decision, as described in 
the Collection below. The proposed new collection necessitated by 
this notice of proposed rulemaking (NPRM) is expected to provide 
parties with additional options for resolution of smaller rail rate 
disputes and will further the Board's policy favoring the use of 
mediation and arbitration procedures.

Description of Collection

    Title: Arbitration Program for Small Rate Cases.
    OMB Control Number: 2140-XXXX.
    STB Form Number: None.
    Type of Review: New Collection.
    Respondents: Parties seeking to arbitrate certain small rate 
case matters under a program administered by the Board.
    Number of Respondents: 30.
    Estimated Time per Response:

                      Estimated Hours per Response
------------------------------------------------------------------------
                                                             Number of
                     Type of filing                          hours per
                                                             response
------------------------------------------------------------------------
``Opt-In'' Notices......................................               1
Initial Notices.........................................               1
Joint Notices...........................................               2
Post-Arbitration Summaries..............................               3
Appeals of Arbitrators' Decision........................              25
------------------------------------------------------------------------

    Frequency: On occasion.

              Estimated Average Annual Number of Responses
------------------------------------------------------------------------
                                                             Number of
                     Type of filing                          responses
------------------------------------------------------------------------
``Opt-In'' Notices*.....................................               3
Initial Notices.........................................              21
Joint Notices...........................................              18
Post-Arbitration Summaries..............................              21
Appeals of Arbitrators' Decision........................               6
------------------------------------------------------------------------
* Each of the seven ``Opt-In'' Notices have a five-year term and have
  been averaged over three years and rounded up.

    Total Burden Hours (annually including all respondents): 273 
(sum of estimated hours per response x number of annual responses 
for each type of filing).

                                            Total Annual Burden Hours
----------------------------------------------------------------------------------------------------------------
                                                                     Hours per     Annual number   Total annual
                         Type of filing                              response       of filings     burden hours
----------------------------------------------------------------------------------------------------------------
``Opt-In'' Notices \*\..........................................               1               3               3
Initial Notices.................................................               1              21              21
Joint Notices...................................................               2              18              36
Post-Arbitration Summaries......................................               3              21              63
Appeals of Arbitrators' Decision................................              25               6             150
                                                                 -----------------------------------------------
    Total annual burden hours...................................  ..............  ..............             273
----------------------------------------------------------------------------------------------------------------
* Each of the seven ``Opt-In'' Notices have a five-year term and have been averaged over three years and rounded
  up.

    Total ``Non-hour Burden'' Cost: There are no non-hourly burden 
costs for this collection. The collections may be filed 
electronically.
    Needs and Uses: Under the Interstate Commerce Act, as amended by 
the ICC

[[Page 67620]]

Termination Act of 1995, the Board is responsible for the economic 
regulation of common carrier rail transportation. Under the proposed 
49 CFR part 1108, subpart B, and as described in detail above, Class 
I (large) rail carriers subject to the Board's jurisdiction may 
agree to participate in the Board's arbitration program by filing a 
notice with the Board to ``opt in'' to arbitration. These ``Opt-In'' 
Notices have a five-year term, and, once a rail carrier is 
participating in the Board's arbitration program, it may withdraw 
from participation only if there is a material change in the law 
regarding how the railroad rates are challenged. To initiate an 
actual arbitration over a rate dispute, a shipper may submit an 
Initial Notice of Intent to Arbitrate to the railroad stating that 
it wishes to invoke the arbitration process. The parties may then 
explore mediation. If the mediation is waived or is unsuccessful, 
the parties may send a Joint Notice to Arbitrate to the Board's 
Office of Public Assistance, Governmental Affairs, and Compliance, 
alerting that office that they intend to proceed to the arbitration 
phase of the Board's proposed small rate case arbitration program, 
upon which time certain waybill data may be available to them.
    Upon conclusion of arbitration, the arbitrator's decision is 
confidential and not filed with the Board. The parties are required, 
however, to provide a post-arbitration summary to the Board within 
14 days after the arbitrators' decision. Finally, the parties may 
appeal an arbitration decision, requesting that the Board vacate or 
modify the arbitrators' decision (at which time, a confidential 
version of the arbitration decision would be provided to the Board). 
These are the steps that provide for the collection of information 
under the PRA.

[FR Doc. 2021-25169 Filed 11-19-21; 2:00 pm]
BILLING CODE 4915-01-P