[Federal Register Volume 61, Number 93 (Monday, May 13, 1996)]
[Proposed Rules]
[Pages 22014-22016]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11716]
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DEPARTMENT OF TRANSPORTATION
Surface Transportation Board
49 CFR Part 1185
[STB Ex Parte No. 543]
Revision of Regulations for Interlocking Rail Officers
AGENCY: Surface Transportation Board.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Surface Transportation Board (the Board) is seeking
comments on proposed revisions to the regulations for authorization of
interlocking rail officers and directors.
DATES: Comments on the proposed revisions are due June 3, 1996.
ADDRESSES: Send comments (an original and 10 copies) referring to STB
Ex Parte No. 543 to: Surface Transportation Board, Office of the
Secretary, Case Control Branch, 1201 Constitution Avenue, NW.,
Washington, DC 20423.
FOR FURTHER INFORMATION CONTACT: Beryl Gordon, (202) 927-7513. [TDD for
the hearing impaired: (202) 927-5721.]
SUPPLEMENTARY INFORMATION: Effective January 1, 1996, the ICC
Termination Act of 1995, Pub. L. No. 104-88, 109 Stat. 803 (the ICCTA)
abolished the Interstate Commerce Commission (ICC) and established
within the Department of Transportation the Board. Section 204 of the
ICCTA provides that ``[t]he Board shall promptly rescind all
regulations established by the [ICC] that are based on provisions of
law repealed and not substantively reenacted by this Act.''
Under the prior statute at 49 U.S.C. 11322, a person wishing to
hold a position of officer or director of more than one rail carrier of
any size was required to seek prior ICC authorization. The ICC,
however, exercising its general exemption authority under former 49
U.S.C. 10505, adopted rules at 49 CFR 1185 exempting from regulation as
a class requests to assume the position of director or officer of a
rail carrier while holding the position of director or officer of
another rail carrier, except where both carriers are Class I railroads.
Exemption--Certain Interlocking Directorates, 5 I.C.C.2d 7 (1988)
(Interlocking Directorates). The class exemption does not apply to an
individual who is an officer or director of a Class I carrier and who
wishes to become an officer or director of another Class I railroad;
that individual is required to file either an application (or petition
for an individual exemption).
The ICCTA revised the statute so that, under new 49 U.S.C. 11328,
individuals seeking to hold the position of officer or director only of
Class III railroads are no longer required to seek Board authorization,
either through exemption or through affirmative approval. We propose to
revise 49 CFR part 1185 to reflect this statutory change and to
eliminate other unnecessary and redundant provisions. The changes would
clarify that the class exemption applies exclusively to interlocking
directorates that (a) Do not involve an officer or director of a Class
I rail carrier who seeks to become an officer or director of another
Class I rail carrier, and (b) do not involve only Class III rail
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carriers.1 The proposed rules would also make clear that, where
the class exemption applies, it is not necessary to make a filing with
the Board to invoke the exemption. See Southern Electric--Petition for
Exemption--Construction of a Rail Line in Shelby Co., AL, Finance
Docket No. 31498 et al. (ICC served Sept. 19, 1989).
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\1\ All other ``interlocking directorates'' are exempted as a
class by virtue of the decision of the ICC in Interlocking
Directorates, supra. The Board proposes to expressly affirm and
adopt that exemption.
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The proposed revision would also update and clarify the term
``carrier'' for purposes of administering the interlocking officer and
director provisions of the statute. Former 49 U.S.C. 11322, and the
current regulations at 49 CFR 1185.2, use the term ``carrier'' as
defined at former 49 U.S.C. 11301(a)(1).2 New 49 U.S.C. 11328 does
not separately define ``carrier.'' We note that the general definition
of ``rail carrier'' in new 49 U.S.C. 10102(5) refers to a person
providing common carrier railroad transportation ``for compensation,''
but not to a ``sleeping car carrier'' or ``a corporation organized to
provide transportation.'' 3
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\2\ The definition in former section 11301(a)(1) read:
``carrier'' means a rail or sleeping car carrier providing
transportation subject to the jurisdiction of the Interstate
Commerce Commission under subchapter I of chapter 105 of this title
(except a street, suburban, or interurban electric railway not
operated as part of a general railroad system of transportation),
and a corporation organized to provide transportation by rail
carrier subject to that subchapter. (Emphasis supplied.)
\3\ Under new 49 U.S.C. 10102(5), rail carrier is defined as:
a person providing common carrier railroad transportation for
compensation, but does not include street, suburban,or interurban
electric railways not operated as part of the general system of rail
transportation[.]
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In defining ``carrier'' for interlocking directorate purposes, we
propose to exclude ``sleeping car carrier'' and to add ``for
compensation.'' We also believe that, in the context of interlocking
directorates, the term ``rail carrier'' should be interpreted to
embrace corporations organized to provide transportation. Because an
individual would need Board approval after a corporation becomes a
carrier, we believe it is appropriate to allow an individual to obtain
early Board consideration, thereby providing more commercial certainty.
This would also benefit the Board, by giving us an earlier opportunity
to analyze a potential interlocking officer position or directorate. We
thus propose the following definition of rail carrier in our proposed
rule 1185.1(d):
A rail carrier means a person providing common carrier
transportation for compensation (except a street, suburban, or
interurban electric railway not operating as part of the general
system of rail transportation), and a corporation organized to
provide transportation by rail carrier.
We also propose to change the requirements for the form of the
application to comply with our rules of practice (proposed section
1185.3). Finally, we seek specific comment on whether to include
proposed section 1185.4, which would revise current 49 CFR 1185.9,
General authority, pertaining to receipt of general authority to hold a
directorship with subsidiary or affiliated companies. We question
whether this provision is needed, because there are two other similar
sections, proposed section 1185.5, Common control (currently section
1185.10) and proposed section 1185.6, Jointly used terminal properties
(currently section 1185.11).4 All three of these provisions
concern interlocking directorships among carriers in an established
system. See Governing Officers, 363 I.C.C. at 681 and 683.
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\4\ In Revised Regulations Governing Officers, 336 I.C.C. 679
(1970) (Governing Officers), the ICC issued rules, codified at 49
CFR 1185.10 and 11, that would allow individuals to hold
interlocking directorate positions with carriers lawfully operated
under common control and to hold interlocking directorate positions
with a carrier and a terminal railroad whose facilities are operated
or used by the carrier jointly with other carriers.
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The Board certifies that this rule, if adopted, would not have a
significant economic effect on a substantial number of small entities.
In response to the statutory change, this proposed rule will reduce
regulation and it imposes no new reporting requirements on small
entities. Requirements for the form of the application have been
slightly modified to conform to the Board's rules of practice. The
Board, however, seeks comments on whether there would be effects on
small entities that should be considered.
This action will not significantly affect either the quality of the
human environment or the conservation of energy resources.
List of Subjects in 49 CFR Part 1185
Administrative practice and procedure, Railroad.
Decided: April 23, 1996.
By the Board, Chairman Morgan, Vice Chairman Simmons, and
Commissioner Owen.
Vernon A. Williams,
Secretary.
For the reasons set forth in the preamble and under the authority
of 49 U.S.C. 721(a), title 49, chapter X, part 1185 of the Code of
Federal Regulations is proposed to be revised to read as follows:
PART 1185--INTERLOCKING OFFICERS
Sec.
1185.1 Definitions and scope of regulations.
1185.2 Contents of application.
1185.3 Procedures.
1185.4 General authority.
1185.5 Common control.
1185.6 Jointly used terminal properties.
Authority: 5 U.S.C. 553 and 559; 49 U.S.C. 721, 10502, and
11328.
Sec. 1185.1 Definitions and scope of regulations.
(a) Under 49 U.S.C. 11328, authorization of the Board is required
before a person may hold the position of officer or director of more
than one rail carrier, except where only Class III carriers are
involved. Board authorization is not needed for individuals seeking to
hold the positions of officers or directors only of Class III
railroads. 49 U.S.C. 11328(b).
(b) When a person is an officer of a Class I railroad and seeks to
become an officer of another Class I railroad, an application under 49
U.S.C. 11328(a) (or petition for individual exemption under 49 U.S.C.
10502) must be filed. All other ``interlocking directorates'' are
exempt as a class from the prior approval requirements of 49 U.S.C.
11328(a). For such interlocking directorates exempted as a class, no
filing with the Board is necessary to invoke the exemption.
(c) An ``interlocking directorate'' exists whenever an individual
holds the position of officer or director of one rail carrier and
assumes the position of officer or director of another rail carrier.
This provision applies to any person who performs duties ordinarily
performed by a director, president, vice president, secretary,
treasurer, general counsel, general solicitor, general attorney,
comptroller, general auditor, general manager, freight traffic manager,
passenger traffic manager, chief engineer, general superintendent,
general land and tax agent or chief purchasing agent.
(d) For purposes of this part, a rail carrier means a person
providing common carrier railroad transportation for compensation
(except a street, suburban, or interurban electric railway not
operating as part of the general system of rail transportation), and a
corporation organized to provide such transportation.
Sec. 1185.2 Contents of application.
(a) Each application shall state the following:
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(1) The full name, occupation, business address, place of
residence, and post office address of the applicant.
(2) A specification of every carrier of which the applicant holds
stock, bonds, or notes, individually, as trustee, or otherwise; and the
amount of, and accurate description of, the securities, owned or held
by him, of each carrier for which he seeks authority to act. (Whenever
it is contemplated that the applicant will represent on the board of
directors of any carrier securities other than those owned by him, the
application shall describe such securities, state the character of
representation, the name of the beneficial owner or owners, and the
general nature of the business conducted by such owner or owners.)
(3) Each and every position with any carrier which is held by the
applicant at the time of the application; and which he seeks authority
to hold, together with the date and manner of his election or
appointment thereto and, if he has entered upon the performance of his
duties in any such position, the nature of the duties so performed and
the date when he first entered upon their performance. (A decision
authorizing a person to hold the position of director of a carrier will
be construed as sufficient to authorize him to serve also as chairman
of its board of directors or as a member or chairman of any committee
or committees of such board; and, therefore, when authority is sought
to hold the position of director, the applicant need not request
authority to serve in any of such other capacities.)
(4) As to each carrier covered by the requested authorization,
whether it is an operating carrier, a lessor company, or any other
corporation organized for the purpose of engaging in rail
transportation. (If any such carrier neither operates nor owns any
railroad, transportation by which is subject to the Act, there shall be
filed with the application, as a part thereof, a copy of such carrier's
charter or certificate or articles of incorporation, with amendments to
date. When such copy has once been filed with the former Interstate
Commerce Commission (ICC) or with the Board, reference thereto, with
amendments, if any, will suffice.)
(5) Thereafter a full statement of pertinent facts relative to any
carrier which does not make annual reports to the Board, authorization
for a position with which is sought.
(6) Full information as to the relationship, operating, financial,
competitive, or otherwise, existing between the carriers covered by the
requested authorization.
(7) Every corporation--industrial, financial, or miscellaneous--of
which the applicant is an officer or director, and the general
character of the business conducted by such corporation.
(8) The reasons, fully, why the granting of the authority sought
will not affect adversely either public or private interests.
(9) Whether or not any other application for authority has been
made in behalf of the applicant and, if so, the date and docket number
thereof, by who made, and the action thereon, if any.
(b) When application has been made in behalf of any person, a
subsequent application by him need not repeat any statement contained
in the previous application but may incorporate the same by appropriate
reference.
Sec. 1185.3 Procedures.
The original application or petition shall be signed by the
individual applicant or petitioner and shall be verified under oath.
Petitions and applications should comply with the Board's general rules
of practice set forth at 49 CFR part 1104. Applications or petitions
may be made by persons on their own behalf.
Sec. 1185.4 General authority.
Any person who holds or may seek specific authority to hold
positions with a carrier may also request general authority to act as
an interlocking officer for all affiliated or subsidiary companies or
properties used or operated by the carrier, either separately or
jointly, with other carriers. A carrier may apply for general authority
on behalf of an individual who has already received authority to act as
an interlocking officer. However, a carrier may not apply for general
authority for an individual who holds a position with another railroad
which is not an affiliate or subsidiary of the carrier or whose
properties are not used or operated by the carrier, either separately
or jointly with other carriers.
Sec. 1185.5 Common control.
It shall not be necessary for any person to secure authorization
under the foregoing provisions to hold the position of officer or
director of two or more carriers, if such carriers are operated under
common control or management, either:
(a) Pursuant to approval and authority of the ICC granted under
former 49 U.S.C. 11343-44 (repealed effective January 1, 1996) or by
the Board granted under 49 U.S.C. 11323-24, or
(b) Pursuant to an exemption authorized by the ICC under former 49
U.S.C. 10505 (repealed effective January 1, 1996) or by the Board under
49 U.S.C. 10502, or
(c) Pursuant to a controlling, controlled, or common control
relationship which has existed between such carriers since before June
16, 1933.
Sec. 1185.6 Jointly used terminal properties.
Any person holding the position of officer or director of a carrier
is hereby relieved from the foregoing provisions to the extent that he
may also hold a directorship and any other position to which he may be
elected or appointed with a terminal railroad the properties of which
are operated or used by the carrier jointly with other carriers.
[FR Doc. 96-11716 Filed 5-10-96; 8:45 am]
BILLING CODE 4915-00-P
