[Federal Register Volume 61, Number 57 (Friday, March 22, 1996)]
[Proposed Rules]
[Pages 11799-11802]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-6986]
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DEPARTMENT OF TRANSPORTATION
Surface Transportation Board
49 CFR Parts 1000 through 1149
[STB Ex Parte No. 527]
Expedited Procedures for Processing Rail Rate Reasonableness,
Exemption and Revocation Proceedings
AGENCY: Surface Transportation Board, DOT.
ACTION: Advance notice of proposed rulemaking.
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SUMMARY: Under new 49 U.S.C. 10704(d), enacted as part of section
102(a) of the ICC Termination Act of 1995 (ICCTA), the Surface
Transportation Board (Board) is required to establish procedures to
expedite the handling of challenges to the reasonableness of railroad
rates and of proceedings involving the granting or revocation of
railroad exemptions. Such procedures are to be promulgated by October
1, 1996. The Board solicits comments on how the existing regulations at
49 CFR Parts 1000 through 1149 can be modified to expedite the handling
of rate reasonableness and exemption/revocation proceedings.
DATES: Comments are due on May 6, 1996.
ADDRESSES: Send comments (an original and 10 copies) referring to STB
Ex Parte No. 527 to: Surface Transportation Board, Office of the
Secretary, Case Control Branch, 1201 Constitution Ave., N.W.,
Washington, DC 20423-0001. Parties are encouraged to submit all
pleadings and attachments on a 3.5-inch diskette in WordPerfect 5.1
format.
FOR FURTHER INFORMATION CONTACT: Thomas J. Stilling, (202) 927-7312.
[TDD for the hearing impaired: (202) 927-5721.]
SUPPLEMENTARY INFORMATION: New 49 U.S.C. 10704(d), which was enacted as
part of section 102(a) of the ICC Termination Act of 1995 (ICCTA), Pub.
L. No. 104-88, 109 Stat. 803, provides that:
Within 9 months after the effective date of the ICC Termination
Act of 1995, the Board shall establish procedures to ensure
expeditious handling of challenges to the reasonableness of railroad
rates. The procedures shall include appropriate measures for
avoiding delay in the discovery and evidentiary phases of such
proceedings and exemption and revocation proceedings, including
appropriate sanctions for such delay, and for ensuring prompt
disposition of motions and interlocutory administrative appeals.
[[Page 11800]]
New section 10704(d) is one of several specific provisions designed
to implement the new rail transportation policy (RTP) ``to provide for
the expeditious handling and resolution of all [rail related]
proceedings.'' New 49 U.S.C. 10101(15). Other such provisions adopted
by the ICCTA include new 49 U.S.C. 10704(c), which requires the Board
to decide the reasonableness of a challenged rate within 9 months after
the close of the record if the determination is based upon a stand-
alone cost presentation,1 and within 6 months if it is based upon
a simplified methodology.2 In addition, any proceeding to grant or
revoke an exemption ``shall be completed within 9 months after it is
begun.'' New 49 U.S.C. 10502 (b) and (d).
\1\ See Coal Rate Guidelines, Nationwide, 1 I.C.C.2d 520 (1985),
aff'd sub nom. Consolidated Rail Corp. v. United States, 812 F.2d
1444 (3d Cir. 1987) (adopting constrained market pricing, including
stand-alone cost, as a test for maximum reasonableness of coal
rates).
\2\ New 49 U.S.C. 10701(d)(3) requires the Board ``to establish
[within 1 year] a simplified and expedited method for determining
the reasonableness of challenged rail rates in those cases in which
a full stand-alone cost presentation is too costly.'' In Rate
Guidelines--Non-Coal Proceedings, Ex Parte No. 347 (Sub-No. 2) (ICC
Dec. 1, 1995), 60 FR 62256 (1995), simplified guidelines have been
proposed for public comment.
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These various provisions were included in the ICCTA, in part, in
response to concerns raised by parties that litigate before the Board.
We hope, and expect, that the parties that raised these concerns will
now participate in a constructive way to assist us in establishing
appropriate procedures to expedite cases. Accordingly, we institute
this proceeding to examine ways in which we can comply with the new RTP
and, in particular, the specific requirements of new section
10704(d).3
\3\ In New Procedures in Rail Exemption Revocation Proceedings,
Ex Parte No. 400 (Sub-No. 4) (ICC Apr. 28, 1995), the Interstate
Commerce Commission (ICC) solicited comments on a proposal by the
Railway Labor Executives' Association to establish formal procedural
rules to govern petitions to revoke exemptions. In a separate
decision served today, that proceeding is being discontinued because
the concerns that were to be addressed there can and should be
subsumed into this broader proceeding. The comments filed in that
proceeding will be incorporated into the record in this proceeding
and need not be refiled.
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New section 10704(d) addresses the need to expedite two distinct
types of proceedings--rate reasonableness and exemption/revocation
cases. We note that, whereas the decisional time limits in rate
reasonableness cases run from the date on which the administrative
record is closed, in exemption/revocation cases they run from the date
on which the proceeding is instituted. Therefore, any delay in the
record-building stage of an exemption/revocation proceeding caused by a
protracted discovery or evidentiary process can hinder a party's
ability to effectively present its case within the allotted time. For
that reason, special discovery and evidentiary procedures might be
needed for exemption/revocation proceedings.
The existing regulations that govern the filing and processing of
rate reasonableness and exemption/revocation cases are contained in the
Rules of Practice at 49 CFR 1000 through 1129 (Rules of General
Applicability), and at 49 CFR 1130 through 1149 (Rate Procedures).
These regulations provide a starting point in the search for new ways
of expediting cases. We recognize that some provisions of the existing
regulations have been rendered obsolete by the ICCTA and are now in the
process of being eliminated. Moreover, certain provisions will require
minor conforming changes, such as updating references to statutory
provisions or replacing the reference to the ICC with the Surface
Transportation Board. Those changes, which do not materially affect the
way in which a case is argued or a decision reached, can be handled
ministerially without comment from the public. In this proceeding, by
contrast, we are focusing on those procedures (both codified and
uncodified) that have a direct and significant impact on the time
devoted to developing the administrative record and the adequacy of
that record.
Discovery
In any proceeding in which discovery is needed to develop an
adequate evidentiary record, the discovery process can have a
substantial impact on how quickly the case proceeds. We recognize that
the evidentiary process in the larger rate reasonableness cases where
stand-alone cost is used--such as challenges to the rate charged for
large volume movements of coal--can involve extensive discovery. In
these cases, discovery disputes often arise as each party attempts to
acquire the data needed to present its case fully. The number of such
disputes and how they are handled by the parties (and by the decisional
body) can be a major factor in protracting these proceedings.
In exemption/revocation proceedings, the development of an adequate
factual record can also be a substantial undertaking. With the new
statutory deadlines, it is imperative that the discovery process be
structured so as to enable discovery to be conducted fully and
completed quickly.4 It is equally important that discovery
procedures not be abused so as to limit an opposing party's ability to
effectively participate in a proceeding within the time allotted.
\4\ In some cases, exemptions have been granted based on the
evidence filed with the petition and without receiving comment from
other interested parties. In such cases, it may be appropriate to
develop procedures that would permit a party wishing to petition to
revoke the exemption to conduct discovery prior to the filing of a
petition for revocation.
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We solicit comments, particularly from parties that have been
involved in litigating cases, as to how we can speed up the discovery
process, how discovery disputes can be avoided, and how we can more
effectively resolve the discovery disputes that require resolution by
the Board. In particular, parties should suggest changes to the
discovery regulations (49 CFR 1114.21-1114.31) that they believe would
expedite the processing of cases.
Some particular areas on which commenters may wish to focus include
the need for Board approval prior to discovery; the use and role of
administrative law judges (ALJs) in handling discovery matters in major
rate cases; and the best way to handle interlocutory appeals of
discovery orders.
The existing discovery rules, for example, require prior Board
approval for all discovery other than interrogatories and requests for
admissions. See 49 CFR 1114.21(b)(2). The discovery rules also provide
for the filing of certain discovery documents with the Board, even
though the documents are not ``evidence,'' and will not be evidence
unless and until they are filed in an evidentiary submission. See 49
CFR 1114.24(h). Every unnecessary filing that is required to be made
with the Board, or processed by the Board, slows down the process for
the parties and impedes the Board in its ability to complete its cases
quickly.5 Therefore, we ask commenters to consider ways in which
discovery can proceed without the need for any Board action or
involvement, at least until a conflict arises.
\5\ Similar internal paperwork burdens result from the practice
of permitting emergency filings by facsimile (FAX) [See 54 FR 52587
(Dec. 22, 1989)]. Although the concept of FAX filings was well
conceived, in practice it burdens the Secretary's Office, by
requiring it to process each FAX, and then to process, for a second
time, the same document when it is submitted in hard copy. As the
existing regulations already contemplate the use of overnight
delivery services (see 49 CFR 1004.6), we are considering
restricting the use of FAXes in the future. Commenters may wish to
address this issue.
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A difficult issue in major rate cases involves disputes over
discovery. On the one hand, we must assure that
[[Page 11801]]
parties obtain the information they need to make their case; on the
other hand, we are concerned that discovery not become overreaching and
unduly burdensome. Also, we are directed by statute to assure that the
process can be completed in a timely fashion. Thus, we seek a process
that will quickly produce proper discovery rulings in the first
instance, and that will then provide only narrow grounds for
interlocutory appeals.
In the past, we have used ALJs initially to resolve discovery
disputes in significant cases. Given the highly technical issues raised
in major rate cases, and the need to curtail the appellate process, our
preliminary view is that the Board's staff--which is thoroughly
familiar with the practical application of the agency's maximum rate
procedures--should be involved in the resolution of discovery disputes
from the outset. Commenters should address how we can best utilize the
talents of an ALJ and/or our own staff to produce initial discovery
rulings that will balance the burdens of production with the needs for
information.6
\6\ For example, it may be that discovery in major rate cases
should be handled directly by the Board; that the ALJ handling
discovery should be directed to include Board staff in all discovery
conferences; or that the ALJ should only prepare a recommended
decision on discovery.
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New section 10704(d) directs the Board to dispose of motions and
interlocutory administrative appeals promptly. Many of these motions
and interlocutory appeals concern discovery. The ICC was not always
consistent in its handling of, for example, interlocutory appeals.
Sometimes, it treated interlocutory appeals under the rules governing
appellate procedures found at 49 CFR 1115. Sometimes, it treated them
under its regulations governing interlocutory appeals from hearing
officers found at 49 CFR 1113.5. Assuming that we can devise procedures
that will advance prompt and proper rulings in the first instance, we
would be inclined to adopt interlocutory appeals procedures along the
lines of those found at 49 CFR 1113.5, which permit interlocutory
appeals only in extremely narrow circumstances. We would also be
inclined to provide that such matters will be handled by the entire
Board, rather than the Chairman, in order to limit the number of
appellate levels available. Commenters should address this issue as
well.7
\7\ We also, of course, seek comment on how we should handle
motions and interlocutory appeals related to matters other than
discovery.
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Evidentiary Phase
The number and timing of evidentiary filings can also greatly
affect the length of a rate reasonableness proceeding. For example, in
a rate case we can proceed with the market dominance and rate
reasonableness phases sequentially or simultaneously. In some cases in
the past, the ICC conducted the two phases of the case sequentially;
only if it found market dominance did the ICC schedule the filing of
rate reasonableness evidence.8 More recently, the ICC provided for
the market dominance and rate reasonableness evidence to be filed
simultaneously.
\8\ In the new law, as in the law prior to the ICCTA, a
prerequisite to our exercise of jurisdiction over the reasonableness
of a rail rate is the requirement that a rail carrier have market
dominance over the transportation at issue. New 49 U.S.C. 10707.
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The sequential procedure can extend the time needed to close the
record, but has the advantage of sparing the parties the expense
associated with presenting evidence on the reasonableness of a rate in
cases where the carrier is found not to possess market dominance. The
simultaneous procedure allows faster completion of the record, but
always requires the parties to incur the expense of filing evidence on
the reasonableness of a rate. We ask for comments on whether to adopt a
general policy that would govern all cases, or whether we should
continue to decide on a case-by-case basis whether to bifurcate the two
phases of a rate proceeding.9
\9\ One option would be not to bifurcate cases unless all
parties to the proceeding favored bifurcation.
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Different evidentiary considerations apply to exemption and
revocation proceedings. Exemption or revocation requests may be very
particularized (i.e., for an individual transaction) or quite broad
(for an entire class of traffic or transactions). Generally, the
broader the request, the more extensive and complicated the evidentiary
record that needs to be developed. However, even a narrowly drawn
individual exemption petition can require a lengthy evidentiary
process. Exemption petitions involving construction or abandonment
activity, for example, often require extensive environmental analyses
(either an environmental assessment or environmental impact statement).
In such cases, it can be difficult to complete the environmental review
within 9 months. Comments are solicited on how proceedings requiring
extensive environmental analysis can best be accommodated in an
exemption context. One approach may be to issue an exemption that is
conditional pending completion of the environmental analysis.
More generally, to speed the exemption/revocation process in all
cases, it would seem that any party seeking either an exemption or a
revocation of an exemption should be required to provide all of its
supporting information at the time it submits its exemption or
revocation request. We welcome suggestions on fashioning appropriate
procedural schedules, including how much time should be allowed for the
filing of reply and rebuttal evidence. For those cases in which the
public should have an opportunity to comment on a request for exemption
or revocation, we also welcome suggestions on how to structure our
procedures to obtain the participation of potentially interested
persons in a prompt and effective manner.
Another issue that affects how much time is needed to complete the
administrative record is the timing of the briefing schedule in those
cases where briefing is needed. A simultaneous briefing schedule
proceeds more quickly than sequential submissions of opening, reply and
rebuttal briefs. Sequential briefing, however, better focuses the
issues and allows parties to directly address and respond to those
issues that are considered important by the opposing party. We request
comments as to whether we should adopt a general policy on simultaneous
or sequential briefing in rate reasonableness and exemption/revocation
proceedings, or whether we should make that decision on a case-by-case
basis. We also request comments on whether page limits generally should
be imposed and, if so, what the page limit should be.
Sanctions
New section 10704(d) specifically calls for ``sanctions to be
imposed for dilatory tactics in rate cases and revocation
proceedings.'' 10 H.R. Conf. Rep. No. 422, 104th Cong., 1st Sess.
172 (1995), reprinted in 1996 U.S. Code Cong. & Admin. News 856. The
current sanctions for failure to respond to discovery are found at 49
CFR 1114.31, and the current sanctions for failure to comply with the
procedural schedule are found at 49 CFR 1112.3. Parties should review
these provisions and comment on whether there are other sanctions, such
as monetary sanctions or other sanctions used by the courts,
[[Page 11802]]
that would be more appropriate and effective.
\10\ The Board has general powers to carry out the provisions
of the statute, including the imposition of sanctions. New 49 U.S.C.
721.
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Other Issues
Finally, we welcome any other suggestions on ways to improve the
processing of rate reasonableness and exemption/revocation
cases.11 In general, we expect to expedite the record-building
stage of cases by looking with disfavor on requests to extend the
procedural schedule. We intend to deny all requests for extensions of
time that fail to demonstrate a compelling need for additional time.
\11\ In several recent cases, we have required that pleadings
be filed in paper form and on computer disk in WordPerfect format.
We have also required that spreadsheets be filed in Lotus 1-2-3.
Having evidence on electronic media in a format that is familiar to
the staff has been quite beneficial as we analyze the record. We
intend to require that evidence be filed on computer disks in the
future.
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We tentatively conclude that the proposed action will not have a
substantial adverse impact on a significant number of small entities.
In any event, the impact on small entities should be beneficial because
it should allow parties to more quickly avail themselves of their
statutory right to institute proceedings before the Board and to have
the Board expedite the processing of those proceedings.
This action will not significantly affect either the quality of the
human environment or the conservation of energy resources.
Decided: March 8, 1996.
By the Board, Chairman Morgan, Vice Chairman Simmons, and
Commissioner Owen.
Vernon A. Williams,
Secretary.
[FR Doc. 96-6986 Filed 3-21-96; 8:45 am]
BILLING CODE 4915-00-P
