03-20588. Class Exemption for Expedited Abandonment Procedure for Class II and Class III Railroads

ACTION:

Advance notice of proposed rulemaking.

SUMMARY:

The Surface Transportation Board (Board) has received a proposal to create a class exemption under 49 U.S.C. 10502 for Class II and Class III railroads from the prior approval abandonment requirements of 49 U.S.C. 10903. The Board intends to consider this proposal, and any other matters that interested persons may raise regarding the abandonment process generally, at an oral hearing to be held in the fall of this year. The Board is not seeking public comment at this time but will issue a subsequent notice setting forth the details for filing comments and participating in the Board's hearing.

FOR FURTHER INFORMATION CONTACT:

Joseph H. Dettmar, [phone]. [Federal Information Relay Service (FIRS) for the hearing impaired: 1-800-877-8339.]

SUPPLEMENTARY INFORMATION:

On May 15, 2003, sixty-five regional and short-line carriers ^[1] (petitioners) filed a petition before the Board to use its exemption authority under 49 U.S.C. 10502. Petitioners ask the Board to adopt a new class exemption for use by small carriers in abandoning rail lines. Petitioners claim that the proposal would eliminate current regulatory incentives for small carriers to delay abandonment while letting the traffic base and physical condition of low-density lines deteriorate; subject exit and entry to the rail industry to market forces; and increase the dissemination of commercial information to facilitate the offer of financial assistance (OFA) procedures. In addition, petitioners claim that the proposal would reduce the administrative burdens on the Board.

The proposal would allow small carriers to file a notice of exemption whenever they make the business decision that a given line was no longer economically viable. Petitioners argue that their proposal would eliminate delays in the abandonment process and allow small carriers to quickly redeploy limited assets. This, petitioners maintain, would facilitate maintenance and infrastructure upgrades necessary for small carriers to continue in operation.

The proposed notices of exemption would include 36-months of traffic and revenue information, a description of the current physical condition of the line, an estimate of rehabilitation, the carrier's calculation of the line's net liquidation value (NLV), the names of connecting carriers and the points of interchange. The abandoning carrier would publish this information for three consecutive weeks in local newspapers and in nationally-distributed, railroad trade publications. A potential purchaser could review the data underlying the published information and the abandoning carrier would be required to provide such information within 5 days.

Petitioners' proposal would require carriers availing themselves of the class exemption to stipulate that any OFA sale would be at NLV and would forgo any claim of a going concern value. In addition, the proposed exemption would assure that any purchaser would have access to third-party carriers through trackage or haulage rights at commercially reasonable rates where traffic moved via those connections during the preceding 24-month period. Further, the proposal would give OFA purchasers more time to consider and evaluate a line by allowing offers up to 90 days after publication in the Federal Register and it would make the data available before the OFA process formally begins.

Petitioners' proposal would also invert the environmental and historic preservation requirements. Currently, abandoning carriers must prepare environmental and historic reports before filing for abandonment authority. Petitioners argue that this is sometimes wasteful, as a successful OFA purchase obviates the need for such reports. Petitioners' proposal would allow the environmental and historic reporting to be made after the completion of the OFA process.

As noted, the Board intends to hold a hearing during the fall on this petition and on other matters that interested persons may raise regarding the Board's abandonment process. The Board will issue a subsequent notice providing details for persons interested in submitting written comments and participating in the Board's hearing.

Board decisions, notices, and the May 15, 2003 petition are available on our Web site at http://www.stb.dot.gov.

Decided: August 7, 2003.

By the Board, Roger Nober, Chairman.

Vernon A. Williams,

Secretary.

Footnotes

1.  The sixty-five carriers are: Allegheny & Eastern Railroad, Inc.; Bradford Industrial Rail, Inc.; Buffalo & Pittsburgh Railroad, Inc.; Carolina Coastal Railway, Inc.; Commonwealth Railway, Inc.; Chicago SouthShore & South Bend Railroad; Chattahoochee & Gulf Railroad Co., Inc.; Connecuh Valley Railroad Co., Inc.; Corpus Christi Terminal Railroad, Inc.; The Dansville & Mount Morris Railroad Company; Eastern Idaho Railroad, Inc.; Genesee & Wyoming Railroad Company; Golden Isles Terminal Railroad, Inc.; H&S Railroad Co., Inc.; Illinois Indiana Development Company, LLC; Illinois & Midland Railroad Company, Inc.; Kansas & Oklahoma Railroad, Inc.; Knoxville & Holston River Railroad Co., Inc.; Lancaster and Chester Railway Company; Laurinburg & Southern Railroad Co., Inc.; Louisiana & Delta Railroad, Inc.; Louisville & Indiana Railroad Company; Minnesota Prairie Line, Inc.; Montana Rail Link, Inc.; New York & Atlantic Railway Company; Pacific Harbor Line, Inc.; Palouse River & Coulee City Railroad, Inc.; Pennsylvania Southwestern Railroad, Inc.; Piedmont & Atlantic Railroad Inc.; Pittsburgh & Shawmut Railroad, Inc.; Portland & Western Railroad, Inc.; Rochester & Southern Railroad, Inc.; Rocky Mount & Western Railroad Co., Inc.; St. Lawrence & Atlantic Railroad Company; Salt Lake City Southern Railroad Company; Savannah Port Terminal Railroad, Inc.; South Buffalo Railway Company; South Kansas & Oklahoma Railroad Company; Stillwater Central Railroad; Talleyrand Terminal Railroad, Inc.; Three Notch Railroad Co., Inc.; Timber Rock Railroad, Inc.; Twin Cities & Western Railroad Company; Utah Railway Company; Willamette & Pacific Railroad, Inc.; Wiregrass Central Railroad Company, Inc.; York Railway Company; AN Railway, LLC; Atlantic and Western Railway, Limited Partnership; Bay Line Railroad, LLC; Central Midland Railway; Copper Basin Railway, Inc.; East Tennessee Railway, L.P.; Galveston Railroad, L.P.; Georgia Central Railway, L.P.; The Indiana Rail Road Company; KWT Railway, Inc.; Little Rock & Western Railway, L.P.; M & B Railroad, L.L.C.; Tomahawk Railway, Limited Partnership; Valdosta Railway, L.P.; Western Kentucky Railway, LLC; Wheeling & Lake Erie Railway Company; Wilmington Terminal Railroad, L.P.; and Yolo Shortline Railroad Company.