Information Required in Notices and Petitions Containing Interchange Commitments, 66165-66169 [2012-26882]

Download as PDF 66165 Proposed Rules Federal Register Vol. 77, No. 213 Friday, November 2, 2012 This section of the FEDERAL REGISTER contains notices to the public of the proposed issuance of rules and regulations. The purpose of these notices is to give interested persons an opportunity to participate in the rule making prior to the adoption of the final rules. Hazard Determinations in the Federal Register and a notice in the affected community’s local newspaper following issuance of a revised preliminary Flood Insurance Rate Map and Flood Insurance Study report. Authority: 42 U.S.C. 4104; 44 CFR 67.4. Dated: September 27, 2012. Sandra K. Knight, Deputy Associate Administrator for Mitigation, Department of Homeland Security, Federal Emergency Management Agency. DEPARTMENT OF HOMELAND SECURITY Federal Emergency Management Agency [FR Doc. 2012–26746 Filed 11–1–12; 8:45 am] 44 CFR Part 67 BILLING CODE 9110–12–P [Docket ID FEMA–2010–0003; Internal Agency Docket No. FEMA–B–1158] DEPARTMENT OF TRANSPORTATION Proposed Flood Elevation Determinations for Scotland County, NC, and Incorporated Areas Surface Transportation Board 49 CFR Parts 1121, 1150, and 1180 Federal Emergency Management Agency, DHS. ACTION: Proposed rule; withdrawal. AGENCY: [Docket No. EP 714] The Federal Emergency Management Agency (FEMA) is withdrawing its proposed rule concerning proposed flood elevation determinations for Scotland County, North Carolina, and Incorporated Areas. DATES: This withdrawal is effective on November 2, 2012. ADDRESSES: You may submit comments, identified by Docket No. FEMA–B– 1158, to Luis Rodriguez, Chief, Engineering Management Branch, Federal Insurance and Mitigation Administration, Federal Emergency Management Agency, 500 C Street SW., Washington, DC 20472, (202) 646–4064, or (email) Luis.Rodriguez3@fema.dhs.gov. SUMMARY: Luis Rodriguez, Chief, Engineering Management Branch, Federal Insurance and Mitigation Administration, Federal Emergency Management Agency, 500 C Street SW., Washington, DC 20472, (202) 646–4064, or (email) Luis.Rodriguez3@fema.dhs.gov. emcdonald on DSK67QTVN1PROD with PROPOSALS FOR FURTHER INFORMATION CONTACT: On December 16, 2010, FEMA published a proposed rulemaking at 75 FR 78654, proposing flood elevation determinations along one or more flooding sources in Scotland County, North Carolina. FEMA is withdrawing the proposed rulemaking and intends to publish a Notice of Proposed Flood SUPPLEMENTARY INFORMATION: VerDate Mar<15>2010 12:55 Nov 01, 2012 Jkt 229001 Information Required in Notices and Petitions Containing Interchange Commitments Surface Transportation Board (the Board or STB), DOT. ACTION: Notice of proposed rulemaking. AGENCY: Through this Notice of Proposed Rulemaking (NPR), the Board is proposing a rule establishing additional disclosure requirements for notices and petitions for exemption where the underlying lease or line sale includes an interchange commitment. DATES: Comments are due by December 3, 2012. Reply comments are due by January 2, 2013. ADDRESSES: Comments and replies may be submitted either via the Board’s e-filing format or in the traditional paper format. Any person using e-filing should attach a document and otherwise comply with the instructions at the E-FILING link on the Board’s Web site, at https://www.stb.dot.gov. Any person submitting a filing in the traditional paper format should send an original and 10 copies to: Surface Transportation Board, Attn: EP 714, 395 E Street SW., Washington, DC 20423–0001. Copies of written comments and replies will be available for viewing and self-copying at the Board’s Public Docket Room, Room 131, and will be posted to the Board’s Web site. FOR FURTHER INFORMATION CONTACT: Amy C. Ziehm at (202) 245–0391. SUMMARY: PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 Assistance for the hearing impaired is available through the Federal Information Relay Service (FIRS) at (800) 877–8339. SUPPLEMENTARY INFORMATION: Interchange commitments are ‘‘contractual provisions included with a sale or lease of a rail line that limit the incentive or the ability of the purchaser or tenant carrier to interchange traffic with rail carriers other than the seller or lessor railroad.’’ 1 Currently, if a proposed acquisition of a rail line involves an interchange commitment, the party filing the notice or petition for exemption must inform the Board that such a provision exists and must file a confidential, complete version of the document containing that provision with the Board.2 Historical Regulation of Interchange Commitments As a result of both the Railroad Revitalization and Regulatory Reform Act of 1976 and the Staggers Rail Act of 1980, it has become easier for rail carriers to abandon, sell, or lease a line or part of a line by utilizing exemptions from regulatory procedures. This flexibility has helped to revitalize the railroad industry. In 1998, the Board held two days of hearings to examine rail access and competition.3 The issue of interchange commitments, or paper barriers, arose in the context of shortline railroads. Many of the transactions that created or built up these new shortline railroads contained interchange commitments.4 The existence of these contractual restrictions encouraged large railroads to sell or lease lighter-density lines at reduced prices (in some cases at no cost), because they were guaranteed to retain a portion of the future revenues from the traffic on those lines. In many instances, they also provided a means of helping to finance the acquisition by shortline railroads. Interchange commitments took varying forms, including lease payment credits for cars interchanged with the seller or lessor carrier (in some instances the lease 1 Review of Rail Access and Competition Issues— Renewed Petition of the W. Coal Traffic League, EP 575, slip op. at 1 (STB served Oct. 30, 2007). Interchange commitments are sometimes referred to as ‘‘paper barriers.’’ 2 See 49 CFR 1121.3(d), 1150.33(h), 1150.43(h), and 1180.4(g)(4). 3 Review of Rail Access and Competition Issues, EP 575 (STB served Apr. 17, 1998). 4 Id. at 8. E:\FR\FM\02NOP1.SGM 02NOP1 66166 Federal Register / Vol. 77, No. 213 / Friday, November 2, 2012 / Proposed Rules emcdonald on DSK67QTVN1PROD with PROPOSALS credit applied if the lessee interchanged with the lessor up to the same number of cars interchanged with the lessor in the prior year); monetary penalties for traffic interchanged with another railroad; or a total ban on interchange with any carrier other than the seller or lessor carrier.5 Many reportedly had no fixed termination date.6 In September 1998, the American Short Line and Regional Railroad Association and the Association of American Railroads entered into a Railroad Industry Agreement (RIA), which stipulated, among other things, that ‘‘[l]egitimate paper barriers are those that are designed as fair payment for the sale or rental value of the line that created the Short Line.’’ 7 In December 1998, the Western Coal Traffic League (WCTL) filed a petition for rulemaking asking the Board to adopt rules of general applicability regarding interchange commitments. The Board deferred action on WCTL’s petition in order to allow for industry experience under the RIA.8 In 2005, in response to a renewed petition filed by WCTL, the Board initiated a rulemaking proceeding to consider regulations restricting interchange commitment provisions included with a sale or lease of a rail line.9 WCTL argued that interchange commitments were anticompetitive because they prevented lessee/ purchaser railroads from offering shippers the full array of competitive routing options. WCTL asked the Board to establish a rebuttable presumption that such provisions are unreasonable and contrary to the public interest if they (a) Last longer than five years, (b) include any financial penalty for interchanging traffic with another carrier, or (c) include a credit for interchanging traffic with the seller or lessor railroad that would provide a return in excess of the railroad industry’s cost of capital.10 Upon receiving comments and conducting a public hearing, the Board declined to adopt a single rule of general applicability, deciding instead to consider the propriety of interchange 5 Review of Rail Access and Competition Issues— Renewed Petition of the W. Coal Traffic League, EP 575, slip op. at 4 (STB served Oct. 30, 2007). 6 Id. 7 Railroad Industry Agreement § III, Paper Barriers (Sept. 10, 1998). 8 Review of Rail Access and Competition Issues— Renewed Petition of the W. Coal Traffic League, EP 575, slip op. at 5–6 (STB served Oct. 30, 2007). 9 See generally id. 10 The cost of capital is the Board’s estimate of the average rate of return needed to persuade investors to provide capital to the freight rail industry. See Railroad Cost of Capital—2011, EP 558 (Sub-No. 15) (STB served Sept. 13, 2012). VerDate Mar<15>2010 12:55 Nov 01, 2012 Jkt 229001 commitments on a case-by-case basis.11 The Board indicated that it would give especially close scrutiny to those interchange commitments that totally ban the lessee/purchasing railroad from interchanging with a third party carrier, and those commitments that were not time-limited.12 To facilitate its review of transactions that include interchange commitments, the Board proposed new disclosure requirements in 2007 to ensure appropriate advance regulatory scrutiny of sale and lease agreements containing interchange commitments,13 and in May 2008, the Board formally adopted the proposed rules.14 Thus, a purchaser or lessee railroad filing a notice or petition for exemption must advise the Board if the sale or lease contract includes an interchange commitment and must file a confidential, unredacted copy of that contract and any related documents containing the terms of the interchange commitment with the Board.15 Since its May 2008 decision adopting disclosure rules, the Board has reviewed 10 notices or petitions for exemption involving interchange commitments.16 In the majority of these cases, the interchange commitment was styled as a lease credit for cars interchanged with the seller or lessor.17 At least one, 11 Review of Rail Access and Competition Issues—Renewed Petition of the W. Coal Traffic League, EP 575, slip op. at 13 (STB served Oct. 30, 2007). 12 Id. at 15. 13 See generally id. 14 Disclosure of Rail Interchange Commitments, EP 575 (Sub-No. 1) (STB served May 29, 2008). 15 Id. 16 Midwest Rail d/b/a Toledo, Lake Erie and W. Ry —Lease & Operation Exemption—Norfolk S. Ry., FD 35634 (STB served June 29, 2012) (Mulvey, commenting); Progressive Rail—Lease & Operation Exemption—Rail Line of Union Pac. R.R., FD 35617 (STB served May 4, 2012) (Mulvey, dissenting); Middletown & N.J. R.R.—Lease & Operation Exemption—Norfolk S. Ry., FD 35412 (STB served Sept. 23, 2011) (Mulvey, dissenting); E. Penn R.R.— Lease & Operation Exemption—Norfolk S. Ry., FD 35533 (STB served July 15, 2011) (Mulvey, dissenting); C&NC R.R.—Lease Renewal Exemption—Norfolk S. Ry., FD 35529 (STB served July 1, 2011) (Mulvey, dissenting); Adrian & Blissfield R.R.—Continuance in Control Exemption—Jackson & Lansing R.R., FD 35410 (STB served Oct. 6, 2010) (Mulvey, dissenting); Jackson & Lansing R.R.—Lease & Operation Exemption—Norfolk S. Ry., FD 35411 (STB served Oct. 6, 2010) (Mulvey, dissenting); Jackson & Lansing R.R.—Trackage Rights Exemption—Norfolk S. Ry., FD 35418 (STB served Oct. 6, 2010) (Mulvey, dissenting); N. Plains R.R.—Lease Exemption—Soo Line R.R., FD 35382 (STB served Aug. 6, 2010) (Mulvey, dissenting); Wash. & Idaho Ry.—Lease & Operation Exemption—BNSF Ry., FD 35370 (STB served Apr. 23, 2010) (Mulvey, dissenting). 17 Midwest Rail d/b/a Toledo, Lake Erie and W. Ry.—Lease & Operation Exemption—Norfolk S. Ry., FD 35634 (STB served June 29, 2012) (Mulvey, commenting); Progressive Rail—Lease & Operation Exemption—Rail Line of Union Pac. R.R., FD 35617 (STB served May 4, 2012) (Mulvey, dissenting); PO 00000 Frm 00002 Fmt 4702 Sfmt 4702 however, involved a total ban on interchanges with any other railroad.18 The Board and interested parties have availed themselves of the information required in transactions containing interchange commitments. For instance, in four of those cases, third parties filed petitions to revoke the exemptions based on the interchange commitment.19 In another case, the Board, on its own initiative, rejected the notice of exemption because the rail carrier had not filed a complete copy of the lease contract as required by our regulations.20 In this rulemaking, the Board proposes to require that additional information be provided in notices and petitions for exemption to include, among other things, specific details regarding the impact the interchange commitment will have on shippers and the purchaser or lessee railroad. The Board’s goal is to ensure that both the agency and other interested parties have sufficient information to judge whether the exemption process is appropriate for a transaction. In particular, because the notice of exemption process involves very short deadlines, the Board proposes to require disclosure of information about the transaction at the time of the notice itself, rather than during any subsequent requests to reject or revoke the exemption. The Proposed Rule: The Board proposes to revise its rules at 49 CFR 1121.3(d), 1150.33(h), 1150.43(h), and 1180.4(g)(4) to require that the filing Middletown & N.J. R.R.—Lease & Operation Exemption—Norfolk S. Ry., FD 35412 (STB served Sept. 23, 2011) (Mulvey, dissenting); E. Penn R.R.— Lease & Operation Exemption—Norfolk S. Ry., FD 35533 (STB served July 15, 2011) (Mulvey, dissenting); C&NC R.R.—Lease Renewal Exemption—Norfolk S. Ry., FD 35529 (STB served July 1, 2011) (Mulvey, dissenting); Adrian & Blissfield R.R.—Continuance in Control Exemption—Jackson & Lansing R.R., FD 35410 (STB served Oct. 6, 2010) (Mulvey, dissenting); Jackson & Lansing R.R.—Lease & Operation Exemption—Norfolk S. Ry., FD 35411 (STB served Oct. 6, 2010) (Mulvey, dissenting); Jackson & Lansing R.R.—Trackage Rights Exemption—Norfolk S. Ry., FD 35418 (STB served Oct. 6, 2010) (Mulvey, dissenting). 18 Wash. & Idaho Ry.—Lease & Operation Exemption—BNSF Ry., FD 35370 (STB served Apr. 23, 2010) (Mulvey, dissenting). 19 Adrian & Blissfield R.R.—Continuance in Control Exemption—Jackson & Lansing R.R., FD 35410 (STB served Sept. 27, 2011) (Mulvey, dissenting); Jackson & Lansing R.R.—Lease & Operation Exemption—Norfolk S. Ry., FD 35411 (STB served Sept. 27, 2011) (Mulvey, dissenting); Jackson & Lansing R.R.—Trackage Rights Exemption—Norfolk S. Ry., FD 35418 (STB served Sept. 27, 2011) (Mulvey, dissenting); Middletown & N.J. R.R.—Lease & Operation Exemption—Norfolk S. Ry., FD 35412 (STB served Sept. 23, 2011) (Mulvey, commenting). 20 Wash. & Idaho Ry.—Lease & Operation Exemption—BNSF Ry., FD 35370 (STB served Apr. 23, 2010) (Mulvey, dissenting). E:\FR\FM\02NOP1.SGM 02NOP1 emcdonald on DSK67QTVN1PROD with PROPOSALS Federal Register / Vol. 77, No. 213 / Friday, November 2, 2012 / Proposed Rules party affirmatively disclose whether or not the underlying agreement contains an interchange commitment. The Board further proposes to revise those rules to require that the following information be included in notices and petitions for exemption involving an interchange agreement: (1) A list of shippers that currently use or have used the line in question within the last two years; (2) The number of carloads those shippers specified in paragraph (1) originated or terminated (submitted under seal); (3) A certification that the railroad has provided notice of the proposed transaction and interchange commitment to the shippers identified in paragraph (1); (4) A list of third party railroads that could physically interchange with the line sought to be acquired or leased; (5) The percentage of the purchasing/ leasing railroad’s revenue projected to be derived from operations on the line with the interchange commitment (submitted under seal); (6) An estimate of the difference between the sale or lease price with and without the interchange commitment (submitted under seal); (7) An estimate of the discounted annual value of the interchange commitment to the Class I (or other incumbent carrier) leasing or selling the line (submitted under seal); and (8) A change in the case caption so that the existence of an interchange commitment is apparent from the case title. The Board’s goal is to encourage transactions that are in the public interest, while ensuring that it has sufficient information about transactions to determine whether they are appropriate for the exemption process or, on the other hand, raise competitive issues that require a more detailed examination. The Board has already indicated that interchange commitments that last in perpetuity or completely eliminate the ability of the lessee/purchaser railroad to interchange with a third-party carrier raise significant concerns. Long-term interchange commitments, often embodied in lengthy, renewable leases, also have the potential to control the competitive environment—thus affecting rates and service—for years to come. To this end, the Board believes that it will benefit the parties to the transaction, shippers, and the public for the Board to be provided with the above-outlined information simultaneously with the filing of a notice or petition for exemption. This additional information will aid the VerDate Mar<15>2010 12:55 Nov 01, 2012 Jkt 229001 Board in its review of petitions for and notices of exemption and allow the Board to evaluate contracts involving interchange commitments without the delay involved with seeking additional information. Furthermore, parties objecting to a petition for exemption or those filing a petition to revoke an exemption will have access to this relevant information up front, thus minimizing the length of time spent on the process of filing and deciding a petition to revoke. Regulatory Flexibility Act. The Regulatory Flexibility Act of 1980, 5 U.S.C. 601–612, generally requires a description and analysis of new rules that would have a significant economic impact on a substantial number of small entities. In drafting a rule, an agency is required to: (1) Assess the effect that its regulation will have on small entities; (2) analyze effective alternatives that may minimize a regulation’s impact; and (3) make the analysis available for public comment. §§ 601–604. In its notice of proposed rulemaking, the agency must either include an initial regulatory flexibility analysis, § 603(a), or certify that the proposed rule would not have a ‘‘significant impact on a substantial number of small entities.’’ § 605(b). The impact must be a direct impact on small entities ‘‘whose conduct is circumscribed or mandated’’ by the proposed rule. White Eagle Coop. v. Conner, 553 F.3d 467, 480 (7th Cir. 2009). The regulations proposed here would affect railroads negotiating contracts that contain interchange commitments. As noted below, the Board estimates that a total of four respondents will be affected by these additional reporting requirements annually, and that the additional time required by each respondent is no more than eight hours. The Board believes that an additional eight hours in the context of putting together the relevant documents and filings does not create a significant impact. Moreover, as only four respondents per year will be affected, the proposed rule would not impact a substantial number of small entities.21 Accordingly, pursuant to 5 U.S.C. 605(b), the Board certifies that the regulations proposed herein would not have a significant economic impact on a substantial number of small entities 21 The Small Business Administration’s (SBA) Office of Size Standards develops the numerical definition of small business. See 13 CFR 121.201. The SBA has established a size standard for rail transportation, stating that a line-haul railroad is considered small if its number of employees is 1,500 or less, and that a shortline railroad is considered small if its number of employees is 500 or less. Id. (subsector 482). PO 00000 Frm 00003 Fmt 4702 Sfmt 4702 66167 within the meaning of the Regulatory Flexibility Act. A copy of this decision will be served upon the Chief Counsel for Advocacy, Office of Advocacy, U.S. Small Business Administration, Washington, DC 20416. Paperwork Reduction Act. Pursuant to the Paperwork Reduction Act (PRA), 44 U.S.C. 3501–3549, and Office of Management and Budget (OMB) regulations at 5 CFR 1320.8(d)(3), the Board seeks comments regarding: (1) Whether the collection of information as modified in the proposed rule and further described in Appendix B, is necessary for the proper performance of the functions of the Board, including whether the collection has practical utility; (2) the accuracy of the Board’s burden estimates; (3) ways to enhance the quality, utility, and clarity of the information collected; and (4) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology, when appropriate. Information pertinent to these issues is included in Appendix B. The modified collection in this proposed rule will be submitted to OMB for review as required under 44 U.S.C. 3507(d) and 5 CFR 1320.11. This action will not significantly affect either the quality of the human environment or the conservation of energy resources. This rulemaking will affect the following subject: Parts 1121, 1150, and 1180 of title 49, chapter X, of the Code of Federal Regulations. It is issued subject to the Board’s authority under 49 U.S.C. 721(a). It is ordered: 1. The Board proposes to amend its rules as set forth in this decision. Notice of the proposed rules will be published in the Federal Register. 2. Comments are due by December 3, 2012. Reply comments are due by January 2, 2013. 3. This decision is effective on the day of service. List of Subjects 49 CFR Part 1121 Administrative practice and procedure, Railroads. 49 CFR Part 1150 Administrative practice and procedure, Railroads. 49 CFR Part 1180 Administrative practice and procedure, Railroads, Reporting and record keeping requirements. Decided: October 29, 2012. E:\FR\FM\02NOP1.SGM 02NOP1 66168 Federal Register / Vol. 77, No. 213 / Friday, November 2, 2012 / Proposed Rules By the Board, Chairman Elliott, Vice Chairman Mulvey, and Commissioner Begeman. Vice Chairman Mulvey commented with a separate expression. Vice Chairman Mulvey, commenting: I commend the Board for proposing additional rules and soliciting comments regarding interchange commitment disclosures requirements. As explained in the decision, the goal of the proposed rules is to provide the Board and interested parties early access to a wide range of information regarding newly proposed interchange commitments. The impact of interchange commitments on competition remains a serious concern for many stakeholders. As we continue to grapple with questions raised by interchange commitments established decades ago, the Board must also be vigilant about the impact of any new restrictions on competition. In responding to the proposed rules, I hope that stakeholders will assist the Board in crafting a regime that provides appropriate scrutiny to transactions that have the potential to adversely impact competition. Jeffrey Herzig, Clearance Clerk. For the reasons set forth in the preamble, the Surface Transportation Board proposes to amend parts 1121, 1150, and 1180 of title 49, chapter X, of the Code of Federal Regulations as follows: (iii) A list of shippers that currently use or have used the line in question within the last two years; (iv) The number of carloads those shippers specified in paragraph (d)(1)(iii) of this section originated or terminated (submitted under seal); (v) A certification that the railroad has provided notice of the proposed transaction and interchange commitment to the shippers identified in paragraph (d)(1)(iii) of this section; (vi) A list of third party railroads that could physically interchange with the line sought to be acquired or leased; (vii) The percentage of the purchasing/leasing railroad’s revenue projected to be derived from operations on the line with the interchange commitment (submitted under seal); (viii) An estimate of the difference between the sale or lease price with and without the interchange commitment (submitted under seal); (ix) An estimate of the discounted annual value of the interchange commitment to the Class I (or other incumbent carrier) leasing or selling the line (submitted under seal); and (x) A change in the case caption so that the existence of an interchange commitment is apparent from the case title. * * * * * PART 1150—CERTIFICATE TO CONSTRUCT, ACQUIRE, OR OPERATE RAILROAD LINES PART 1121—RAIL EXEMPTION PROCEDURES 3. The authority citation for part 1150 continues to read as follows: 1. The authority citation for part 1121 continues to read as follows: Authority: 49 U.S.C. 721(a), 10502, 10901, and 10902. Authority: 49 U.S.C. 10502 and 10704. 2. Amend § 1121.3 by revising paragraph (d)(1) introductory text and by adding paragraphs (d)(1)(iii) through (x) to read as follows: § 1121.3 Content. emcdonald on DSK67QTVN1PROD with PROPOSALS * * * * * (d) Interchange commitments. (1) The filing party must certify whether or not a proposed acquisition or operation of a rail line involves a provision or agreement that may limit future interchange with a third-party connecting carrier, whether by outright prohibition, per-car penalty, adjustment in the purchase price or rental, positive economic inducement, or other means (‘‘interchange commitment’’). If such a provision exists, the following additional information must be provided: * * * * * VerDate Mar<15>2010 12:55 Nov 01, 2012 Jkt 229001 4. Amend § 1150.33 by revising paragraph (h)(1) introductory text and by adding paragraphs (h)(1)(iii) through (x) to read as follows: § 1150.33 Information to be contained in notice—transactions that involve creation of Class III carriers. * * * * * (h) Interchange commitments. (1) The filing party must certify whether or not a proposed acquisition or operation of a rail line involves a provision or agreement that may limit future interchange with a third-party connecting carrier, whether by outright prohibition, per-car penalty, adjustment in the purchase price or rental, positive economic inducement, or other means (‘‘interchange commitment’’). If such a provision exists, the following additional information must be provided: * * * * * PO 00000 Frm 00004 Fmt 4702 Sfmt 4702 (iii) A list of shippers that currently use or have used the line in question within the last two years; (iv) The number of carloads those shippers specified in paragraph (iii) originated or terminated (submitted under seal); (v) A certification that the railroad has provided notice of the proposed transaction and interchange commitment to the shippers identified in paragraph (iii); (vi) A list of third party railroads that could physically interchange with the line sought to be acquired or leased; (vii) The percentage of the purchasing/leasing railroad’s revenue projected to be derived from operations on the line with the interchange commitment (submitted under seal); (viii) An estimate of the difference between the sale or lease price with and without the interchange commitment (submitted under seal); (ix) An estimate of the discounted annual value of the interchange commitment to the Class I (or other incumbent carrier) leasing or selling the line (submitted under seal); and (x) A change in the case caption so that the existence of an interchange commitment is apparent from the case title. * * * * * 5. Amend § 1150.43 by revising paragraphs (h)(1) introductory text and by adding paragraphs (h)(1)(iii) through (x) to read as follows: § 1150.43 Information to be contained in notice for small line acquisitions. * * * * * (h) Interchange commitments. (1) The filing party must certify whether or not a proposed acquisition or operation of a rail line involves a provision or agreement that may limit future interchange with a third-party connecting carrier, whether by outright prohibition, per-car penalty, adjustment in the purchase price or rental, positive economic inducement, or other means (‘‘interchange commitment’’). If such a provision exists, the following additional information must be provided: * * * * * (iii) A list of shippers that currently use or have used the line in question within the last two years; (iv) The number of carloads those shippers specified in paragraph (h)(1)(iii) of this section originated or terminated (submitted under seal); (v) A certification that the railroad has provided notice of the proposed transaction and interchange commitment to the shippers identified in paragraph (h)(1)(iii) of this section; E:\FR\FM\02NOP1.SGM 02NOP1 Federal Register / Vol. 77, No. 213 / Friday, November 2, 2012 / Proposed Rules (vi) A list of third party railroads that could physically interchange with the line sought to be acquired or leased; (vii) The percentage of the purchasing/leasing railroad’s revenue projected to be derived from operations on the line with the interchange commitment (submitted under seal); (viii) An estimate of the difference between the sale or lease price with and without the interchange commitment (submitted under seal); (ix) An estimate of the discounted annual value of the interchange commitment to the Class I (or other incumbent carrier) leasing or selling the line (submitted under seal); and (x) A change in the case caption so that the existence of an interchange commitment is apparent from the case title. * * * * * PART 1180—RAILROAD ACQUISITION, CONTROL, MERGER, CONSOLIDATION PROJECT, TRACKAGE RIGHTS, AND LEASE PROCEDURES 6. The authority citation for part 1180 continues to read as follows: Authority: 5 U.S.C. 553 and 559; 11 U.S.C. 1172; 49 U.S.C. 721, 10502, 11323–11325. 7. Amend § 1180.4 by revising paragraph (g)(4)(i) introductory text and by adding paragraphs (g)(4)(i)(C) through (J) to read as follows: § 1180.4 Procedures. emcdonald on DSK67QTVN1PROD with PROPOSALS * * * * * (g) * * * (4) Interchange commitments. (i) The filing party must certify whether or not a proposed acquisition or operation of a rail line involves a provision or agreement that may limit future interchange with a third-party connecting carrier, whether by outright prohibition, per-car penalty, adjustment in the purchase price or rental, positive economic inducement, or other means (‘‘interchange commitment’’). If such a provision exists, the following additional information must be provided: (C) A list of shippers that currently use or have used the line in question within the last two years; (D) The number of carloads those shippers specified in paragraph (g)(4)(i)(C) of this section originated or terminated (submitted under seal); (E) A certification that the railroad has provided notice of the proposed transaction and interchange commitment to the shippers identified in paragraph (g)(4)(i)(C) of this section; VerDate Mar<15>2010 12:55 Nov 01, 2012 Jkt 229001 (F) A list of third party railroads that could physically interchange with the line sought to be acquired or leased; (G) The percentage of the purchasing/ leasing railroad’s revenue projected to be derived from operations on the line with the interchange commitment (submitted under seal); (H) An estimate of the difference between the sale or lease price with and without the interchange commitment (submitted under seal); (I) An estimate of the discounted annual value of the interchange commitment to the Class I (or other incumbent carrier) leasing or selling the line (submitted under seal); and (J) A change in the case caption so that the existence of an interchange commitment is apparent from the case title. * * * * * Note: The following appendix will not appear in the Code of Federal Regulations. Appendix The additional information below is included to assist those who may wish to submit comments pertinent to review under the Paperwork Reduction Act: Description of Collection Title: Disclosure of Rail Interchange Commitments. OMB Control Number: 2140–0016. STB Form Number: None. Type of Review: Revision of an approved collection. Respondents: Noncarriers and carriers seeking an exemption to acquire (through purchase or lease) and/or operate a rail line, if the proposed transaction includes an interchange commitment. Number of Respondents: Four. Estimated Time per Response: No more than eight hours. Frequency: On occasion. Total Burden Hours (annually including all respondents): 32 hours. Total ‘‘Non-hour Burden’’ Cost: None identified. Respondents may file the requested information electronically. Needs and Uses: Under 49 U.S.C. 10502, noncarriers and carriers may seek an exemption from the prior approval requirements of sections 10901, 10902, and 11323 to acquire (through purchase or lease) and operate a rail line. The collection of agreements with interchange commitments has facilitated the case-specific review of interchange commitments and the Board’s monitoring of their usage generally. The modifications proposed here will further ensure that the Board has sufficient information about these transactions to determine whether they are appropriate for the exemption process and will also help parties objecting to a petition for exemption or filing a petition to revoke an exemption by providing access to this relevant information up front, thus minimizing the length of time spent on the process of filing and deciding a petition to revoke. PO 00000 Frm 00005 Fmt 4702 Sfmt 4702 66169 Retention Period: Information in this report will be maintained in the Board’s confidential file for 10 years, after which it is transferred to the National Archives. [FR Doc. 2012–26882 Filed 11–1–12; 8:45 am] BILLING CODE 4915–01–P DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 648 [Docket No. 120822383–2383–01] RIN 0648–BC48 Fisheries of the Northeastern United States; Northeast Multispecies Fishery Management Plan; Amendment 19 National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Proposed rule; request for comments. AGENCY: NMFS proposes regulations to implement Amendment 19 to the Northeast Multispecies Fishery Management Plan, if approved. The New England Fishery Management Council developed Amendment 19 to modify management measures that currently govern the small-mesh multispecies fishery, including the accountability measures, the year-round possession limits and total allowable landings process. DATES: Written comments must be received no later than 5 p.m. eastern standard time, on December 3, 2012. ADDRESSES: An environmental assessment (EA) was prepared for Amendment 19 that describes the proposed action and other considered alternatives, and provides an analysis of the impacts of the proposed measures and alternatives. Copies of the Amendment, including the EA and the Initial Regulatory Flexibility Analysis (IRFA), are available on request from Paul J. Howard, Executive Director, New England Fishery Management Council, 50 Water Street, Newburyport, MA 01950. These documents are also available online at https:// www.nefmc.org. You may submit comments, identified by NOAA–NMFS–2012–0170, by any one of the following methods: • Electronic Submissions: Submit all electronic public comments via the Federal e-Rulemaking Portal www.regulations.gov. To submit comments via the e-Rulemaking Portal, first click the ‘‘submit a comment’’ icon, SUMMARY: E:\FR\FM\02NOP1.SGM 02NOP1

Agencies

[Federal Register Volume 77, Number 213 (Friday, November 2, 2012)]
[Proposed Rules]
[Pages 66165-66169]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-26882]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

49 CFR Parts 1121, 1150, and 1180

[Docket No. EP 714]


Information Required in Notices and Petitions Containing 
Interchange Commitments

AGENCY: Surface Transportation Board (the Board or STB), DOT.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: Through this Notice of Proposed Rulemaking (NPR), the Board is 
proposing a rule establishing additional disclosure requirements for 
notices and petitions for exemption where the underlying lease or line 
sale includes an interchange commitment.

DATES: Comments are due by December 3, 2012. Reply comments are due by 
January 2, 2013.

ADDRESSES: Comments and replies may be submitted either via the Board's 
e-filing format or in the traditional paper format. Any person using e-
filing should attach a document and otherwise comply with the 
instructions at the E-FILING link on the Board's Web site, at https://www.stb.dot.gov. Any person submitting a filing in the traditional 
paper format should send an original and 10 copies to: Surface 
Transportation Board, Attn: EP 714, 395 E Street SW., Washington, DC 
20423-0001. Copies of written comments and replies will be available 
for viewing and self-copying at the Board's Public Docket Room, Room 
131, and will be posted to the Board's Web site.

FOR FURTHER INFORMATION CONTACT: Amy C. Ziehm at (202) 245-0391. 
Assistance for the hearing impaired is available through the Federal 
Information Relay Service (FIRS) at (800) 877-8339.

SUPPLEMENTARY INFORMATION: Interchange commitments are ``contractual 
provisions included with a sale or lease of a rail line that limit the 
incentive or the ability of the purchaser or tenant carrier to 
interchange traffic with rail carriers other than the seller or lessor 
railroad.'' \1\ Currently, if a proposed acquisition of a rail line 
involves an interchange commitment, the party filing the notice or 
petition for exemption must inform the Board that such a provision 
exists and must file a confidential, complete version of the document 
containing that provision with the Board.\2\
---------------------------------------------------------------------------

    \1\ Review of Rail Access and Competition Issues--Renewed 
Petition of the W. Coal Traffic League, EP 575, slip op. at 1 (STB 
served Oct. 30, 2007). Interchange commitments are sometimes 
referred to as ``paper barriers.''
    \2\ See 49 CFR 1121.3(d), 1150.33(h), 1150.43(h), and 
1180.4(g)(4).
---------------------------------------------------------------------------

Historical Regulation of Interchange Commitments

    As a result of both the Railroad Revitalization and Regulatory 
Reform Act of 1976 and the Staggers Rail Act of 1980, it has become 
easier for rail carriers to abandon, sell, or lease a line or part of a 
line by utilizing exemptions from regulatory procedures. This 
flexibility has helped to revitalize the railroad industry. In 1998, 
the Board held two days of hearings to examine rail access and 
competition.\3\ The issue of interchange commitments, or paper 
barriers, arose in the context of shortline railroads. Many of the 
transactions that created or built up these new shortline railroads 
contained interchange commitments.\4\ The existence of these 
contractual restrictions encouraged large railroads to sell or lease 
lighter-density lines at reduced prices (in some cases at no cost), 
because they were guaranteed to retain a portion of the future revenues 
from the traffic on those lines. In many instances, they also provided 
a means of helping to finance the acquisition by shortline railroads. 
Interchange commitments took varying forms, including lease payment 
credits for cars interchanged with the seller or lessor carrier (in 
some instances the lease

[[Page 66166]]

credit applied if the lessee interchanged with the lessor up to the 
same number of cars interchanged with the lessor in the prior year); 
monetary penalties for traffic interchanged with another railroad; or a 
total ban on interchange with any carrier other than the seller or 
lessor carrier.\5\ Many reportedly had no fixed termination date.\6\
---------------------------------------------------------------------------

    \3\ Review of Rail Access and Competition Issues, EP 575 (STB 
served Apr. 17, 1998).
    \4\ Id. at 8.
    \5\ Review of Rail Access and Competition Issues--Renewed 
Petition of the W. Coal Traffic League, EP 575, slip op. at 4 (STB 
served Oct. 30, 2007).
    \6\ Id.
---------------------------------------------------------------------------

    In September 1998, the American Short Line and Regional Railroad 
Association and the Association of American Railroads entered into a 
Railroad Industry Agreement (RIA), which stipulated, among other 
things, that ``[l]egitimate paper barriers are those that are designed 
as fair payment for the sale or rental value of the line that created 
the Short Line.'' \7\ In December 1998, the Western Coal Traffic League 
(WCTL) filed a petition for rulemaking asking the Board to adopt rules 
of general applicability regarding interchange commitments. The Board 
deferred action on WCTL's petition in order to allow for industry 
experience under the RIA.\8\
---------------------------------------------------------------------------

    \7\ Railroad Industry Agreement Sec.  III, Paper Barriers (Sept. 
10, 1998).
    \8\ Review of Rail Access and Competition Issues--Renewed 
Petition of the W. Coal Traffic League, EP 575, slip op. at 5-6 (STB 
served Oct. 30, 2007).
---------------------------------------------------------------------------

    In 2005, in response to a renewed petition filed by WCTL, the Board 
initiated a rulemaking proceeding to consider regulations restricting 
interchange commitment provisions included with a sale or lease of a 
rail line.\9\ WCTL argued that interchange commitments were 
anticompetitive because they prevented lessee/purchaser railroads from 
offering shippers the full array of competitive routing options. WCTL 
asked the Board to establish a rebuttable presumption that such 
provisions are unreasonable and contrary to the public interest if they 
(a) Last longer than five years, (b) include any financial penalty for 
interchanging traffic with another carrier, or (c) include a credit for 
interchanging traffic with the seller or lessor railroad that would 
provide a return in excess of the railroad industry's cost of 
capital.\10\ Upon receiving comments and conducting a public hearing, 
the Board declined to adopt a single rule of general applicability, 
deciding instead to consider the propriety of interchange commitments 
on a case-by-case basis.\11\ The Board indicated that it would give 
especially close scrutiny to those interchange commitments that totally 
ban the lessee/purchasing railroad from interchanging with a third 
party carrier, and those commitments that were not time-limited.\12\
---------------------------------------------------------------------------

    \9\ See generally id.
    \10\ The cost of capital is the Board's estimate of the average 
rate of return needed to persuade investors to provide capital to 
the freight rail industry. See Railroad Cost of Capital--2011, EP 
558 (Sub-No. 15) (STB served Sept. 13, 2012).
    \11\ Review of Rail Access and Competition Issues--Renewed 
Petition of the W. Coal Traffic League, EP 575, slip op. at 13 (STB 
served Oct. 30, 2007).
    \12\ Id. at 15.
---------------------------------------------------------------------------

    To facilitate its review of transactions that include interchange 
commitments, the Board proposed new disclosure requirements in 2007 to 
ensure appropriate advance regulatory scrutiny of sale and lease 
agreements containing interchange commitments,\13\ and in May 2008, the 
Board formally adopted the proposed rules.\14\ Thus, a purchaser or 
lessee railroad filing a notice or petition for exemption must advise 
the Board if the sale or lease contract includes an interchange 
commitment and must file a confidential, unredacted copy of that 
contract and any related documents containing the terms of the 
interchange commitment with the Board.\15\
---------------------------------------------------------------------------

    \13\ See generally id.
    \14\ Disclosure of Rail Interchange Commitments, EP 575 (Sub-No. 
1) (STB served May 29, 2008).
    \15\ Id.
---------------------------------------------------------------------------

    Since its May 2008 decision adopting disclosure rules, the Board 
has reviewed 10 notices or petitions for exemption involving 
interchange commitments.\16\ In the majority of these cases, the 
interchange commitment was styled as a lease credit for cars 
interchanged with the seller or lessor.\17\ At least one, however, 
involved a total ban on interchanges with any other railroad.\18\
---------------------------------------------------------------------------

    \16\ Midwest Rail d/b/a Toledo, Lake Erie and W. Ry --Lease & 
Operation Exemption--Norfolk S. Ry., FD 35634 (STB served June 29, 
2012) (Mulvey, commenting); Progressive Rail--Lease & Operation 
Exemption--Rail Line of Union Pac. R.R., FD 35617 (STB served May 4, 
2012) (Mulvey, dissenting); Middletown & N.J. R.R.--Lease & 
Operation Exemption--Norfolk S. Ry., FD 35412 (STB served Sept. 23, 
2011) (Mulvey, dissenting); E. Penn R.R.--Lease & Operation 
Exemption--Norfolk S. Ry., FD 35533 (STB served July 15, 2011) 
(Mulvey, dissenting); C&NC R.R.--Lease Renewal Exemption--Norfolk S. 
Ry., FD 35529 (STB served July 1, 2011) (Mulvey, dissenting); Adrian 
& Blissfield R.R.--Continuance in Control Exemption--Jackson & 
Lansing R.R., FD 35410 (STB served Oct. 6, 2010) (Mulvey, 
dissenting); Jackson & Lansing R.R.--Lease & Operation Exemption--
Norfolk S. Ry., FD 35411 (STB served Oct. 6, 2010) (Mulvey, 
dissenting); Jackson & Lansing R.R.--Trackage Rights Exemption--
Norfolk S. Ry., FD 35418 (STB served Oct. 6, 2010) (Mulvey, 
dissenting); N. Plains R.R.--Lease Exemption--Soo Line R.R., FD 
35382 (STB served Aug. 6, 2010) (Mulvey, dissenting); Wash. & Idaho 
Ry.--Lease & Operation Exemption--BNSF Ry., FD 35370 (STB served 
Apr. 23, 2010) (Mulvey, dissenting).
    \17\ Midwest Rail d/b/a Toledo, Lake Erie and W. Ry.--Lease & 
Operation Exemption--Norfolk S. Ry., FD 35634 (STB served June 29, 
2012) (Mulvey, commenting); Progressive Rail--Lease & Operation 
Exemption--Rail Line of Union Pac. R.R., FD 35617 (STB served May 4, 
2012) (Mulvey, dissenting); Middletown & N.J. R.R.--Lease & 
Operation Exemption--Norfolk S. Ry., FD 35412 (STB served Sept. 23, 
2011) (Mulvey, dissenting); E. Penn R.R.--Lease & Operation 
Exemption--Norfolk S. Ry., FD 35533 (STB served July 15, 2011) 
(Mulvey, dissenting); C&NC R.R.--Lease Renewal Exemption--Norfolk S. 
Ry., FD 35529 (STB served July 1, 2011) (Mulvey, dissenting); Adrian 
& Blissfield R.R.--Continuance in Control Exemption--Jackson & 
Lansing R.R., FD 35410 (STB served Oct. 6, 2010) (Mulvey, 
dissenting); Jackson & Lansing R.R.--Lease & Operation Exemption--
Norfolk S. Ry., FD 35411 (STB served Oct. 6, 2010) (Mulvey, 
dissenting); Jackson & Lansing R.R.--Trackage Rights Exemption--
Norfolk S. Ry., FD 35418 (STB served Oct. 6, 2010) (Mulvey, 
dissenting).
    \18\ Wash. & Idaho Ry.--Lease & Operation Exemption--BNSF Ry., 
FD 35370 (STB served Apr. 23, 2010) (Mulvey, dissenting).
---------------------------------------------------------------------------

    The Board and interested parties have availed themselves of the 
information required in transactions containing interchange 
commitments. For instance, in four of those cases, third parties filed 
petitions to revoke the exemptions based on the interchange 
commitment.\19\ In another case, the Board, on its own initiative, 
rejected the notice of exemption because the rail carrier had not filed 
a complete copy of the lease contract as required by our 
regulations.\20\
---------------------------------------------------------------------------

    \19\ Adrian & Blissfield R.R.--Continuance in Control 
Exemption--Jackson & Lansing R.R., FD 35410 (STB served Sept. 27, 
2011) (Mulvey, dissenting); Jackson & Lansing R.R.--Lease & 
Operation Exemption--Norfolk S. Ry., FD 35411 (STB served Sept. 27, 
2011) (Mulvey, dissenting); Jackson & Lansing R.R.--Trackage Rights 
Exemption--Norfolk S. Ry., FD 35418 (STB served Sept. 27, 2011) 
(Mulvey, dissenting); Middletown & N.J. R.R.--Lease & Operation 
Exemption--Norfolk S. Ry., FD 35412 (STB served Sept. 23, 2011) 
(Mulvey, commenting).
    \20\ Wash. & Idaho Ry.--Lease & Operation Exemption--BNSF Ry., 
FD 35370 (STB served Apr. 23, 2010) (Mulvey, dissenting).
---------------------------------------------------------------------------

    In this rulemaking, the Board proposes to require that additional 
information be provided in notices and petitions for exemption to 
include, among other things, specific details regarding the impact the 
interchange commitment will have on shippers and the purchaser or 
lessee railroad. The Board's goal is to ensure that both the agency and 
other interested parties have sufficient information to judge whether 
the exemption process is appropriate for a transaction. In particular, 
because the notice of exemption process involves very short deadlines, 
the Board proposes to require disclosure of information about the 
transaction at the time of the notice itself, rather than during any 
subsequent requests to reject or revoke the exemption.
    The Proposed Rule: The Board proposes to revise its rules at 49 CFR 
1121.3(d), 1150.33(h), 1150.43(h), and 1180.4(g)(4) to require that the 
filing

[[Page 66167]]

party affirmatively disclose whether or not the underlying agreement 
contains an interchange commitment. The Board further proposes to 
revise those rules to require that the following information be 
included in notices and petitions for exemption involving an 
interchange agreement:
    (1) A list of shippers that currently use or have used the line in 
question within the last two years;
    (2) The number of carloads those shippers specified in paragraph 
(1) originated or terminated (submitted under seal);
    (3) A certification that the railroad has provided notice of the 
proposed transaction and interchange commitment to the shippers 
identified in paragraph (1);
    (4) A list of third party railroads that could physically 
interchange with the line sought to be acquired or leased;
    (5) The percentage of the purchasing/leasing railroad's revenue 
projected to be derived from operations on the line with the 
interchange commitment (submitted under seal);
    (6) An estimate of the difference between the sale or lease price 
with and without the interchange commitment (submitted under seal);
    (7) An estimate of the discounted annual value of the interchange 
commitment to the Class I (or other incumbent carrier) leasing or 
selling the line (submitted under seal); and
    (8) A change in the case caption so that the existence of an 
interchange commitment is apparent from the case title.
    The Board's goal is to encourage transactions that are in the 
public interest, while ensuring that it has sufficient information 
about transactions to determine whether they are appropriate for the 
exemption process or, on the other hand, raise competitive issues that 
require a more detailed examination. The Board has already indicated 
that interchange commitments that last in perpetuity or completely 
eliminate the ability of the lessee/purchaser railroad to interchange 
with a third-party carrier raise significant concerns. Long-term 
interchange commitments, often embodied in lengthy, renewable leases, 
also have the potential to control the competitive environment--thus 
affecting rates and service--for years to come. To this end, the Board 
believes that it will benefit the parties to the transaction, shippers, 
and the public for the Board to be provided with the above-outlined 
information simultaneously with the filing of a notice or petition for 
exemption. This additional information will aid the Board in its review 
of petitions for and notices of exemption and allow the Board to 
evaluate contracts involving interchange commitments without the delay 
involved with seeking additional information. Furthermore, parties 
objecting to a petition for exemption or those filing a petition to 
revoke an exemption will have access to this relevant information up 
front, thus minimizing the length of time spent on the process of 
filing and deciding a petition to revoke.
    Regulatory Flexibility Act. The Regulatory Flexibility Act of 1980, 
5 U.S.C. 601-612, generally requires a description and analysis of new 
rules that would have a significant economic impact on a substantial 
number of small entities. In drafting a rule, an agency is required to: 
(1) Assess the effect that its regulation will have on small entities; 
(2) analyze effective alternatives that may minimize a regulation's 
impact; and (3) make the analysis available for public comment. 
Sec. Sec.  601-604. In its notice of proposed rulemaking, the agency 
must either include an initial regulatory flexibility analysis, Sec.  
603(a), or certify that the proposed rule would not have a 
``significant impact on a substantial number of small entities.'' Sec.  
605(b). The impact must be a direct impact on small entities ``whose 
conduct is circumscribed or mandated'' by the proposed rule. White 
Eagle Coop. v. Conner, 553 F.3d 467, 480 (7th Cir. 2009).
    The regulations proposed here would affect railroads negotiating 
contracts that contain interchange commitments. As noted below, the 
Board estimates that a total of four respondents will be affected by 
these additional reporting requirements annually, and that the 
additional time required by each respondent is no more than eight 
hours. The Board believes that an additional eight hours in the context 
of putting together the relevant documents and filings does not create 
a significant impact. Moreover, as only four respondents per year will 
be affected, the proposed rule would not impact a substantial number of 
small entities.\21\ Accordingly, pursuant to 5 U.S.C. 605(b), the Board 
certifies that the regulations proposed herein would not have a 
significant economic impact on a substantial number of small entities 
within the meaning of the Regulatory Flexibility Act. A copy of this 
decision will be served upon the Chief Counsel for Advocacy, Office of 
Advocacy, U.S. Small Business Administration, Washington, DC 20416.
---------------------------------------------------------------------------

    \21\ The Small Business Administration's (SBA) Office of Size 
Standards develops the numerical definition of small business. See 
13 CFR 121.201. The SBA has established a size standard for rail 
transportation, stating that a line-haul railroad is considered 
small if its number of employees is 1,500 or less, and that a 
shortline railroad is considered small if its number of employees is 
500 or less. Id. (subsector 482).
---------------------------------------------------------------------------

    Paperwork Reduction Act. Pursuant to the Paperwork Reduction Act 
(PRA), 44 U.S.C. 3501-3549, and Office of Management and Budget (OMB) 
regulations at 5 CFR 1320.8(d)(3), the Board seeks comments regarding: 
(1) Whether the collection of information as modified in the proposed 
rule and further described in Appendix B, is necessary for the proper 
performance of the functions of the Board, including whether the 
collection has practical utility; (2) the accuracy of the Board's 
burden estimates; (3) ways to enhance the quality, utility, and clarity 
of the information collected; and (4) ways to minimize the burden of 
the collection of information on the respondents, including the use of 
automated collection techniques or other forms of information 
technology, when appropriate. Information pertinent to these issues is 
included in Appendix B. The modified collection in this proposed rule 
will be submitted to OMB for review as required under 44 U.S.C. 3507(d) 
and 5 CFR 1320.11.
    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.
    This rulemaking will affect the following subject: Parts 1121, 
1150, and 1180 of title 49, chapter X, of the Code of Federal 
Regulations. It is issued subject to the Board's authority under 49 
U.S.C. 721(a).
    It is ordered:
    1. The Board proposes to amend its rules as set forth in this 
decision. Notice of the proposed rules will be published in the Federal 
Register.
    2. Comments are due by December 3, 2012. Reply comments are due by 
January 2, 2013.
    3. This decision is effective on the day of service.

List of Subjects

49 CFR Part 1121

    Administrative practice and procedure, Railroads.

49 CFR Part 1150

    Administrative practice and procedure, Railroads.

49 CFR Part 1180

    Administrative practice and procedure, Railroads, Reporting and 
record keeping requirements.

    Decided: October 29, 2012.


[[Page 66168]]


    By the Board, Chairman Elliott, Vice Chairman Mulvey, and 
Commissioner Begeman. Vice Chairman Mulvey commented with a separate 
expression.

Vice Chairman Mulvey, commenting:

    I commend the Board for proposing additional rules and soliciting 
comments regarding interchange commitment disclosures requirements. As 
explained in the decision, the goal of the proposed rules is to provide 
the Board and interested parties early access to a wide range of 
information regarding newly proposed interchange commitments. The 
impact of interchange commitments on competition remains a serious 
concern for many stakeholders. As we continue to grapple with questions 
raised by interchange commitments established decades ago, the Board 
must also be vigilant about the impact of any new restrictions on 
competition. In responding to the proposed rules, I hope that 
stakeholders will assist the Board in crafting a regime that provides 
appropriate scrutiny to transactions that have the potential to 
adversely impact competition.

Jeffrey Herzig,
Clearance Clerk.
    For the reasons set forth in the preamble, the Surface 
Transportation Board proposes to amend parts 1121, 1150, and 1180 of 
title 49, chapter X, of the Code of Federal Regulations as follows:

PART 1121--RAIL EXEMPTION PROCEDURES

    1. The authority citation for part 1121 continues to read as 
follows:

    Authority: 49 U.S.C. 10502 and 10704.

    2. Amend Sec.  1121.3 by revising paragraph (d)(1) introductory 
text and by adding paragraphs (d)(1)(iii) through (x) to read as 
follows:


Sec.  1121.3  Content.

* * * * *
    (d) Interchange commitments. (1) The filing party must certify 
whether or not a proposed acquisition or operation of a rail line 
involves a provision or agreement that may limit future interchange 
with a third-party connecting carrier, whether by outright prohibition, 
per-car penalty, adjustment in the purchase price or rental, positive 
economic inducement, or other means (``interchange commitment''). If 
such a provision exists, the following additional information must be 
provided:
* * * * *
    (iii) A list of shippers that currently use or have used the line 
in question within the last two years;
    (iv) The number of carloads those shippers specified in paragraph 
(d)(1)(iii) of this section originated or terminated (submitted under 
seal);
    (v) A certification that the railroad has provided notice of the 
proposed transaction and interchange commitment to the shippers 
identified in paragraph (d)(1)(iii) of this section;
    (vi) A list of third party railroads that could physically 
interchange with the line sought to be acquired or leased;
    (vii) The percentage of the purchasing/leasing railroad's revenue 
projected to be derived from operations on the line with the 
interchange commitment (submitted under seal);
    (viii) An estimate of the difference between the sale or lease 
price with and without the interchange commitment (submitted under 
seal);
    (ix) An estimate of the discounted annual value of the interchange 
commitment to the Class I (or other incumbent carrier) leasing or 
selling the line (submitted under seal); and
    (x) A change in the case caption so that the existence of an 
interchange commitment is apparent from the case title.
* * * * *

PART 1150--CERTIFICATE TO CONSTRUCT, ACQUIRE, OR OPERATE RAILROAD 
LINES

    3. The authority citation for part 1150 continues to read as 
follows:

    Authority:  49 U.S.C. 721(a), 10502, 10901, and 10902.

    4. Amend Sec.  1150.33 by revising paragraph (h)(1) introductory 
text and by adding paragraphs (h)(1)(iii) through (x) to read as 
follows:


Sec.  1150.33  Information to be contained in notice--transactions that 
involve creation of Class III carriers.

* * * * *
    (h) Interchange commitments. (1) The filing party must certify 
whether or not a proposed acquisition or operation of a rail line 
involves a provision or agreement that may limit future interchange 
with a third-party connecting carrier, whether by outright prohibition, 
per-car penalty, adjustment in the purchase price or rental, positive 
economic inducement, or other means (``interchange commitment''). If 
such a provision exists, the following additional information must be 
provided:
* * * * *
    (iii) A list of shippers that currently use or have used the line 
in question within the last two years;
    (iv) The number of carloads those shippers specified in paragraph 
(iii) originated or terminated (submitted under seal);
    (v) A certification that the railroad has provided notice of the 
proposed transaction and interchange commitment to the shippers 
identified in paragraph (iii);
    (vi) A list of third party railroads that could physically 
interchange with the line sought to be acquired or leased;
    (vii) The percentage of the purchasing/leasing railroad's revenue 
projected to be derived from operations on the line with the 
interchange commitment (submitted under seal);
    (viii) An estimate of the difference between the sale or lease 
price with and without the interchange commitment (submitted under 
seal);
    (ix) An estimate of the discounted annual value of the interchange 
commitment to the Class I (or other incumbent carrier) leasing or 
selling the line (submitted under seal); and
    (x) A change in the case caption so that the existence of an 
interchange commitment is apparent from the case title.
* * * * *
    5. Amend Sec.  1150.43 by revising paragraphs (h)(1) introductory 
text and by adding paragraphs (h)(1)(iii) through (x) to read as 
follows:


Sec.  1150.43  Information to be contained in notice for small line 
acquisitions.

* * * * *
    (h) Interchange commitments. (1) The filing party must certify 
whether or not a proposed acquisition or operation of a rail line 
involves a provision or agreement that may limit future interchange 
with a third-party connecting carrier, whether by outright prohibition, 
per-car penalty, adjustment in the purchase price or rental, positive 
economic inducement, or other means (``interchange commitment''). If 
such a provision exists, the following additional information must be 
provided:
* * * * *
    (iii) A list of shippers that currently use or have used the line 
in question within the last two years;
    (iv) The number of carloads those shippers specified in paragraph 
(h)(1)(iii) of this section originated or terminated (submitted under 
seal);
    (v) A certification that the railroad has provided notice of the 
proposed transaction and interchange commitment to the shippers 
identified in paragraph (h)(1)(iii) of this section;

[[Page 66169]]

    (vi) A list of third party railroads that could physically 
interchange with the line sought to be acquired or leased;
    (vii) The percentage of the purchasing/leasing railroad's revenue 
projected to be derived from operations on the line with the 
interchange commitment (submitted under seal);
    (viii) An estimate of the difference between the sale or lease 
price with and without the interchange commitment (submitted under 
seal);
    (ix) An estimate of the discounted annual value of the interchange 
commitment to the Class I (or other incumbent carrier) leasing or 
selling the line (submitted under seal); and
    (x) A change in the case caption so that the existence of an 
interchange commitment is apparent from the case title.
* * * * *

PART 1180--RAILROAD ACQUISITION, CONTROL, MERGER, CONSOLIDATION 
PROJECT, TRACKAGE RIGHTS, AND LEASE PROCEDURES

    6. The authority citation for part 1180 continues to read as 
follows:

    Authority:  5 U.S.C. 553 and 559; 11 U.S.C. 1172; 49 U.S.C. 721, 
10502, 11323-11325.

    7. Amend Sec.  1180.4 by revising paragraph (g)(4)(i) introductory 
text and by adding paragraphs (g)(4)(i)(C) through (J) to read as 
follows:


Sec.  1180.4  Procedures.

* * * * *
    (g) * * *
    (4) Interchange commitments. (i) The filing party must certify 
whether or not a proposed acquisition or operation of a rail line 
involves a provision or agreement that may limit future interchange 
with a third-party connecting carrier, whether by outright prohibition, 
per-car penalty, adjustment in the purchase price or rental, positive 
economic inducement, or other means (``interchange commitment''). If 
such a provision exists, the following additional information must be 
provided:
    (C) A list of shippers that currently use or have used the line in 
question within the last two years;
    (D) The number of carloads those shippers specified in paragraph 
(g)(4)(i)(C) of this section originated or terminated (submitted under 
seal);
    (E) A certification that the railroad has provided notice of the 
proposed transaction and interchange commitment to the shippers 
identified in paragraph (g)(4)(i)(C) of this section;
    (F) A list of third party railroads that could physically 
interchange with the line sought to be acquired or leased;
    (G) The percentage of the purchasing/leasing railroad's revenue 
projected to be derived from operations on the line with the 
interchange commitment (submitted under seal);
    (H) An estimate of the difference between the sale or lease price 
with and without the interchange commitment (submitted under seal);
    (I) An estimate of the discounted annual value of the interchange 
commitment to the Class I (or other incumbent carrier) leasing or 
selling the line (submitted under seal); and
    (J) A change in the case caption so that the existence of an 
interchange commitment is apparent from the case title.
* * * * *

    Note:  The following appendix will not appear in the Code of 
Federal Regulations.

Appendix

    The additional information below is included to assist those who 
may wish to submit comments pertinent to review under the Paperwork 
Reduction Act:

Description of Collection

    Title: Disclosure of Rail Interchange Commitments.
    OMB Control Number: 2140-0016.
    STB Form Number: None.
    Type of Review: Revision of an approved collection.
    Respondents: Noncarriers and carriers seeking an exemption to 
acquire (through purchase or lease) and/or operate a rail line, if 
the proposed transaction includes an interchange commitment.
    Number of Respondents: Four.
    Estimated Time per Response: No more than eight hours.
    Frequency: On occasion.
    Total Burden Hours (annually including all respondents): 32 
hours.
    Total ``Non-hour Burden'' Cost: None identified. Respondents may 
file the requested information electronically.
    Needs and Uses: Under 49 U.S.C. 10502, noncarriers and carriers 
may seek an exemption from the prior approval requirements of 
sections 10901, 10902, and 11323 to acquire (through purchase or 
lease) and operate a rail line. The collection of agreements with 
interchange commitments has facilitated the case-specific review of 
interchange commitments and the Board's monitoring of their usage 
generally. The modifications proposed here will further ensure that 
the Board has sufficient information about these transactions to 
determine whether they are appropriate for the exemption process and 
will also help parties objecting to a petition for exemption or 
filing a petition to revoke an exemption by providing access to this 
relevant information up front, thus minimizing the length of time 
spent on the process of filing and deciding a petition to revoke.
    Retention Period: Information in this report will be maintained 
in the Board's confidential file for 10 years, after which it is 
transferred to the National Archives.

[FR Doc. 2012-26882 Filed 11-1-12; 8:45 am]
BILLING CODE 4915-01-P

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