[Federal Register Volume 63, Number 248 (Monday, December 28, 1998)]
[Rules and Regulations]
[Pages 71396-71402]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-34187]
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DEPARTMENT OF TRANSPORTATION
Surface Transportation Board
49 CFR Parts 1146 and 1147
[STB Ex Parte No. 628]
Expedited Relief for Service Inadequacies
AGENCY: Surface Transportation Board.
ACTION: Final rules.
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SUMMARY: The Surface Transportation Board (Board) is issuing final
rules establishing procedures for obtaining temporary alternative rail
service when there has been a substantial measurable deterioration or
other demonstrated inadequacy in rail service provided by the incumbent
carrier.
DATES: These rules are effective January 27, 1999.
FOR FURTHER INFORMATION CONTACT: Joseph H. Dettmar, (202) 565-1600.
[TDD for the hearing impaired: (202) 565-1695.]
SUPPLEMENTARY INFORMATION: In April 1998, the Board conducted hearings,
at the request of Congress, to examine issues of rail access and
competition in today's railroad industry. A recurring complaint voiced
by rail shippers at those hearings was the delay and ineffectiveness of
existing procedures for obtaining relief from localized service
failures, and the railroads agreed that we should reexamine how such
service failures can best be addressed.1 Accordingly, in a
notice of proposed rulemaking in this proceeding served May 12, 1998,
and published in the Federal Register on May 18, 1998 (63 FR 27253)
(May Notice), we sought comments on a proposal to establish expedited
procedures for shippers to obtain localized temporary alternative rail
service from another carrier when the incumbent carrier cannot properly
serve them.
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\1\ See Review of Rail Access and Competition Issues, STB Ex
Parte No. 575 (STB served Apr. 17, 1998) (Review), slip op. at 6-7.
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Under the proposed procedures, parties could seek alternative rail
service, under 49 U.S.C. 10705, 11102, or 11123, when, over an
identified time period, there has been a substantial measurable
deterioration in the rail service provided by an incumbent carrier. We
did not list particular factors to be used in making that assessment,
or propose a specific test period, but rather sought to retain the
flexibility needed to address widely varying circumstances. We
explained, however, that these procedures were not meant to redress
minor service disruptions, but rather would be directed only at
substantial service problems that cannot readily be resolved by the
incumbent railroad. Petitioners would be required to first discuss and
assess with the incumbent carrier whether adequate service would be
restored within a reasonable time (and, if not, to explain why not); to
obtain from another railroad the necessary commitment'should it be
afforded access--to meet the service needs; and to describe how the new
service could be provided safely, without degrading service to its
existing customers and without unreasonably interfering with the
incumbent's overall ability to provide service. Where relief is granted
and the incumbent carrier can later demonstrate that it has restored,
or is prepared to restore, adequate service, it could petition to
terminate that relief.
In a supplemental notice of proposed rulemaking served October 15,
1998, and published in the Federal Register on October 20, 1998 (63 FR
55996) (October Notice), we sought comments on a request by the
American Short Line and Regional Railroad Association (ASLRRA) for
similar expedited procedures for Class II and Class III railroads to
obtain temporary access to an additional carrier under similar
circumstances.
We have received comments in response to both the May Notice
2 and the October Notice.3 The comments express
near-universal support for both proposals,4 although the
commenting parties differ somewhat on what the rules should provide and
how they should be applied. After considering the comments,5
we are clarifying and modifying the earlier proposals and are adopting
the rules set forth below, to be codified at 49 CFR Parts 1146 and
1147.
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\2\ Comments were submitted by ACE Cogeneration Company (ACE);
Alliance for Rail Competition; AmerenUE; ASLRRA; Arkansas, Louisiana
& Mississippi Railroad Company (AL&M); Association of American
Railroads (AAR); BHP Copper Inc. (BHP); California Public Utilities
Commission (CPUC); Cemex USA Management, Inc. (Cemex); Chemical Lime
Company (CLC); Chemical Manufacturers Association (CMA); Edison
Electric Institute, Farmland Industries, Inc. and The Fertilizer
Institute (Edison-Farmland-Fertilizer); Empire Electric District
Company (Empire); Entergy Services, Inc. and Entergy Arkansas, Inc.
(Entergy); International Paper Company (IPC); Lower Colorado River
Authority and the City of Austin, TX (LCRA); National Grain and Feed
Association (NGFA); National Industrial Traffic League (NITL);
National Lime and Stone Company; National Mining Association (NMA);
North Dakota Grain Dealers Association, North Dakota Public Service
Commission, and North Dakota Wheat Commission (North Dakota); Ohio
Rail Development Commission, Public Utilities Commission of Ohio,
and Ohio Attorney General Antitrust Section; PP&L, Inc. (PP&L);
Shell Oil Company and Shell Chemical Company (Shell); Society of
Plastics Industry, Inc. (SPI); Swanson-Superior Forest Products,
Inc.; United States Department of Agriculture; United States
Department of Transportation (DOT); United Transportation Union
(UTU); U.S. Clay Producers Traffic Associations, Inc. (US Clay);
Joseph C. Szabo, for and on behalf of United Transportation Union-
Illinois Legislative Board (UTU-IL); and Western Coal Traffic League
(WCTL).
Replies were filed by AL&M; AAR; BHP; CPUC; Empire; Entergy;
IPC; LCRA; NITL, CMA, Edison-Farmland-Fertilizer, NMA, SPI, US Clay,
AmerenUE, and PP&L (NITL et al.); Shell; and WCTL.
\3\ Supplemental comments were filed by AL&M; CPUC; Cemex;
Edison-Fertilizer; Empire; Farmrail System, Inc. (Farmrail); NGFA;
NITL; Reagent Chemical & Research, Inc.; UTU; UTU-IL; WCTL; and
Western Railroad Company, Inc.
Supplemental replies were filed by AAR; ASLRRA; Edison-
Fertilizer; Farmrail; and DOT.
\4\ UTU-IL is the only commenter opposing the proposals. It
argues that new procedures are unnecessary. Its assertion, however,
is belied by the overwhelming consensus, expressed in the comments
of the shipper and railroad communities alike, that such procedures
would be useful and would assist parties in overcoming temporary
service problems.
We also note that the national UTU, while voicing ``serious
concerns'' about issues that could arise in individual cases
regarding safety and adverse effects on rail employees, does not
oppose the proposals.
\5\ Individual suggestions or arguments not specifically
referenced here are embraced by our general discussion in this
decision setting forth the positions of various groups and our
response thereto.
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Discussion and Conclusions
Overview
The procedures we are adopting here are designed to enable the
Board to provide temporary relief from serious, localized railroad
service problems more quickly and effectively. They do not provide
permanent remedies; to the contrary, they include specific procedures
for terminating the relief as soon as the incumbent carrier is ready
and able to serve the traffic again. Moreover, they are not intended to
address demands for more competitive service. The ``competitive
access'' regulations, at 49 CFR 1144, remain available for obtaining
more permanent relief where the incumbent railroad has acted in a way
``that is contrary to the competition policies of 49 U.S.C. 10101[] or
is otherwise anticompetitive,'' 49 CFR 1144.5(a)(1)(i).
Choice of Remedies
In the May Notice we proposed a single set of procedures under
which parties could seek temporary alternative rail service under
either the ``access'' provisions of sections 10705 or 11102 or the
``emergency service'' provisions of
[[Page 71397]]
section 11123. Under section 10705(a), the Board has broad authority to
prescribe alternative through routes when we ``consider[] it desirable
in the public interest.'' Similarly, under section 11102, we have broad
authority to order the use of another carrier's terminal facilities (in
subsection (a)) or to order switching arrangements (in subsection (c))
when we find such arrangements ``to be practicable and in the public
interest.'' 6 Finally, we have very broad authority under
section 11123 to direct the handling of traffic and the use of rail
facilities for a limited time (not more than 270 days) when there is an
``emergency situation'' causing ``substantial adverse effects on
shippers,'' or ``on rail service in a region'' of the country, or when
a rail carrier ``cannot transport the traffic offered to it in a manner
that properly serves the public.'' 7 We explained that
providing a choice of relief would afford flexibility in addressing
individual circumstances.8
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\6\ We may also order switching arrangements upon a finding that
they are ``necessary to provide competitive service.'' 49 U.S.C.
11102(c). However, as noted above, the rules adopted here are not
designed to address such needs. A party seeking relief based on a
desire for more competitive service must proceed under the
``competitive access'' rules at 49 CFR 1144.5(a). See Intramodal
Rail Competition, 1 I.C.C. 2d 822 (1985), aff'd sub nom. Baltimore
Gas & Elec. Co. v. United States, 817 F.2d 108 (D.C. Cir. 1987)
(adopting the competitive access rules); Midtec Paper Corp. v.
Chicago & N.W. Transp. Co., 3 I.C.C.2d 171 (1986), aff'd sub nom.
Midtec Paper Corp. v. United States, 857 F.2d 1487 (D.C. Cir. 1988).
\7\ As we explained in the May Notice, although section 11123
typically has been used to respond to regional service emergencies,
it is not limited to regional emergencies, but by its terms is also
available to address more localized situations.
\8\ We noted that the relief available under sections 10705 and
11102 is limited in nature (for example, trackage rights can only be
granted to terminal facilities), whereas the emergency relief
available under section 11123 is limited in duration (restricted to
a maximum 270-day period) but not in nature.
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AAR argues that temporary relief for service problems may only be
afforded under section 11123, and not under sections 10705 or 11102.
AAR reasons that, because section 11123 addresses emergency situations
requiring expedited action and embraces the types of service relief
that would be available under sections 10705 or 11102, we cannot
circumvent the limitations imposed under section 11123--the 30-day
reappraisal requirement and the 270-day total time limit 9--
by providing the same relief under sections 10705 or 11102.
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\9\ 49 U.S.C. 11123(c)(1).
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We agree with AAR, but only in part. We conclude that it would not
be appropriate to provide emergency service relief under sections 10705
or 11102 based on an accelerated or summary process, as section 11123
is specifically tailored for that purpose. Indeed, section 11123
permits us to act immediately, without observing normal due process
procedures, 49 U.S.C. 11123(b)(1), but our actions under those
circumstances must therefore be short-term (not to exceed 270 days).
Under the rules that we had proposed, and those that we have decided to
adopt in Part 1146 for requests brought under section 11123,
significant process will in fact be provided,10 but under
very short time frames given the urgency of the situations for which
they are designed. It is therefore appropriate that the relief granted
be limited to a specific duration, as it will be based upon the limited
record that can be developed under such a tight schedule.
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\10\ The incumbent railroad will be served with a copy of the
petition for relief and afforded an opportunity to reply. Moreover,
while the time for filing a reply is short, the incumbent will
receive additional actual notice, because the petitioner is required
to discuss the service problems with the incumbent carrier prior to
filing the petition for relief. In addition, we will issue a written
decision addressing the record and containing our findings.
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However, contrary to AAR's position, the statute does not preclude
us from prescribing alternative service under sections 10705 and 11102
to alleviate service problems on a fuller, less hastily developed
record. Inherent in the power to provide permanent relief under those
sections is the authority to provide the lesser included remedy of
temporary alternative service. Accordingly, we have decided to adopt
separate rules, in Part 1147, under which requests for temporary
alternative service under sections 10705 and 11102 based on service
problems will be entertained under less pressing time frames, and under
which the authority granted will be temporary but not limited to a
specific duration.
Upon the adoption of these new rules, we will have three different
sets of rules under which parties may seek alternative rail service.
Each set of rules will serve a different purpose. The Part 1146 rules
will apply to requests for expedited, short-term emergency relief under
section 11123.11 The Part 1147 rules will apply to requests
for temporary alternative service under sections 10705 or 11102, on a
more fully developed record, to address serious (but not necessarily
emergency) service problems. The Part 1144 rules will remain available
for requests for more permanent alternative service under sections
10705 or 11102 to address competitive abuses.
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\11\ Our adoption of the Part 1146 rules for handling requests
for localized immediate service relief is not intended to preclude
us from handling broader, regional service emergencies, as we have
in the past, under ad hoc, case-by-case procedures, as in Joint Pet.
for Service Order, STB Service Order No. 1518 (Oct. 31, 1997),
modified and extended (Dec. 4, 1997), further modified and extended
(Feb. 17 and 25, 1998), terminated with wind-down period (July 31,
1998) (UP/SP Service Order).
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These various procedures are not mutually exclusive; parties may
seek relief under more than one set of rules. For example, parties may
need temporary access under Part 1147 to address serious ongoing
service problems while they prepare a case for more permanent
alternative arrangements under Part 1144 to address a more basic
underlying competitive problem. Or, in emergency situations, parties
may need immediate, short-term relief under Part 1146, while they
pursue longer-term relief through the necessarily slower proceedings
under Part 1147 and/or Part 1144. In short, to obtain both immediate
and complete relief, multiple proceedings may be needed, requiring a
separate record to be developed in each proceeding. This is necessary,
however, so that the speed of the process, and extent of the showing
required, can be appropriately tailored to the nature and extent of the
relief sought. Moreover, we believe that the resulting selection of
procedures--Part 1146 for expedited, short-term emergency relief; Part
1147 for temporary, service-based access; and Part 1144 for permanent,
competition-based access--will be both fair to the interests of the
affected railroads and responsive to the transportation needs of the
shippers involved.
Nature and Extent of Service Problems
The comments reflect differing views on the nature and extent of
service problems to be addressed by these rules. AAR, supported by UTU,
argues for a somewhat more restrictive approach than we had envisioned,
while various shippers advocate a broader approach than we believe is
appropriate. We emphasize that the temporary service relief to be
offered under these rules is meant only to address serious service
problems and only to the extent necessary to meet a demonstrated need
for rail service; it is to be used for restorative or alleviative
purposes only, and not as a punitive or preventive measure.
Thus, we reject AAR's attempt to exclude from the reach of these
rules those service problems for which the incumbent railroad is not at
fault.12
[[Page 71398]]
After all, the potentially ruinous impacts on affected shippers and
connecting carriers of not having adequate rail transportation
generally do not depend upon the root cause of the carrier's service
problems. Moreover, because this temporary relief is not a punishment
against the incumbent railroad--the relief is terminable as soon as
that carrier is ready and able to provide adequate service itself--we
need not assign fault for service problems in order to provide relief
from them.
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\12\ AAR seeks to carve out service reductions caused by a
change in demand for rail service or by other shifts in market
conditions. AAR offers the following examples of what it considers
to be major market shifts: the Russian grain purchases of the 1970s;
shifts in traffic due to coal type changes resulting from the Clean
Air Act; and the primary market for Pacific Northwest lumber
changing from Asia to the Eastern United States.
AAR also argues that car supply issues--such as car acquisition,
allocation, and maintenance--should not addressed in these rules, as
they can be addressed under 49 U.S.C. 11121 (under which we may,
after a hearing, require a railroad to furnish safe and adequate car
service if we make certain findings). We do not believe that section
11121 precludes us from taking other, temporary measures to enable
traffic to move by other means while a carrier confronts its own car
supply problems. Indeed, section 11123 expressly includes a
``shortage of equipment'' among the urgent situations to be
addressed under that section.
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Similarly, these rules are designed only to address serious ongoing
service disruptions. They are not intended to anticipate problems that
have not yet occurred (and might not occur), as mentioned by AL&M. Nor
are they meant for situations where service is adequate, but simply not
up to the level that a particular shipper or connecting carrier might
desire. In other words, while transportation needs are crucial,
individual service desires are not necessarily the proper determinant
of the adequacy or inadequacy of rail service, as some shippers have
suggested.
Many comments addressed the level of service problems that would
warrant relief under these rules. AAR argues that relief should be
restricted to instances of ``severe'' service deterioration
13 occurring over a meaningful time period 14 as
measured against an appropriate comparison period.15 Various
other parties advocate a looser standard based upon the particular
needs and viewpoint of the shippers involved. Still others would have
us set out in advance more definitive service standards, presumptions
or benchmarks that would entitle petitioners to relief.
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\13\ AAR advocates using the adjective ``severe'' so as to limit
relief to instances of a major service decline and to prevent the
rules from being used as a subterfuge for universal ``open access.''
It further suggests that this is necessary to avoid chilling
railroads from taking initiatives to improve service, out of fear
that any improvement in service that cannot be sustained will serve
as a new benchmark for a later determination that service has since
deteriorated. We plan to administer these rules in such a manner
that these fears should not be realized, and our application of
these rules in individual cases is, of course, subject to judicial
review.
\14\ AAR argues that this time period should be 90 days, to
distinguish a sustained decline in service quality from the ordinary
variability of rail service. AAR concedes, however, that a shorter
test period could be appropriate where there have been ``extreme and
undisputed service breakdowns,'' as in bankruptcies.
ASLRRA suggests a 30-day time period, arguing that for a small
railroad such a period is ``extremely damaging and intolerable . . .
[and] long enough to rule out temporary, minor or fleeting service
problems.'' Various shippers urge even shorter time periods.
BHP and IPC argue against a specific test period, and for
maintaining the flexibility to address varying situations. We agree
that it is not necessary or appropriate at this time to prescribe a
minimum period. We note, however, that petitioners have the burden
of demonstrating the inadequacy of the existing service, and,
presumably, the longer problems continue, the easier it should be
for petitioners to document those problems and to demonstrate the
gravity of the situation.
\15\ AAR suggests that the base period for comparison should
consist of several equivalent time intervals over a span of prior
years, in order to guard against a ratcheted approach where every
temporary improvement in service that results from seasonality and
traffic ups and downs could establish a new baseline standard. Such
concerns, however, can and should be addressed on a case-by-case
basis. Both petitioners and the incumbent carriers should submit any
relevant evidence of instructive base periods in making their
respective presentations.
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We do not believe that it is possible or appropriate to attempt to
delineate or define in the abstract what constitutes adequate service
for all traffic under all circumstances at all times. Rather, we remain
convinced that such issues are best addressed on a case-by-case basis,
under flexible general rules, because transportation needs and service
difficulties can vary substantially. Moreover, we believe that the
``substantial measurable deterioration'' language we had proposed
appropriately describes serious, objectively determinable service
declines for which relief should be available under these rules.
However, we are persuaded by the comments that there may be an
equally compelling need for relief in instances where there has been no
deterioration from prior service levels because service has been
continuously inadequate or because there are new rail transportation
needs (by newly located shippers or existing shippers with changed
transportation needs) for which adequate service is not being provided.
To address such situations, we are also providing for relief from
``other demonstrated inadequacy in rail service provided by the
incumbent carrier.'' 16
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\16\ This change is consistent not only with sections 10705 and
11102, but also section 11123(a), which refers to transportation
``that properly serves the public,'' and with the railroads'
overarching common carrier obligation, embodied in 49 U.S.C.
11101(a), to provide service upon reasonable request.
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Available Traffic
AAR argues that we lack authority to provide any relief for
transportation that has been exempted from our regulation pursuant to
49 U.S.C. 10502 or that is the subject of a rail transportation
contract under 49 U.S.C. 10709.
AAR is clearly wrong with respect to exempt traffic. We retain full
jurisdiction to deal with exempted transportation, as we can revoke the
exemption at any time, in whole or in part, under section 10502(d). G&T
Terminal Packaging Co. v. Consolidated Rail Corp., 830 F.2d 1230, 1235
(3rd Cir. 1987), cert. denied, 485 U.S. 988 (1988). We will do so to
the extent required to provide relief shown to be justified under these
rules.
As for transportation that is provided under a rail transportation
contract, AAR is correct that we cannot enforce, interpret, or disturb
the contracts themselves, nor can we directly regulate transportation
that is provided under such a contract. 49 U.S.C. 10709(b), (c).
However, where no transportation is being provided, we do not believe
that the mere existence of a contract precludes us from providing for
temporary emergency service, upon a proper showing, so that traffic can
move while any contract-related issues are being litigated in the
courts. Moreover, there may be other instances where it is possible and
appropriate to exercise our broad regulatory authority to ensure that
traffic can move, as in the recent UP/SP Service Order. Thus, we are
not inclined to disavow in advance any possible exercise of
jurisdiction. Such jurisdictional issues are best left to a case-by-
case examination and, again, our assertion of jurisdiction in any
specific case will be subject to judicial review.
Discussions With the Incumbent Carrier
AAR supports the requirement that prospective petitioners discuss
service problems in advance with the incumbent railroad, and that their
petitions address the reasons why the incumbent carrier is unlikely to
restore adequate rail service in a reasonable period of time. AAR
suggests adding a further requirement that the petitioner act
responsibly, cooperate reasonably with the incumbent railroad to allow
provision of adequate service, and not be allowed to reject reasonable
alternatives proposed by the incumbent carrier to solve the service
problems.
Some commentors take a different view. WCTL objects to imposing an
additional burdens on petitioners. AL&M submits that the advance
discussions with the incumbent should
[[Page 71399]]
be simply for the purpose of establishing facts about the service
problem, such as its causes, magnitude, and the forecast for service
restoration; in an expedited process, they argue, parties should not
have to engage in deeper discussions. Shell expresses concern that
requiring projections of when service will be restored may lead the
incumbent railroad to project dates that it knows it cannot meet in
order to forestall the introduction of an alternative service provider.
We see no need to reduce, expand, or otherwise place conditions on
the requirement that was proposed. Advance discussions between the
parties are indispensable. They may help solve or ameliorate the
service problems; narrow the issues in dispute; or, at a minimum,
enable a more complete and informative record to be developed upon
which we can assess the situation and the proposal for relief. Thus, it
is in all parties' interests to engage in full, good faith
discussions.17 Any allegations that either party is acting
unreasonably or in bad faith can and will be considered on a case-by-
case basis.
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\17\ We agree with AAR that, as part of the pre-petition
communications, the parties should not withhold, but rather should
make fully available to each other, any documentation of the service
history.
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Arrangements With an Alternative Carrier
Several commentors express concern about the requirement that a
petition include a commitment from another carrier to provide the
alternative service. CMA suggests that a potential alternative carrier
may be unwilling to participate because taking on new business for a
short period of time may be unattractive financially. Or a carrier may
be hesitant to serve for fear of retaliation by the incumbent carrier,
particularly if the alternative carrier is a small railroad. CMA and
CPUC suggest that an unwilling carrier be required to explain its
objections and, unless they are reasonable, we should order it to
provide service. Because the cooperation of the alternative carrier is
essential, we must reject this suggestion. As we explained in the May
Notice, at 6, even temporary access is a serious remedy, given the
potentially significant operational, safety, and financial implications
for the carriers involved. Forcing a second carrier to provide service
unwillingly could create safety concerns, impair service to its
customers, or hurt its finances.
BHP and IPC seek clarification that a shipper can seek alternative
service from any entity that is ready, willing, and able to provide
service, including third-party rail switchers or other entities that
may not be certificated carriers.18 AAR objects, arguing
that a carrier is not in a position to help if it does not own its own
infrastructure. We do not foreclose the possibility that third-party
rail switchers and others can provide genuine service relief in certain
circumstances, and we will allow any competent carrier to serve,
provided it can do so safely. However, inasmuch as an entity authorized
under these provisions will be required to interface directly and fully
with other rail carriers as common carriers by rail, the entity
authorized to provide alternative service should be a carrier
certificated by the Board. That is not to say, as noted, that
noncarrier entities would be foreclosed from participation, only that
such entities would be required to use our 7-day notice procedures (at
49 CFR 1150.31) to obtain the requisite operating authority. In these
circumstances, and in order to expedite the process and minimize
burdens on temporary operators, filing fees for such authority will be
waived.
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\18\ BHP and IPC assert that third-party rail switchers are
fully capable of operating on rail lines and moving cars in and out
of a shipper's plant and, in emergencies, can safely operate over an
incumbent railroad's track for short distances to interchange
points.
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AAR seeks clarification that the alternative carrier must be able
to provide better service than the incumbent carrier is currently
providing. We consider that to be implicit in the reason for providing
relief under these rules, and we will deal with this matter on a case-
by-case basis. We will authorize relief where the combination of the
alternative carrier and the incumbent carrier will provide better
service than the incumbent carrier is providing by itself. In this
regard, we note that providing authority to an alternative carrier does
not supplant the service furnished by the existing carrier, but rather
supplements it.
AAR further suggests that these rules should apply only to
exclusively-served petitioners, and not to those that already have
access to an alternative carrier. We agree that as a general rule no
relief is necessary for petitioners that can already access another
carrier capable of handling the service needs. If neither of the
incumbent carriers is providing adequate service, however, relief under
these rules is not foreclosed.
Safe Implementation
Petitions for relief under these rules must show how the
alternative carrier would provide the service safely and without
degrading service to its existing customers or unreasonably interfering
with the incumbent's overall ability to provide service. Several of the
comments specifically addressed this requirement.
AAR voiced a concern that alternative service remedies could be
counterproductive, because the incumbent carrier's crews would have to
train the crews of the alternative carrier, or the incumbent carrier's
crews might have to be diverted from other service in order to run the
trains of the alternative carrier. UTU expressed concern that,
particularly where the incumbent's lines are already congested, the
inexperience of employees of the alternative carrier on the incumbent's
trackage could lead to greater delays or accidents. UTU asks that new
crews be given significant training whenever an alternative carrier
enters another carrier's lines. BHP and IPC agree that having the crews
of the incumbent carrier train the new crews or run the alternative
carrier's trains may may be necessary for safety reasons, but they
argue that we should not deny a request for alternative service relief
on that basis. And of course, as NITL notes, there should be little
effect on an incumbent carrier's operations and safety when only
reciprocal switching or through route/joint rate remedies are sought.
NITL argues that, to avoid delay, it should be the responsibility
of the incumbent carrier, not the petitioner, to identify and address
likely safety issues, as it would be more difficult for a shipper to
anticipate and address operational issues. While the incumbent carrier
will undoubtedly wish to address any such issues, the alternative
carrier is expected to anticipate and address them as well. Therefore,
we believe that it is appropriate to have the petition describe the
alternative carrier's operational plans and discuss how the proposed
operations can be conducted safely.19 Moreover, the carriers
involved need to discuss with each other how they can work together to
make the alternative service work smoothly, and any problems or
disputes should be raised and dealt with as early in the process as
possible.
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\19\ The simple one-page commitment suggested by US Clay
(consisting merely of a pledge to adequately and safely serve the
traffic) would not be sufficient. Advance planning will be necessary
to assure safe integration of the operations of the alternative
carrier and the incumbent carrier. We believe it is appropriate for
us to require the respective carriers to demonstrate that they have
undertaken the requisite planning.
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Given the importance of safety issues, DOT asks that a copy of
petitions be served on the Federal Railroad
[[Page 71400]]
Administration (FRA) and that the parties be required to cooperate with
FRA to ensure that safety is not compromised. We agree and are adding a
requirement for service on FRA,20 and we expect parties to
cooperate fully with FRA.
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\20\ UTU-IL asks that petitioners also be required to serve
their petitions on employee organizations and to include unspecified
employee information in the petition. However, UTU-IL--a local
legislative body located in Illinois--would not be the entity to
receive such petitions under its proposal, and no entity that would
has joined in the request. We are reluctant to impose unnecessary
burdens on the filing of these petitions. Moreover, we are confident
that safety issues can and will be addressed fully without these
additional requirements.
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Finally, AAR argues that we should impose the least intrusive
remedy that will address the particular service problem
presented.21 Cemex, on the other hand, asks that we provide
the best, most expeditious, available relief. We believe it is best to
maintain the flexibility to weigh issues of intrusiveness, feasibility,
effectiveness, and speed of relief on a case-by-case basis. However, it
is worth repeating at this juncture that the remedy provided is
designed to most effectively address identified service problems, not
to punish the incumbent carrier.
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\21\ AAR notes that a new through route can be less disruptive
or costly than other remedies, and that in most cases reciprocal
switching is less intrusive than trackage rights.
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Compensation, Rates and Divisions
NITL argues that the Board, rather than the carriers, should set
the amount of compensation to be paid to the incumbent carrier for the
use of its property. However, that would be contrary to the statute,
which authorizes the Board to set compensation only if the parties
cannot agree on terms. 49 U.S.C. 11102(a), (c), 11123(b)(2).
Various parties address the need for the incumbent carrier to be
fairly compensated if it is required to provide services and/or
facilities to the alternative carrier. NITL et al. argue that any
payment to the incumbent carrier should be limited to costs incurred by
the incumbent, including a return on investment, and not include
compensation for lost profits. They suggest that fair compensation can
be developed from our railroad cost accounting system, known as URCS.
We agree that the incumbent railroad is entitled to fair compensation
for whatever services and facilities it provides, but not for lost
profits for service it is not providing. Because the type of access to
an incumbent carrier's facilities and the services the incumbent will
be required to provide to an alternative carrier will vary widely,
depending on the service inadequacy and the relief that is fashioned,
we will not attempt to prescribe in the abstract a compensation formula
applicable to all situations. Rather, where appropriate we will be
guided by established precedent, taking into account the circumstances
of the particular case.
BHP and IPC argue that affected shippers should not have to pay
more for receiving the alternative service than would be paid for the
incumbent carrier's service, and NITL argues that affected shippers
should not have to pay more than the URCS variable costs for moving
their traffic. We do not have the authority, however, to prescribe the
rates that a carrier will charge to a shipper unless we first find that
the carrier has market dominance over the traffic involved and that the
rate selected by the carrier is unlawful. 49 U.S.C. 10701(c), (d),
10704(a)(1), 10709. Thus, the rates to be charged for the alternative
service are a matter for discussion between the shipper and alternative
carrier. We would note, however, that attempting to limit what the
alternative railroad may charge to what the incumbent would have
charged, even though the alternative carrier will incur different
costs, could disserve the shippers' interests by discouraging carriers
from offering to provide alternative service.
Finally, ACE asks that we set standards for determining the
division between the carriers of any joint rates. We have such
standards in place, at 49 CFR 1137, and see no need to revise them at
this time. We note, however, that those regulations are meant to serve
as a last resort only; carriers are encouraged to negotiate divisions
among themselves.22
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\22\ Official-Southwestern Divisions In the Matter of Joint
Rates Between Official and Southwestern Territories, Docket No.
29886 (Sub-No. 1) (ICC served Jan. 28, 1987).
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Case Procedures
We proposed very short time frames for the development of a record
under Part 1146--with a reply by the incumbent railroad due in 5
business days, and any rebuttal by the petitioner due 3 business days
later--to enable us to provide prompt relief for service emergencies.
As noted above, we have decided to lengthen the time periods in Part
1147 applicable to petitions for temporary, service-based access under
sections 10705 and 11102 of the statute--with a reply by the incumbent
railroad due in 30 days, and any rebuttal by the petitioner due 15 days
later.
With respect to the abbreviated time frames proposed for Part 1146,
some commenters seek to lengthen the schedule,23 while
others would have us shorten it even more.24 We do not
believe that a shorter time frame is feasible, given the nature of the
relief sought, the need for an adequately developed record regarding
the factual predicate for such action, and the ability of the parties
to implement the proposed arrangement safely and without harm to either
railroad or their other shippers. By the same token, we are not
persuaded that a longer time frame is necessary or appropriate given
the emergency nature of the situations for which the Part 1146 rules
are reserved. (We remind the commenters that parties will actually have
additional notice of the controversy, because they are required to
discuss the service problems prior to the filing of the petition.) To
ensure that the limited time provided can be used effectively, however,
we adopt the NITL suggestion that service of all pleadings be by hand
or by overnight delivery.
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\23\ AAR suggests that the reply be due in 14 days, and
petitioner's rebuttal 7 days thereafter. As NITL points out, that
would serve to triple the originally proposed time frame. North
Dakota suggests that petitioners have 5 business days for rebuttal.
\24\ BHP and IPC would have us require the filing and service of
pleadings (on a designated ``service officer'' for the incumbent
railroad) by facsimile, with a reply due within 2 calendar days. To
further speed the process, they suggest that we appoint an ombudsman
of the Board to receive and quickly act on such petitions, with
appeals available to the Board.
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Finally, several parties ask that we set a time for Board action on
a petition for temporary alternative service.25 Our goal is
to issue a decision as soon as possible after the record closes, taking
into account the degree of urgency involved in the particular request
before us. We are not persuaded that this goal will be furthered by
prescribing in advance an arbitrary deadline for Board action in all
such cases.
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\25\ The dates suggested ranged from 5 (Shell and CPUC) to 7
(CLC) to 15 (US Clay) days after rebuttal.
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Duration of Relief
The relief available under Part 1146 is, of course, subject to both
the 30-day reappraisal requirement and the maximum 270-day time limit
for actions taken under section 11123. Part 1146 contains a rebuttable
presumption that an emergency for which relief is granted will extend
beyond the initial 30-day period, unless otherwise indicated in the
Board's initial order. AAR argues against such a presumption, on the
ground that we cannot avoid the requirement in section 11123 for a
reappraisal of the situation at the end of the first 30 days. Contrary
to AAR's impression, the presumption was not intended to obviate the
need for a
[[Page 71401]]
further Board order at the end of the 30-day period. Rather, it is
designed to simplify and expedite the 30-day reexamination by avoiding
a rehashing of the original inquiry into whether relief is appropriate
and limiting the evidentiary presentations and our analysis to the
issue of whether the emergency is over so that the relief is no longer
needed. The presumption can be rebutted by the incumbent railroad.
Moreover, the presumption will not apply in those cases where the Board
in its original order finds that the emergency is unlikely to continue
for more than 30 days.
Of course, under both Parts 1146 and 1147, the incumbent railroad
will be free to petition to terminate the relief as soon as the
emergency is over, regardless of when that occurs. The statement in the
proposed rules that would have discouraged carriers from filing a
petition to terminate relief less than 90 days after the relief is
granted, absent special circumstances, would not have barred earlier
termination petitions. Rather, we intended for it to serve as an
admonition to carriers not to file such petitions too hastily or
prematurely. Accordingly, we have changed the language to express that
purpose more directly and clearly.
Some shippers seek a minimum period of relief to which the
petitioner would be entitled.26 While we appreciate their
concern, we do not believe that establishing a minimum time would be
appropriate, given the nature and (non-punitive, restorative) purpose
of actions taken under Parts 1146 or 1147.27 As discussed
above, parties desiring alternative service that extends beyond
correction of any serious service problems may proceed under Part 1144.
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\26\ NITL argues for a 90-day minimum period, arguing that any
shorter period will be insufficient to justify the time and expense
spent by alternative carriers in providing service. Others proposed
minimum periods ranging from 30 days (AL&M) to 180 days (SPI) to one
year (PP&L and AmerenUE).
\27\ For the same reason, we do not believe it is necessary or
appropriate to place an outside limit on the duration of relief that
is provided under Part 1147. (Relief granted under Part 1146 is
statutorily limited to 270 days.) Unitl the incumbent railroad is
ready to provide adequate service on its own, the basis and need for
frelief continue.
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Railroad Petitioners
We agree with AAR that the rules as originally proposed did not
preclude railroads (of any size) from seeking relief under the rules,
and the rules will so specify. As ASLRRA points out, there may well be
situations where a railroad is seriously affected by the service
disruptions of a connecting (incumbent) carrier and may need to obtain
a connection with a second (alternative) carrier and access (by either
the petitioning or alternative carrier) over track of the incumbent
carrier for a reasonable distance to reach the alternative carrier. The
primary issues 28 regarding railroad- (as opposed to
shipper-) initiated petitions relate to mandatory interchange
requirements and relief from ``paper barriers'' 29 or other
contractual impediments to access. 30
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\28\ ASLRRA's suggestion that we assess qualifying service
disruptions based upon a preset (30-day) time period, and AAR's
attempt to remove car supply issues from the service problems for
which relief may be granted, are rejected for the reasons discussed
above under ``Nature and Extent of Service Problems.''
\29\ ``Paper barriers'' refer to contractual restrictions that
limit the ability of some small carriers to interchange traffic with
carriers other than their primary connecting carrier. See Review, at
8.
\30\ DOT and Farmrail agree that there may be other contractual
impediments that limit the service that a small railroad can
provide, such as car supply requirements and exclusive rate making
authority by the larger, connecting carrier.
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ASLRRA asserts that a railroad-petitioner should not need an
advance commitment from an alternative carrier, in view of the
mandatory interchange requirements applicable to all railroads in 49
U.S.C. 10742. AAR argues against compelling an unwilling second
railroad to participate in an emergency service arrangement. AAR
asserts that the principal, if not only, reason that a second railroad
would decline to handle additional traffic via a new connection would
be operating considerations, which are a significant factor in
determining whether to grant relief. AAR argues that requiring the
willingness of the second carrier will filter out those situations
where there are operational problems. DOT suggests an intermediate
position short of requiring a binding commitment from a prospective
connecting railroad--that the prospective railroad be consulted to
ensure that any relief granted would not unduly affect its operations.
31 ASLRRA concedes that as a practical matter the
petitioning railroad will need to work closely with the alternative
carrier to work out the details of how traffic would be handled
efficiently and safely in a manner acceptable to each. We agree and
thus we would expect the carriers normally to have worked out an
agreement. If for some reason they have not been able to reach
agreement, we will take that into consideration, on a case-by-case
basis, in determining whether the relief sought is operationally
feasible and safe and will not harm service to existing customers.
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\31\ WCTL agrees that the petitioning railroad should be
required to show, as any petitioner would, that the requested relief
is operationally feasible, but should not be required to ``pre-clear
its petition with the second carrier's marketing department.'' WCTL
Supplemental Comments at 6.
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AAR agrees that contract terms that would directly prevent the
exercise of the remedy granted by the Board should be superseded, but
argues that broader relief is inappropriate. Such issues are likely to
be fact-dependent, and are thus best left to consideration on any
individual case basis.
This action will not significantly affect either the quality of the
human environment or the conservation of energy resources. Moreover, we
certify that this action will not have a substantial impact upon a
significant number of small entities.
List of Subjects in 49 CFR Parts 1146 and 1147
Railroads, Service.
Decided: December 18, 1998.
By the Board, Chairman Morgan and Vice Chairman Owen.
Vernon A. Williams,
Secretary.
For the reasons set forth in the preamble, the Board adds new parts
1146 and 1147 to title 49, chapter X, of the Code of Federal
Regulations, to read as follows:
PART 1146--EXPEDITED RELIEF FOR SERVICE EMERGENCIES
Authority: 49 U.S.C. 721, 11101, and 11123.
Sec. 1146.1. Prescription of alternative rail service.
(a) General. Alternative rail service will be prescribed under 49
U.S.C. 11123(a) if the Board determines that, over an identified period
of time, there has been a substantial, measurable deterioration or
other demonstrated inadequacy in rail service provided by the incumbent
carrier.
(b)(1) Petition for Relief. Affected shippers or railroads may seek
the relief described in paragraph (a) of this section by filing an
appropriate petition containing:
(i) A full explanation, together with all supporting evidence, to
demonstrate that the standard for relief contained in paragraph (a) of
this section is met;
(ii) A summary of the petitioner's discussions with the incumbent
carrier of the service problems and the reasons why the incumbent
carrier is unlikely to restore adequate rail service consistent with
current transportation needs within a reasonable period of time;
(iii) A commitment from another available railroad to provide
alternative service that would meet current transportation needs (or,
if the
[[Page 71402]]
petitioner is a railroad and does not have an agreement from the
alternative carrier, an explanation as to why it does not), and an
explanation of how the alternative service would be provided safely
without degrading service to the existing customers of the alternative
carrier and without unreasonably interfering with the incumbent's
overall ability to provide service; and
(iv) A certification of service of the petition, by hand or by
overnight delivery, on the incumbent carrier, the proposed alternative
carrier, and the Federal Railroad Administration.
(2) Reply. The incumbent carrier must file a reply to a petition
under this paragraph within five (5) business days.
(3) Rebuttal. The party requesting relief may file rebuttal no more
than three (3) business days later.
(c) Presumption of continuing need. Unless otherwise indicated in
the Board's order, a Board order issued under paragraph (a) of this
section shall establish a rebuttable presumption that the
transportation emergency will continue for more than 30 days from the
date of that order.
(d)(1) Petition to terminate relief. Should the Board prescribe
alternative rail service under paragraph (a), of this section the
incumbent carrier may subsequently file a petition to terminate that
relief. Such a petition shall contain a full explanation, together with
all supporting evidence, to demonstrate that the carrier is providing,
or is prepared to provide, adequate service. Carrier are admonished not
to file such a petition prematurely.
(2) Reply. Parties must file replies to petitions to terminate
filed under this subsection within five (5) business days.
(3) Rebuttal. The incumbent carrier may file any rebuttal no more
than three (3) business days later.
(e) Service. All pleadings under this part shall be served by hand
or overnight delivery on the Board, the other parties, and the Federal
Railroad Administration.
PART 1147--TEMPORARY RELIEF UNDER 49 U.S.C. 10705 AND 11102 FOR
SERVICE INADEQUACIES
Authority: 49 U.S.C. 721, 10705, 11101, and 11102.
Sec. 1147.1. Prescription of alternative rail service.
(a) General. Alternative rail service will be prescribed under 49
U.S.C. 11102(a), 11102(c) or 10705(a) if the Board determines that,
over an identified period of time, there has been a substantial,
measurable deterioration or other demonstrated inadequacy in rail
service provided by the incumbent carrier.
(b)(1) Petition for Relief. Affected shippers or railroads may seek
relief described in paragraph (a) of this section by filing an
appropriate petition containing:
(i) A full explanation, together with all supporting evidence, to
demonstrate that the standard for relief contained in paragraph (a) of
this section is met;
(ii) A summary of the petitioner's discussions with the incumbent
carrier of the service problems and the reasons why the incumbent
carrier is unlikely to restore adequate rail service consistent with
current transportation needs within a reasonable period of time;
(iii) A commitment from another available railroad to provide
alternative service that would meet current transportation needs (or,
if the petitioner is a railroad and does not have an agreement from the
alternative carrier, an explanation as to why it does not), and an
explanation of how the alternative service would be provided safely
without degrading service to the existing customers of the alternative
carrier and without unreasonably interfering with the incumbent's
overall ability to provide service; and
(iv) A certification of service of the petition, by hand or by
overnight delivery, on the incumbent carrier, the proposed alternative
carrier, and the Federal Railroad Administration.
(2) Reply. The incumbent carrier must file a reply to a petition
under this paragraph within thirty (30) days.
(3) Rebuttal. The party requesting relief may file rebuttal no more
than fifteen (15) days later.
(c)(1) Petition to terminate relief. Should the Board prescribe
alternative rail service under paragraph (a) of this section, the
incumbent carrier may subsequently file a petition to terminate that
relief. Such a petition shall contain a full explanation, together with
all supporting evidence, to demonstrate that the carrier is providing,
or is prepared to provide, adequate service to affected shippers.
Carriers are admonished not to file such a petition prematurely.
(2) Reply. Parties must file replies to petitions to terminate
filed under this subsection within five (5) business days.
(3) Rebuttal. The incumbent carrier may file any rebuttal no more
than three (3) business days later.
(d) Service. All pleadings under this part shall be served by hand
or by overnight delivery on the Board, other parties, and the Federal
Railroad Administration.
[FR Doc. 98-34187 Filed 12-24-98; 8:45 am]
BILLING CODE 4915-00-P
