[Federal Register Volume 63, Number 85 (Monday, May 4, 1998)]
[Notices]
[Pages 24588-24589]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-11669]
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DEPARTMENT OF TRANSPORTATION
[STB Ex Parte No. 627]
Market Dominance Determinations--Product and Geographic
Competition
AGENCY: Surface Transportation Board.
ACTION: Notice of Proposal to Eliminate Product and Geographic
Competition From Consideration in Market Dominance Determinations.
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SUMMARY: Pursuant to its decision in Review of Rail Access and
Competition Issues, STB Ex Parte No. 575 (STB served Apr. 17, 1998),
the Board is instituting a proceeding to consider removing product and
geographic competition as factors in market dominance determinations in
railroad rate proceedings. The Board requests that persons intending to
participate in this proceeding notify the agency of that intent. A
separate service list will be issued based on the notices of intent to
participate that the Board receives.
DATES: Notices of intent to participate in this proceeding are due May
12, 1998. Comments on this proposal are due May 29, 1998. Replies are
due June 29, 1998.
ADDRESSES: An original plus 12 copies of all comments and replies,
referring to STB Ex Parte No. 627, must be sent to the Office of the
Secretary, Case Control Unit, ATTN: STB Ex Parte No. 627, Surface
Transportation Board, 1925 K Street, N.W., Washington, DC 20423-0001.
Copies of the written comments will be available from the Board's
contractor, D.C. News and Data, Inc., located in Room 210 in the
Board's building. D.C. News can be reached at (202) 289-4357. The
comments will also be available for viewing and self copying in the
Board's Microfilm Unit, Room 755.
In addition to an original and 12 copies of all paper documents
filed with the Board, the parties shall submit their pleadings,
including any graphics, on a 3.5-inch diskette formatted for
WordPerfect 7.0 (or in a format readily convertible into WordPerfect
7.0). All textual material, including cover letters, certificates of
service, appendices and exhibits, shall be included in a single file on
the diskette. The diskettes shall be clearly labeled with the filer's
name, the docket number of this proceeding, STB Ex Parte No. 627, and
the name of the electronic format used on the diskette for files other
than those formatted in WordPerfect 7.0. All pleadings submitted on
diskettes will be posted on the Board's website (www.stb.dot.gov). The
electronic submission requirements set forth in this notice supersede,
for the purposes of this proceeding, the otherwise applicable
electronic submission requirements set forth in the Board's
regulations. See 49 CFR 1104.3(a), as amended in Expedited Procedures
for Processing Rail Rate Reasonableness, Exemption and Revocation
Proceedings, STB Ex Parte No. 527, 61 FR 52710, 711 (Oct. 8, 1996), 61
FR 58490, 58491 (Nov. 15, 1996).1
\1\ A copy of each diskette submitted to the Board should be
provided to any other party upon request.
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FOR FURTHER INFORMATION CONTACT: Joseph H. Dettmar, (202) 565-1600.
[TDD for the hearing impaired: (202) 565-1695.]
SUPPLEMENTARY INFORMATION: In STB Ex Parte No. 575, the Board conducted
two days of informational hearings, on April 2 and 3, 1998, to examine
issues of rail access and competition in today's railroad industry, and
the statutory remedies and agency regulations and procedures that
relate to those matters. As a result of those hearings, we announced,
inter alia, that we would commence a proceeding to consider eliminating
the product and geographic competition factors of our market dominance
guidelines in cases challenging the reasonableness of rail
rates.2
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\2\ The current market dominance guidelines are set forth in
Product and Geographic Competition, 2 I.C.C.2d 1, 20-22 (1985)
(Market Dominance III).
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Under 49 U.S.C. 10707, the Board can entertain a challenge to the
reasonableness of a rail rate only if we
[[Page 24589]]
first find that the rail carrier has market dominance over the traffic
to which the rate applies, that is, that there is no effective
competition for that traffic. In making that determination, we now
consider four forms of competition that may effectively constrain the
carrier's pricing: intramodal competition (whether the shipper could
obtain the transportation service that it needs from other railroads);
intermodal competition (whether the shipper could obtain service by
another transportation mode); product competition (whether the shipper
can use a suitable substitute product that can be acquired without
relying on the services of the same carrier); and geographic
competition (whether the shipper can obtain the product it needs from a
different source and/or by shipping its goods to a different
destination using another carrier). Shippers have the burden of showing
that there is no effective intramodal and intermodal competition;
carriers have the burden of identifying any product and geographic
competition and showing its effectiveness.
At the Ex Parte 575 hearings, shippers complained about the
difficulties associated with seeking rate relief from the Board today,
particularly the complexity and burden of litigating issues of product
and geographic competition, issues that they charge have transformed
the threshold market dominance phase of a rail rate complaint into a
full-blown antitrust-style case of its own. Shippers regard product and
geographic competition issues as major, undue litigation obstacles that
discourage captive shippers from even seeking regulatory relief from
unreasonably high rates in both large and small rates cases.
Accordingly, consistent with our determination in Ex Parte 575 to
reexamine certain aspects of our current regulatory regime in the
context of today's more consolidated rail industry--particularly those
that concern the availability of regulatory relief--we are instituting
this proceeding to consider eliminating product and geographic
competition from our market dominance analysis.
We note that our predecessor, the Interstate Commerce Commission
(ICC), initially concluded that consideration of product and geographic
competition issues would complicate rate proceedings unduly. Special
Procedures for Making Findings of Market Dominance, 353 I.C.C. 875,
905-06, modified, 355 I.C.C. 12 (1976) (Market Dominance I), aff'd in
relevant part sub nom. Atchison, T. & S.F. Ry. v. ICC, 580 F.2d 623
(D.C. Cir. 1978). The ICC subsequently reversed course and decided that
consideration of these issues would be manageable. Market Dominance
Determinations, 365 I.C.C. 118, 127-31 (1981) (Market Dominance II),
aff'd sub nom. Western Coal Traffic League v. United States, 719 F.2d
772 (5th Cir. 1983) (en banc), cert. denied, 466 U.S. 953 (1984).
Later, recognizing that it is inherently ``much more difficult'' for
shippers to prove the ineffectiveness of these factors than of
intramodal and intermodal competition, the ICC placed upon the
railroads the burden of both identifying any product and geographic
competition and demonstrating the effectiveness of such competition in
individual cases. Market Dominance III, 2 I.C.C.2d at 15.
The comments presented in the Ex Parte 575 hearings suggest,
however, that, even without bearing the burden of proof on these
issues, shippers find that the product and geographic competition
inquiry remains an imposing burden upon their ability to prosecute rail
rate complaints. Aggressive use of the discovery process may be partly
responsible for the heavy burdens associated with the inquiry into
product and geographic competition, and we have recently taken action
to prevent a rail carrier from effectively shifting those burdens onto
a complaining shipper through unsupported and/or overreaching discovery
demands. FMC Wyoming Corp. et al. v. Union Pac. R.R., STB Docket No.
42022 (STB served Apr. 17, 1998). However, curbing individual instances
of discovery abuses may not be sufficient to address the shippers'
concerns. Therefore, we are instituting this proceeding to obtain
public comment on whether we should eliminate product and geographic
competition from consideration altogether.
Any person that wishes to participate as a party of record in this
matter must notify us of this intent by May 12, 1998. In order to be
designated a party of record, a person must satisfy the filing
requirements outlined in the ADDRESSES section. We will then compile
and issue a service list. Copies of comments and replies must be served
on all persons designated on the list as a party of record. Comments on
the proposal are due May 29, 1998; replies are due June 29, 1998.
A copy of this decision is being served on all persons on the
service list in Ex Parte No. 575. This decision will serve as notice
that persons who were parties of record in the Ex Parte 575 proceeding
will not be placed on the service list in the Ex Parte 627 proceeding
unless they notify us of their intent to participate therein.
The Board preliminarily certifies that the proposal to eliminate
product and geographic competition from its market dominance analysis,
if adopted, would not have a significant effect on a substantial number
of small entities. While the proposal, if adopted, may ease the burdens
on those prosecuting rate complaints, we do not expect it to affect a
substantial number of small entities. 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.
Decided: April 28, 1998.
By the Board, Chairman Morgan and Vice Chairman Owen.
Vernon A. Williams,
Secretary.
[FR Doc. 98-11669 Filed 5-1-98; 8:45 am]
BILLING CODE 4915-00-P
