[Federal Register Volume 62, Number 187 (Friday, September 26, 1997)]
[Proposed Rules]
[Pages 50550-50553]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25642]
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DEPARTMENT OF TRANSPORTATION
49 CFR Part 1111
[STB Ex Parte No. 527 (Sub-No. 1)]
Expedited Procedures for Processing Simplified Rail Rate
Reasonableness Proceedings
AGENCY: Surface Transportation Board; DOT.
ACTION: Notice of proposed rulemaking.
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SUMMARY: On February 12, 1997, the Surface Transportation Board issued
an Advance Notice of Proposed Rulemaking soliciting comments on how the
complaint and investigation procedures at 49 CFR part 1111 should be
modified to reflect the Board's adoption of Simplified Rate
Guidelines.1 Based on the comments received, the Board
proposes to amend part 1111 to facilitate the processing of cases using
Simplified Rate Guidelines. Comments are invited.
\1\ Rate Guidelines--Non-Coal Proceedings, Ex Parte No. 347
(Sub-No. 2) (STB served Dec. 31, 1996), pet. for rehearing and
reconsideration denied (STB served Sept. 24, 1996), pet. for
judicial review pending sub nom., Association of Am. Railroad v.
Surface Transp. Bd., No. 97-1020 (D.C. Cir. filed Jan. 10, 1997).
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DATES: Comments are due November 10, 1997.
ADDRESSES: Send comments referring to STB Ex Parte No. 527 (Sub-No. 1)
to: Surface Transportation Board, Office of the Secretary, Case Control
Branch, 1925 K Street, N.W., Washington, DC 20423-0001.
FOR FURTHER INFORMATION CONTACT: Thomas J. Stilling, (202) 565-1567.
(TDD for the hearing impaired: (202) 565-1695.)
SUPPLEMENTARY INFORMATION: The Board is charged with expediting the
processing of rate complaint proceedings. Under 49 U.S.C. 10704(c), we
are required to make a determination as to the reasonableness of a
challenged rate within 9 months after the record closes if the
determination is based on stand-alone cost (SAC) evidence, and within 6
months if it is based upon a simplified methodology adopted pursuant to
49 U.S.C. 10701(d)(3). On October 1, 1996,2 we adopted rules
to expedite the handling of complaints challenging the reasonableness
of railroad rates using SAC,3 including the generally
applicable procedural schedule of 49 CFR 1111.8 that requires
completion of the evidentiary phase of a SAC case in 7 months. We
declined to adopt a procedural schedule to govern the filing of
evidence in cases using the then unadopted Simplified Rate Guidelines
procedures. Rather, we decided to consider the adoption of regulations
covering such cases following completion of the Simplified Rate
Guidelines rulemaking.
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\2\ Expedited Procedures for Processing Rail Rate
Reasonableness, Exemption and Revocation Proceedings, STB Ex Parte
No. 527, published in the Federal Register on October 8, 1996, (61
FR 52710), modified by decision served November 15, 1996.
\3\ SAC is one of four constraints on railroad pricing adopted
in Coal Rate Guidelines--Nationwide, 1 I.C.C.2d 520 (1985).
Notwithstanding its title, Coal Rate Guidelines procedures are not
limited to coal cases. Rather, the guidelines are the preferred
method of evaluating the reasonableness of any rate.
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On December 31, 1996, we adopted simplified evidentiary guidelines
in Simplified Rate Guidelines to determine the reasonableness of rail
rates on captive traffic where the Coal Rate Guidelines could not be
practicably applied. Subsequently, by Advance Notice of Proposed
Rulemaking, served February 12, 1997 (62 FR 6508), we solicited
comments on whether a general procedural schedule applicable to cases
processed under the Simplified Rate Guidelines could be promulgated
(and, if so, what that schedule should be), or whether we should delay
the adoption of a general procedural schedule and proceed on a case-by-
case basis until all concerned acquire some experience utilizing the
new guidelines.4
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\4\ Simplified Rate Guidelines suggested that procedural
schedules should initially be set on a case-by-case basis. Id. at 38
n.145.
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Comments were filed by the Association of American Railroads (AAR),
the National Industrial Transportation League (NITL), Barbara R.
Kueppers, and the United Transportation Union-Illinois Legislative
Board (UTU-ILB).
Positions of the Parties
AAR acknowledges that the choice of guidelines (Coal Rate
Guidelines or Simplified Rate Guidelines) must be made at the outset of
a case. However, AAR sees no need to adopt a set timeframe, such as the
45-day schedule suggested in Simplified Rate Guidelines (at 38) for
deciding whether a case should proceed under the Coal Rate Guidelines
or the simplified procedures. AAR claims that a 45-day schedule would
be unfair because it would give a shipper unlimited time to prepare its
initial case while giving the defendant only two weeks to analyze
complainant's case and prepare opposing evidence.5 AAR also
notes that
[[Page 50551]]
the 45-day schedule appears to conflict with the requirement for a
conference of the parties required by 49 CFR 1111.9.6 AAR
prefers convening a conference of the parties shortly after a complaint
is filed to allow the parties to develop a schedule, subject to Board
approval, for determining whether the Simplified Rate Guidelines can be
used. In addition, because no case has yet been processed using
Simplified Rate Guidelines, AAR suggests that we set procedural
schedules for the filing of evidence on a case-by-case basis until
sufficient experience is gained and the need for a general schedule
becomes apparent.
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\5\ Under the 45-day schedule, the defendants would have 15 days
after the complaint is filed to oppose use of the simplified
procedures. Complainant would have 10 days to respond to the
railroad position, and the Board would have 20 days to make its
determination.
\6\ Under 49 CFR 1111.9(b), in stand-alone cost complaints, the
parties are to discuss procedural matters within 7 days after a
complaint is filed. Under 49 CFR 1111.9(a), in all other complaint
proceedings, the parties shall discuss procedural issues within 7
days after an answer is filed.
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NITL argues that, with minor modifications, complaints seeking to
invoke Simplified Rate Guidelines can be handled under the procedures
established at 49 CFR part 1111.7 NITL supports deciding
within 45 days a request for invocation of the simplified procedures.
It proposes that the factors that must be included in a complaint
seeking to invoke the Simplified Rate Guidelines be specifically listed
in 49 CFR 1111.1(a) so that potential complainants are given
appropriate notice of both the availability of, and requirements for,
the use of the simplified procedures.8
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\7\ NITL suggests that a conference of the parties could be held
within 7 days of the filing of the answer as specified in 49 CFR
1111.9(a).
\8\ Simplified Rate Guidelines (at 37-38) requires that a
complaint seeking to invoke the simplified procedures should
contain:
(1) A general history of the traffic at issue, including how the
traffic has moved in the past, how it currently moves, and how it
can and will be moved in the future. This information should address
not only the physical movement of the traffic, but the type and
level of rates actually used. It should include all carriers (rail
and nonrail) that have participated in the transportation of this
traffic or could do so.
(2) The specific commodity description(s) for the traffic at
issue, the shipping characteristics and requirements of the traffic,
and the type of railroad cars required or used for the traffic.
(3) All origins, destinations, and O-D [origin-destination]
pairs involved in the complaint, by commodity type.
(4) The amount of traffic involved (by commodity type),
including total annual carloadings, average tons per car, number of
carloads per shipment, and number of carloads per week or month.
(5) Total or average revenue per carload paid to the defendant
railroad(s), by commodity type.
(6) The feasibility and anticipated cost of preparing a SAC
presentation in the case.
(7) An estimate of the other costs to be incurred in pursuing
the rate complaint, including preparing necessary jurisdictional
threshold and market dominance evidence.
(8) The relief sought, including all reparations as well as the
level and duration of any rate prescription.
(9) The present value of the relief sought.
AAR notes that factor 7 includes costs associated with
``preparing necessary jurisdictional threshold and market dominance
evidence.'' It asserts that these costs are common to both
simplified procedure and CMP cases and are therefore not relevant to
determining which procedure to follow. We note that while the costs
are common to both types of cases, the purpose of including them is
to determine and weigh the costs of presenting a rate case under
either CMP or the simplified procedures.
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Finally, NITL recommends that the Rules of Practice should include
a reference to the procedures established in 49 CFR 1244.8 regarding
access to the Waybill Sample data. It suggests that complainants
request access to the Waybill Sample simultaneously with the filing of
the complaint so that complainant can complete discovery and prepare
its opening statement within 120 days of the filing of the complaint as
specified at 49 CFR 1111.8.
Ms. Kueppers argues that the Board should provide for a cost-
efficient means of accessing data through discovery.9 In
particular, she proposes that discovery be completed in 6 months where
rate reasonableness is the sole issue in a proceeding. When rate
reasonableness is combined with other issues, she proposes that the
procedural schedule be determined on a case-by-case basis, allowing for
discovery related to other issues. Ms. Kueppers also argues that,
because individuals in small shipping organizations have a variety of
duties, it is difficult to determine a universally appropriate schedule
(such as 120 days in stand-alone cases) for small shippers to prepare
and present a case. She contends that small shippers should be afforded
flexibility in scheduling.
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\9\ She requests that parties enter into a confidentiality
agreement within 7 days after a complaint is filed. If they are
unable to concur on an agreement, they can request that the Board
impose a confidentiality agreement. Within 10 days of a
confidentiality agreement being in place, the parties are to
disclose the information required in Rule 26 of the Federal Rules of
Civil Procedure, and the carrier shall provide to complainant its
waybill tapes.
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The UTU-ILB offers no comments on procedural matters but states
that it continues to support traditional rate comparisons as the best
test of rate reasonableness for the small shipper, port, or community.
It adds that it will await the issuance of a notice of proposed
rulemaking before making any other recommendations.
Discussion
We appreciate the comments of the parties and have attempted to
incorporate as many of their suggestions as practical in our proposal.
We propose to include in our regulations the information that a
complainant should supply when seeking to test the reasonableness of a
rate using the Simplified Rate Guidelines. We also propose to establish
a schedule for determining whether the Simplified Rate Guidelines can
be used in a particular case. Additional, minor changes are being
proposed. We are not proposing to adopt at this time a general
procedural schedule for processing rate complaints under the Simplified
Rate Guidelines, but rather intend to proceed on a case-by-case basis
until we gain more experience using the new guidelines.
Simplified Rate Guidelines (at 37) recognized that a determination
as to which guidelines should be used in a particular case must be
decided at the outset of the case.10 If the simplified
procedures are sought, the complainant ``must present sufficient
information to show that [use of the Coal Rate Guidelines] is not
available * * * . [T]his information should be included in the initial
complaint, so as not to delay the case.'' Id. Simplified Rate
Guidelines enumerated 9 evidentiary factors (listed in note 8, supra),
which should be included in a complaint. We propose to modify section
1111.1(a), as suggested by NITL, to specifically list the 9 evidentiary
factors that a complaint seeking to use the Simplified Rate Guidelines
should address.11 This will ensure that anyone contemplating
filing a complaint is fully aware of the factors that must be addressed
in its initial pleading. We also propose to make certain technical
changes to that section.
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\10\ No special showing is needed to use Coal Rate Guidelines
because, where available, those guidelines must be used.
\11\ Currently, 49 CFR 1111.1(a) states in relevant part:
In a complaint challenging the reasonableness of a rail rate,
the complainant should indicate whether * * * the reasonableness of
the rate should be examined using constrained market pricing or
simplified standards to be adopted pursuant to 49 U.S.C.
10701(d)(3). The complainant should specify the basis for this
assertion.
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As noted, AAR and NITL differ on whether we should prescribe a 45-
day period for deciding whether the simplified procedure should be used
in deciding rate reasonableness. To comply with the Congressional
directive to expedite rate cases, the determination of whether to apply
the simplified procedures must be made quickly at the outset of a case.
Based on the comments of the parties, however, we propose to modify
slightly the 45-day schedule suggested in Simplified Rate Guidelines.
Instead of 15 days, the railroad would have 20 days to file opposition
to the
[[Page 50552]]
use of the simplified procedures, the same due date for filing an
answer to a complaint. 49 CFR 1111.4 (a) and (b). This proposal gives a
railroad more time to respond and necessitates only one filing, rather
than two, in response to a complaint. The complainant would have 10
days to respond, and the Board would have 20 days in which to determine
whether the Simplified Rate Guidelines should be used. See proposed new
section 1111.9 (providing for a 50-day schedule).12
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\12\ We propose to renumber current section 1111.9 as section
1111.10.
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We believe that such an approach balances the needs of the parties.
While the time frame is relatively short, we note that we are not
deciding the case on the merits but simply determining whether to use
the Simplified Rate Guidelines. This short schedule is necessary if we
are to proceed with the expeditious handling of the complaint.
Both the AAR and the NITL see a scheduling conflict between holding
the procedural conference (49 CFR 1111.9) and determining whether to
apply the simplified procedures. AAR, while not wanting a schedule for
determining whether to apply the Simplified Rate Guidelines, wants a
conference of the parties to be held ``shortly after the complaint is
filed.'' NITL also favors a conference and supports proceeding under 49
CFR 1111.9(a), under which the parties are required to meet, or discuss
by telephone, discovery and procedural matters within 7 days after an
answer to a complaint is filed.13 To avoid convening a
conference during the time that parties are preparing pleadings
addressing the appropriateness of using the Simplified Rate Guidelines,
we propose to modify 49 CFR 1111.9(a) so that the conference will be
held 12 (instead of 7) days after the answer is filed (day 32) and the
report to the Board will be due 19 (instead of 14) days after the
answer is filed.14
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\13\ Within 14 days after an answer to a complaint is filed,
the parties, either jointly or separately, shall file a report with
the Board setting forth a proposed procedural schedule to govern
future activities and deadlines in the case.
\14\ Because we propose to redesignate Sec. 1111.9 as
Sec. 1111.10, these modifications are in proposed section
1111.10(a).
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The parties disagree about whether we should prescribe a general
procedural schedule to govern the submission of evidence for cases
processed under the Simplified Rate Guidelines. AAR and, to some
extent, Ms. Kueppers favor a case-by-case approach. NITL supports the
use of the procedural schedule applicable to stand-alone cost cases
with certain modifications.15
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\15\ See 49 CFR 1111.8.
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We agree with AAR and Ms. Kueppers that it seems best to proceed
initially on a case-by-case basis. Without any experience processing
cases using the Simplified Rate Guidelines, it is difficult to develop
a generally applicable procedural schedule. Nevertheless, the goal of
section 10704 is to expedite the processing of rate cases. As a general
matter, we believe that the evidentiary phase of a non-coal case should
take less than the 7-month time frame for large coal cases. Therefore,
we will generally require that discovery be expedited.
Finally, NITL requests that the Rules of Practice cross reference
the regulation at 49 CFR 1244.8 concerning access to the Waybill
Sample.16 We believe, however, that such redundance is
unnecessary.17
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\16\ Ms. Kueppers requests that the carrier provide its waybill
tapes to the complainant. Our rules at section 1244.8, however,
provide for a party to request from the Board the Waybill Sample,
which is a statistically valid sample. We believe that this process
is a more efficient method of obtaining information. We also
believe, at least for the present, that Ms. Kueppers' request for
discovery and confidentiality rules is unnecessary and can be
handled on a case-by-case basis.
\17\ In Simplified Rate Guidelines (at 41) we denied access to
the Waybill Sample prior to the filing of the complaint. However,
parties can request access to such data simultaneously with the
filing of a complaint. The Board will act promptly on these
requests.
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The Board certifies that the rules, if adopted, would not have a
significant economic effect on a substantial number of small entities.
The proposed rules should result in the quicker processing of rail
complaints using the simplified procedures. 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 1111
Administrative practice and procedure, Investigations.
Decided: September 18, 1997.
By the Board, Chairman Morgan and Vice Chairman Owen.
Vernon A. Williams,
Secretary.
For the reasons set forth in the preamble, title 49 chapter X, part
1111 of the Code of Federal Regulations is proposed to be amended as
follows:
PART 1111--COMPLAINT AND INVESTIGATION PROCEDURES
1. The authority citation for part 1111 is revised to read as
follows:
Authority: 5 U.S.C. 559; 49 U.S.C. 721, 10704, and 11701.
2. Section 1111.1 is proposed to be amended by revising the last
two sentences of paragraph (a) and adding paragraphs (a)(1) through
(a)(9) to read as follows:
Sec. 1111.1 Content of formal complaints; joinder.
(a) * * * In a complaint challenging the reasonableness of a rail
rate, the complainant should indicate whether, in its view, the
reasonableness of the rate be examined using constrained market pricing
or simplified standards adopted pursuant to 49 U.S.C. 10701(d)(3). If
the complainant seeks to use the simplified standards, it should
support this request by submitting, at a minimum, the following
information:
(1) A general history of the traffic at issue, including how the
traffic has moved in the past, how it currently moves, and how it can
and will be moved in the future. This information should address not
only the physical movement of the traffic, but the type and level of
rates actually used. It should include all carriers (rail and nonrail)
that have participated in the transportation of this traffic or could
do so.
(2) The specific commodity description(s) for the traffic at issue,
the shipping characteristics and requirements of the traffic, and the
type of railroad cars required or used for the traffic.
(3) All origins, destinations, and origin-destination (O-D) pairs
involved in the complaint, by commodity type.
(4) The amount of traffic involved (by commodity type), including
total annual carloadings, average tons per car, number of carloads per
shipment, and number of carloads per week or month.
(5) Total or average revenue per carload paid to the defendant
railroad(s), by commodity type.
(6) The feasibility and anticipated cost of preparing a SAC
presentation in the case.
(7) An estimate of the other costs to be incurred in pursuing the
rate complaint, including preparing necessary jurisdictional threshold
and market dominance evidence.
(8) The relief sought, including all reparations as well as the
level and duration of any rate prescription.
(9) The present value of the relief sought.
* * * * *
[[Page 50553]]
Sec. 1111.8 [Amended]
3. In Sec. 1111.8 remove the phrase ``section 1111.9(b)'' and add
``Sec. 1111.10(b)'' in its place.
4. Redesignate Sec. 1111.9 as Sec. 1111.10 and add new Sec. 1111.9
to read as follows:
Sec. 1111.9 Procedural schedule to determine whether to use simplified
procedures.
Absent a specific order by the Board, the following procedural
schedule will apply in determining whether to grant a request under
Sec. 1111.1(a) to use the simplified procedures (the remainder of the
procedural schedule will be determined on a case-by-case basis):
Day 0 Complaint filed, discovery period begins.
Day 20 Defendant's answer to complaint and opposition to use of
simplified procedures due.
Day 30 Complainant's response to use of simplified procedures due.
Day 50 Board's determination of whether simplified procedures
should be used.
5. In newly designated Sec. 1111.10 paragraph (a) is revised to
read as follows:
Sec. 1111.10 Meetings to discuss procedural matters.
(a) Generally. In all complaint proceedings, other than those
challenging the reasonableness of a rail rate based on stand-alone
cost, the parties shall meet, or discuss by telephone, discovery and
procedural matters within 12 days after an answer to a complaint is
filed. Within 19 days after an answer to a complaint is filed, the
parties, either jointly or separately, shall file a report with the
Board setting forth a proposed procedural schedule to govern future
activities and deadlines in the case.
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[FR Doc. 97-25642 Filed 9-25-97; 8:45 am]
BILLING CODE 4915-00-P
