Assessment of Mediation and Arbitration Procedures, 29071-29085 [2013-11675]

Agencies

• Surface Transportation Board
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 78, Number 96 (Friday, May 17, 2013)]
[Rules and Regulations]
[Pages 29071-29085]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-11675]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

49 CFR Parts 1002, 1011, 1108, 1109, 1111, and 1115

[Docket No. EP 699]


Assessment of Mediation and Arbitration Procedures

AGENCY: Surface Transportation Board, DOT.

ACTION: Final rules.

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SUMMARY: The Surface Transportation Board (Board or STB) adopts 
regulations that allow the Board to order parties to participate in 
mediation in certain types of cases and modify and clarify its existing 
mediation regulations. The Board also establishes a new arbitration 
program under which carriers and shippers may agree voluntarily in 
advance to arbitrate certain types of disputes that come before the 
Board, and clarifies and simplifies its existing arbitration rules.

DATES: These rules are effective on June 12, 2013.

ADDRESSES: Information or questions regarding these final rules should 
reference Docket No. EP 699 and be in writing addressed to: Chief, 
Section of Administration, Office of Proceedings, Surface 
Transportation Board, 395 E Street SW., Washington, DC 20423-0001.

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 1-800-877-8339.]

SUPPLEMENTARY INFORMATION: The Board favors the resolution of disputes 
through the use of mediation and arbitration procedures, in lieu of 
formal Board proceedings, wherever possible.\1\ To that end, the Board 
has existing rules that encourage parties to agree voluntarily to 
mediate or arbitrate certain matters subject to its jurisdiction. The 
Board's mediation rules are set forth at 49 CFR 1109.1, 1109.3, 1109.4, 
1111.2, 1111.9, and 1111.10. Its arbitration rules are set forth at 49 
CFR 1108, 1109.1, 1109.2, 1109.3, and 1115.8. In a decision served on 
August 20, 2010,\2\ and published in the Federal Register on August 24, 
2010,\3\ we sought input on how to increase the use of mediation and 
arbitration to resolve matters before the Board.\4\ The Board received 
comments from 12 parties.\5\
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    \1\ Mediation is a process in which parties attempt to negotiate 
an agreement that resolves some or all of the issues in dispute, 
with the assistance of a trained, neutral, third-party mediator. 
Arbitration, by comparison, is an informal evidentiary process 
conducted by a trained, neutral, third-party arbitrator with 
expertise in the subject matter of the dispute. By agreeing to 
participate in arbitration, the parties agree to be bound (with 
limited appeal rights) by the arbitral decision.
    \2\ Assessment of Mediation and Arbitration Procedures, EP 699 
(STB served Aug. 20, 2010).
    \3\ Assessment of Mediation and Arbitration Procedures, 75 FR 
52054.
    \4\ Assessment of Mediation and Arbitration Procedures, EP 699 
(STB served Dec. 3, 2010). The Board served a subsequent notice in 
this matter on December 3, 2010, to clarify that any comments filed 
by the Railroad-Shipper Transportation Advisory Council (RSTAC) 
would be accorded the same weight as other comments in developing 
any new rules. RSTAC is an advisory board established by Federal law 
to advise the U.S. Congress, the U.S. Department of Transportation, 
and the Board on issues related to rail transportation policy, with 
particular attention to issues of importance to small shippers and 
small railroads. By statute, RSTAC members are appointed by the 
Board's chairman. Representatives of large and small rail customers, 
Class I railroads, and small railroads sit on RSTAC. The Board's 
members and the U.S. Secretary of Transportation are ex officio, 
nonvoting RSTAC members. (49 U.S.C. 726.)
    \5\ The Board received comments from the U.S. Department of 
Agriculture (USDA), the Association of American Railroads (AAR), 
Consumers United for Rail Equity (CURE), the National Grain and Feed 
Association (NGFA), the National Oilseed Processors Association 
(NOPA), RSTAC, Transportation Arbitration and Mediation, P.L.L.C. 
(TAM), the Western Coal Traffic League (WCTL), Dave Gambrel, and 
Gordon P. MacDougall for the United Transportation Union-New York 
State Legislative Board (UTU-NY). The American Paper & Forest 
Association (APFA) and The National Industrial Transportation League 
(NITL) filed joint comments.
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    On March 28, 2012, the Board issued a Notice of Proposed Rulemaking 
(NPRM) incorporating the previous comments and concerns of the parties. 
The Board proposed regulations that would allow the Board to order 
parties to participate in mediation in certain types of cases and would 
modify and clarify its existing mediation rules. The Board also 
proposed an arbitration program under which carriers and shippers would 
agree voluntarily to arbitrate certain types of disputes, and proposed 
modifications to clarify and simplify its existing rules governing 
arbitration in other disputes.\6\
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    \6\ Assessment of Mediation and Arbitration Procedures, EP 699 
(STB served Mar. 28, 2012).
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    The Board sought comments on the proposed regulations by May 17, 
2012,\7\ and replies by June 18, 2012.\8\ On August 2, 2012, the Board 
held a public hearing to further explore the NPRM and the comments of 
the parties. At the public hearing, the Board heard testimony from the 
NGFA, NITL, WCTL, AAR, NS, UP, UTU-NY, The Tom O'Connor Group (Tom 
O'Connor), and the Alliance for Rail Competition (ARC).\9\
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    \7\ The Board received comments from BNSF Railway Company 
(BNSF), Norfolk Southern Railway Company (NS), Union Pacific 
Railroad Company (UP), AAR, WCTL, Montana Grain Growers Association 
(MGGA), NGFA, NITL, National Railroad Passenger Corporation 
(AMTRAK), USDA, and UTU-NY.
    \8\ The Board received replies from AAR, UP, WCTL, NITL, and 
UTU-NY.
    \9\ Terry Whiteside appeared on behalf of the following parties: 
ARC, Montana Wheat & Barley Committee, Colorado Wheat Administrative 
Committee, Idaho Barley Commission, Idaho Wheat Commission, Nebraska 
Wheat Board, Oklahoma Wheat Commission, South Dakota Wheat 
Commission, Texas Wheat Producer Board, and Washington Grain 
Commission.
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    As explained in the NPRM, the Board's arbitration processes have 
remained largely unused since they were instituted.\10\ The changes to 
the

[[Page 29072]]

Board's arbitration rules are intended to consolidate the separate 
arbitration procedures in Parts 1108 and 1109, and to encourage greater 
use of arbitration to resolve disputes before the Board by simplifying 
the process, identifying specific types of disputes eligible for a new 
arbitration program, and establishing clear limits on the amounts in 
controversy.\11\ As discussed below, the Board believes that the 
proposed arbitration program it now establishes will be useful to both 
shippers and carriers, facilitating the resolution of disputes in a 
less time-consuming and expensive manner than through the Board's 
formal adjudicatory processes. Additionally, as arbitration is 
potentially less adversarial, it can help the parties to preserve their 
commercial relationship.\12\
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    \10\ The Board first adopted arbitration rules in Arbitration of 
Certain Disputes Subject to the Statutory Jurisdiction of the 
Surface Transportation Board, EP 560 (STB served Sept. 2, 1997).
    \11\ The Board has authority to revise its arbitration rules 
under 49 U.S.C. 721(a) and under the Alternative Dispute Resolution 
Act, 5 U.S.C. 571-584.
    \12\ Alternative Dispute Resolution Act of 1998, Public Law 105-
315, Sec.  2, 112 Stat. 2993 (1998) (discussing the benefits of 
alternative dispute resolution).
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    In designing the arbitration program set forth in these final 
rules, the Board sought to incorporate the suggestions of the 
commenting parties to the maximum extent possible. The resulting 
arbitration program is designed to be flexible, party-driven, and 
functional. Under the new arbitration program, all parties eligible to 
bring matters before the Board will have the opportunity to opt into 
the arbitration program before a dispute arises. Parties will also have 
the option to opt into the arbitration program when a dispute is 
formally filed with the Board, provided the parties agree to do so in 
writing. Arbitration-program-eligible matters are limited to demurrage; 
accessorial charges; misrouting or mishandling of rail cars; and 
disputes involving a carrier's published rules and practices as applied 
to particular rail transportation. The parties may also agree in 
writing, prior to the commencement of arbitration, to arbitrate certain 
additional matters, subject to the condition that they may only 
arbitrate matters within the statutory jurisdiction of the Board, and 
may not arbitrate matters in which the Board is required to grant or 
deny a license or other regulatory approval or exemption. Furthermore, 
the monetary award cap under the Board's new program will be set at 
$200,000. In response to comments, the final rules provide that parties 
may agree to a different award level when they opt into the program or 
by a separate written agreement at the start of an arbitration 
proceeding.
    The changes to the existing mediation rules establish procedures 
under which the Board may order the parties to participate in mediation 
in certain types of disputes before the Board, on a case-specific 
basis, and clarifies and simplifies the existing mediation rules.\13\ 
The Board will assign one or more Board employees, trained in 
mediation, to conduct the mediation. Mediation periods will last up to 
30 days, but can be extended upon the mutual request of the parties. 
The Board reserves the right to stay underlying proceedings and to toll 
any applicable statutory deadlines when the parties mutually consent to 
mediation. However, the Board will not stay proceedings or toll 
statutory deadlines when at least one of the parties does not consent 
to mediation. The Board concludes that the revised mediation rules are 
in the public interest. If a dispute is amicably resolved, it is likely 
that the parties would incur considerably less time and expense than if 
they used the Board's formal adjudicatory process.
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    \13\ The Board's authority to revise its mediation rules exists 
under 49 U.S.C. 721(a) and under the Alternative Dispute Resolution 
Act, 5 U.S.C. 571-584.
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    There are important limitations to the types of matters that can be 
the subject of the mediation and arbitration program. The mediation and 
arbitration rules are not available to resolve any matter in which the 
Board is statutorily required to grant or deny an application or 
petition for exemption for a license or other regulatory approval, or 
in matters beyond the statutory jurisdiction of the Board.\14\ These 
rules will also not apply to labor-protection disputes, which have 
their own arbitration procedures.
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    \14\ Thus, these procedures will not be available in a 
regulatory proceeding to obtain the grant, denial, stay or 
revocation of a request for construction, abandonment, acquisition, 
trackage rights, merger, or pooling authority or an exemption 
related to such matters.
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The Board's Final Rules and the Comments of the Parties

Arbitration

    Having carefully considered the comments and testimony of the 
parties, the Board adopts the following rules governing the use of 
arbitration to resolve disputes before the Board. The Board's 
arbitration rules will be revised to consolidate the separate 
arbitration procedures contained in Parts 1108 and 1109, and are 
intended to encourage greater use of arbitration to resolve disputes 
before the Board by simplifying the process and by clarifying the types 
of disputes that may be submitted under the Board's new arbitration 
program. We discuss below the major issues raised in the comments to 
our proposed arbitration rules, and our responses to the parties' 
concerns.

Participation in the Board's Arbitration Program

    The NPRM proposed a new arbitration program in which Class I and 
Class II rail carriers would have been deemed to agree to participate 
voluntarily in the Board's proposed arbitration program unless they 
opted out of the program by filing a notice with the Board. Class III 
rail carriers and shippers would not have been deemed to agree to 
participate but instead could have chosen to participate in the 
arbitration program on a case-by-case basis. Under the proposed rules, 
there would have been no penalty for opting out of the Board's 
arbitration program. The option of choosing to participate in the 
arbitration program on a case-by-case basis was also open to Class I 
and Class II railroads if they opted out of the arbitration program.
    AAR and the participating Class I railroads are unanimous in their 
objection to the opt-out provision of the NPRM. AAR's position is that 
the proposed arbitration program was not voluntary, and the parties 
could not meaningfully consent to arbitration.\15\ BNSF \16\ and NS 
\17\ echo AAR's concerns. UP challenges the opt-out provision on 
grounds that Class I and Class II railroads would be treated 
differently from Class III railroads and shippers.\18\
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    \15\ AAR Comments 6, May 17, 2012.
    \16\ BNSF Comments 3, May 17, 2012.
    \17\ NS Comments 3 & 6, May 17, 2012.
    \18\ UP Comments 4-7, May 17, 2012.
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    During the public hearing, AAR argued that if the Board moves 
forward with its proposed rule requiring Class I and Class II railroads 
to agree in advance to arbitrate certain matters, then the requirement 
should be required of all parties on an equal, reciprocal basis.\19\ 
AAR stated that allowing participants to opt into the program would 
encourage participation.\20\ UP went further stating that the opt-out 
approach did not facilitate trust between shippers and carriers.\21\ UP 
also raised concerns that the proposed rules would create uncertainty 
because tens of thousands of shippers would have the ability to use a 
one-sided mechanism to force the Class I railroads to arbitrate

[[Page 29073]]

disputes.\22\ UP speculated that an opt-in arbitration program, where 
even a few parties on each side are opting in, may result in more 
voluntary participation.\23\ In its comments, BNSF proposes altering 
the program from an opt-out to an opt-in program where the joining 
party could specify the types of disputes it would be willing to 
arbitrate.\24\
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    \19\ Public Hr'g Tr., 112, Aug. 2, 2012.
    \20\ Id. at 113.
    \21\ Id. at 134.
    \22\ Id.
    \23\ Id. at 135-36.
    \24\ BNSF Comments 3-4, May 17, 2012
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    The Board found persuasive the concerns and suggestions raised by 
AAR, UP, BNSF, and NS, and remains committed to establishing a 
functional arbitration program, which clearly necessitates 
participation by the Class I and Class II railroads. The record and the 
testimony of the carriers show that the proposed rule requiring a Class 
I or Class II railroad to opt out of the program created an unintended 
perception that the Board's proposed arbitration program would be 
procedurally biased.
    Based on the comments, and to encourage the participation of Class 
I and Class II railroads in this arbitration program, the final rule 
eliminates the opt-out procedures in favor of an opt-in requirement for 
all parties. Under the final rule, all classes of rail carriers, 
shippers, and other parties eligible to participate in disputes before 
the Board may voluntarily choose to opt into the Board's arbitration 
program by filing a notice with the Board. The Board will then maintain 
a list of program participants on its Web site. Thus, all parties will 
be on an equal footing entering into the arbitration program. The Board 
recognizes that there are many more shippers than there are railroads, 
making the process of shippers opting in a significant task. The 
Board's Office of Rail Customer and Public Assistance will engage in 
outreach with shipper organizations to ensure that they are aware of 
their options under the arbitration program.
    Under the final rules, those parties voluntarily opting into the 
arbitration program are eligible to select which arbitration-program-
eligible matters they are willing to arbitrate. An arbitral award may 
not exceed a monetary cap of $200,000, unless the parties to a dispute 
agree to a different amount, either higher or lower, in writing, on a 
case-by-case basis, prior to the commencement of arbitration. Both 
railroads and shippers may voluntarily opt into the program on a case-
by-case basis. Parties who have opted into the program may also choose 
to opt out of the program by filing a notice with the Board. An opt-out 
notice will take effect 90 days after filing. These opt-out procedures 
may not be used to opt out of an ongoing arbitration proceeding.
    Program participants in the new arbitration program will have prior 
knowledge of the issues to be arbitrated and the maximum amount of a 
monetary award. The Board's arbitration program is intended to be 
participant-driven; allowing parties to agree in writing to arbitrate 
additional matters and change the monetary award cap on a case-by-case 
basis.

Arbitration-Program-Eligible Matters

    In its proposed rules, the Board suggested matters that would be 
eligible for arbitration through the program. This list included: (1) 
Demurrage and accessorial charges; (2) misrouting or mishandling of 
rail cars; (3) disputes involving a carrier's published rules and 
practices as applied to particular rail transportation; and (4) other 
rail service-related matters.
    The inclusion of the term ``other service-related matters'' led 
some commenters to suggest that arbitration program participants, 
particularly Class I and Class II railroads, would be agreeing in 
advance to arbitrate matters that were not clearly defined. AAR asserts 
that, despite the list, the Board failed to define adequately what 
disputes would be subject to the proposed arbitration program.\25\ 
Similarly, UP states that the ``other service-related matters'' 
language in the NPRM was overly broad and suggested alternative 
language.\26\
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    \25\ AAR Comments 7, May 17, 2012.
    \26\ UP Comments 7-8, May 17, 2012.
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    Conversely, NITL asks that the Board add to the list of arbitral 
matters: (1) Disputes about loss and damage arising under receipts and 
bills of lading governed by 49 U.S.C. 11706; (2) disputes about damage 
to shipper rail cars; and (3) disputes involving damage as a result of 
service failures not otherwise covered in the list proposed by the 
Board.\27\ NITL justifies these additions by noting that they are 
generally dollar-determinable, rarely have broad policy or regulatory 
ramifications, and are common sources of dispute between railroads and 
shippers.\28\ UP and AAR oppose an expansion of the list of 
arbitration-eligible matters.\29\
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    \27\ NITL Comments 8, May 17, 2012.
    \28\ Id.
    \29\ UP Reply 5-7, June 18, 2012; and AAR Reply 9-10, June 18, 
2012.
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    Additionally, NITL asks that the Board clarify whether parties 
could use the Board's arbitration process for contract disputes where 
all parties to the dispute agree and where the contract does not 
contain an arbitration clause.\30\ UP opposes this approach on grounds 
that this type of arbitration would complicate the dispute resolution 
process and would entangle the Board in interpreting contracts, which 
the Board generally leaves to the courts to resolve.\31\ UTU-NY also 
raises jurisdictional concerns and asserts that arbitration should be 
confined to transactions otherwise subject to the Board's jurisdiction. 
\32\
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    \30\ NITL Comments 9, May 17, 2012.
    \31\ UP Reply 8, June 18, 2012.
    \32\ UTU-NY Comments 9, May 17, 2012.
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    The MGGA also advocates expanding the scope of subjects that could 
be arbitrated through the Board's program, requesting that parties be 
permitted to arbitrate matters that could lead to prospective relief, 
including freight rates.\33\ UP counters that rate challenges are 
complicated and that an arbitrator would lack the expertise or 
resources to handle such matters.\34\ Likewise, WCTL agrees that the 
arbitration program would not be appropriate to resolve complex 
matters.\35\
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    \33\ MGGA Comments 2, May 17, 2012.
    \34\ UP Reply 9, June 18, 2012.
    \35\ WCTL Comments 7-8, May 17, 2012.
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    During the public hearing, AAR and the participating Class I 
railroads urged the Board to remove the catch-all ``other rail service-
related matters'' provision.\36\ UP stated that adding clarity to the 
arbitration process by reducing the range and types of disputes would 
encourage participation.\37\ AAR expressed the view that the list of 
arbitration-eligible matters should be limited to specifically 
enumerated matters that do not rise to a level of policy significance 
and are essentially factual disputes.\38\ The NGFA stated that it has 
no objection to removing the catch-all provision.\39\
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    \36\ Public Hr'g Tr., 147-53, Aug. 2, 2012.
    \37\ Id. at 148.
    \38\ Id. at 112-13.
    \39\ Id. at 95.
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    The Board's final rule clarifies the types of disputes that are 
eligible for arbitration under the Board's program, removing the 
catchall language of ``other rail service-related matters'' to ensure 
that the list of program-eligible matters is clearly defined. Matters 
eligible for arbitration are: Demurrage, accessorial charges, 
misrouting or mishandling or railcars, and disputes involving a 
carrier's published rules and practices as applied to particular rail 
transportation. Under the final rules, all parties opting into the 
arbitration program will have full prior knowledge that these four 
matters are eligible under the arbitration program.

[[Page 29074]]

    In response to the comments, the final rules also provide that, 
when submitting an opt-in notice, parties may further narrow the field 
of eligible matters that they will agree to arbitrate. At the same 
time, the final rules reflect the requests of a number of parties for 
the opportunity to arbitrate additional types of disputes where the 
parties believe arbitration could be helpful. Thus, to provide parties 
with maximum flexibility, the final rules specify that parties may 
agree in writing on a case-by-case basis to arbitrate additional 
matters, provided that the additional matters are within the Board's 
statutory jurisdiction to resolve, and that the dispute does not 
require the Board to grant, deny, stay or revoke a license or other 
regulatory approval or exemption, and does not involve labor protective 
conditions.

Monetary Award Cap

    The NPRM proposed that the relief that could be awarded under the 
arbitration program would be limited to a maximum of $200,000 per 
arbitral dispute, unless all parties to the matter agreed at the 
commencement of arbitration to a higher cap. However, the Board 
specifically invited comments on whether the proposed monetary award 
cap should be increased or decreased.
    NITL argues that the proposed cap of $200,000 is too low and is 
likely to substantially restrict the number of disputes that might be 
eligible for arbitration.\40\ NITL suggests that the cap should be 
increased to at least $500,000.\41\ That figure, according to NITL, 
would better cover the majority of disputes under the proposed 
arbitration program and would make shipper parties more likely to 
participate in disputes.\42\ WCTL endorses the monetary award limit put 
forward by the Board.\43\ USDA asserts that the proposed $200,000 cap 
should be increased, or that there need be no cap at all.\44\
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    \40\ NITL Comments 14, May 17, 2012.
    \41\ Id.
    \42\ Id.
    \43\ WCTL Comments 9, May 17, 2012.
    \44\ USDA Comments 3, May 17, 2012.
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    During the public hearing, NGFA stated that its arbitration program 
currently has a cap of $200,000, but that its cap is currently under 
review.\45\ WCTL said that it was generally satisfied with the proposed 
cap of $200,000, but that the parties should have the option to 
mutually agree to increase the amount.\46\ ARC recommended a program 
award cap of $1,000,000 to reflect the cost a party might incur in the 
arbitration process and to open the program up to a larger number of 
potential users.\47\
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    \45\ Id. at 64-Public Hr'g Tr., 65, Aug. 2, 2012.
    \46\ Id. at 104.
    \47\ Id. at 55.
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    UP stated that it would not rule out participating in Board-
sponsored arbitration if the monetary award cap is raised from $200,000 
to $500,000.\48\ NS stated that the cap would be one of a number of 
factors it would consider in deciding whether to participate in 
arbitration and that the higher the cap the more important a factor it 
would become.\49\ AAR recommended that the Board keep the cap low at 
least until participants become more familiar and comfortable with the 
program.\50\
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    \48\ Id. at 138.
    \49\ Id. at 139.
    \50\ Public Hr'g Tr., 138-39, Aug. 2, 2012.
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    The Board will maintain the proposed arbitration program's monetary 
award cap of $200,000. We recognize that some parties have concerns 
about this amount but we believe an award cap of $200,000 is an 
appropriate starting point as the arbitration program is introduced. 
Such an amount is high enough to encompass a wide range of disputes, 
but should not be so high as to dissuade parties from participating in 
the arbitration program.\51\ The monetary award cap is per case and not 
per occurrence. As parties become more familiar with using the 
arbitration program, the Board may reassess the monetary award cap.
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    \51\ For example, of 15 recent demurrage cases before the Board, 
11 would have been eligible for arbitration under the $200,000 
monetary award cap based on the value of the case asserted in the 
complaint.
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    At the same time, the Board recognizes that any monetary award cap 
placed on the arbitration program may not fully encompass every 
arbitration-eligible dispute. Thus, the final rules allow parties to 
agree in writing to arbitrate a dispute with a different award amount. 
However, no injunctive relief will be available through the Board's 
arbitration program because matters in which a party seeks injunctive 
relief are generally complicated or implicate significant policy or 
regulatory issues that are better suited for resolution using the 
Board's formal adjudicatory procedures.

Counterclaims and Affirmative Defenses

    The Board's proposed rules did not expressly provide parties with 
the option to present counterclaims and affirmative defenses in 
arbitration proceedings. AAR \52\ and UP \53\ express concerns about 
whether the railroads could present counterclaims in the proposed 
arbitration program and note that the proposed rules create a 
perception that shippers would hold veto power over any such claim. At 
the hearing, UP noted that, regardless of whether the railroad or the 
shipper initiated the arbitration, it would not be cost effective to 
deal with only part of a dispute through arbitration, leaving related 
issues unresolved.\54\ NITL suggested that the Board should allow for 
counterclaims in arbitration if the issue is arbitration-program-
eligible and is related to the same transportation events as the 
primary claim.\55\
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    \52\ AAR Comments 13-14, May 17, 2012.
    \53\ UP Comments 4, May 17, 2012.
    \54\ Public Hr'g Tr., 148-49, Aug. 2, 2012.
    \55\ Id. at 40.
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    In response to these comments, the final rules will allow a 
respondent to file a counterclaim against a complaining party when the 
respondent files its answer to the arbitration complaint, provided the 
counterclaim arises out of the same set of circumstances or is 
substantially related to the underlying dispute, and subject to the 
Board's jurisdiction. An answer shall also contain all affirmative 
defenses that a respondent wishes to assert against a complainant. If a 
party fails to assert a counterclaim or affirmative defense in the 
answer to the complaint, it will forfeit the right to do so at a later 
date. Counterclaims will not count against the monetary award cap 
selected by the parties for the initiating complaint, because a 
counterclaim is a separate claim and will be subject to its own 
monetary award cap of $200,000, unless a different cap is selected by 
the parties.

Arbitrator Panel

    In its proposed rules, the Board did not propose the use of 
multiple arbitrators to resolve a dispute. It did, however, seek 
comments on approaches the agency could employ if parties were to 
utilize a panel of two or three arbitrators. In response, NITL asserts 
that the parties should have the option of using a panel of three 
arbitrators.\56\ It claims that, although many disputes might be 
resolved by a single arbitrator, there are some disputes in which the 
collective judgment of three persons might be useful.\57\ NITL argues, 
however, that this option should be used only when all parties to a 
dispute agree that one arbitrator would be insufficient.\58\ MGGA 
claims that a panel of arbitrators would be better than a single 
arbitrator.\59\ It suggests that, upon agreement by both parties, the

[[Page 29075]]

Board should appoint the agency's arbitrator, and each party should 
choose and pay for an additional arbitrator.\60\
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    \56\ NITL Comments 13, May 17, 2012.
    \57\ Id.
    \58\ Id.
    \59\ MGGA Comments 2, May 17, 2012.
    \60\ Id.
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    During the public hearing, NGFA supported a panel of three 
arbitrators. In the NGFA's experience, this improves the likelihood of 
well-reasoned decisions, enhances the balance and fairness with which 
the system is viewed, and reduces the potential for inadvertent 
errors.\61\ ARC stated that creating a panel of three arbitrators, in 
which the railroad and shipper are both represented by an arbitrator on 
the panel, would eliminate the need to find a single arbitrator who 
would be both neutral and an industry expert.\62\ NITL believed a 
single arbitrator to be more cost effective, but that the parties 
should have the option to select an arbitration panel.\63\ Both 
NITL\64\ and WCTL\65\ expressed concerns regarding the cost-prohibitive 
nature of a panel of three arbitrators in light of the $200,000 
monetary award cap, the central concern being that shippers seeking 
small amounts of damages might be frozen out of the arbitration process 
if the Board were to mandate a three-member arbitration panel.
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    \61\ Public Hr'g Tr., 20, Aug. 2, 2012.
    \62\ Id. at 56 & 72-73.
    \63\ Id. at 42.
    \64\ Id. at 84-85.
    \65\ Id. at 85-86.
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    UP stated at the hearing that it views three-member arbitration 
panels as a solution to the problem of finding a single-neutral 
arbitrator with subject-matter expertise.\66\ UP stated that with three 
arbitrators, and each of the parties selecting someone it believes is 
knowledgeable and able to explain the issues, UP might be willing to 
accept a third-neutral arbitrator with less familiarity of the subject 
matter.\67\
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    \66\ Id. at 141-42.
    \67\ Public Hr'g Tr., 142, Aug. 2, 2012.
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    The Board finds persuasive the comments regarding the respective 
benefits of both a panel of three arbitrators and the use of a single-
neutral arbitrator. The Board further believes that a flexible program 
will be the most useful to party participants. The parties, and not the 
Board, are in the best position to determine what will work best in a 
particular arbitration proceeding. The final rules, therefore, allow 
the parties to shape individual arbitrations to suit their specific 
needs rather than creating a one-size-fits-all arbitration program.
    Under the final rules, a panel of three arbitrators will be 
utilized unless the parties agree in writing to the use of a single 
neutral arbitrator. The Board believes that using a panel of three 
arbitrators will alleviate the concerns raised about finding a single-
neutral arbitrator with subject-matter expertise. The parties in their 
comments and testimony recognize that it would not be overly difficult 
to appoint two subject-matter experts as arbitrators who can educate 
and guide the third-neutral arbitrator.\68\ Thus, establishing a three-
member arbitration panel, as a general rule, will help to ensure the 
integrity and neutrality of the arbitration proceedings.
---------------------------------------------------------------------------

    \68\ The final rules allow each party to appoint one arbitrator 
who is intended to be a subject-matter expert. The final rules place 
no restrictions on the selection of this party-appointed arbitrator. 
A party may appoint any individual that it believes has the 
requisite qualifications to serve as an arbitrator, including its 
employee, a choice that could reduce the costs of arbitration.
---------------------------------------------------------------------------

    The Board also recognizes that it can be appropriate to use a 
single-neutral arbitrator in certain cases as a cost-effective, 
expeditious choice for resolving a dispute between the parties. Thus, 
the final rules allow either party to request the single-arbitrator 
option in either the complaint or the answer. Both parties, however, 
must consent to the use of a single-neutral arbitrator in writing for 
the option to be selected. If no agreement is reached, the parties will 
have the option of utilizing the panel of three arbitrators or bringing 
the matter formally before the Board and foregoing the arbitration 
process.

Selecting Arbitrators and Cost Sharing

    AAR suggests that the Board should reassess how arbitrators will be 
selected.\69\ If the Board were to maintain the current roster system, 
AAR asks that the Board initiate a public and transparent process for 
updating the list.\70\ It claims that the Board has no apparent 
standards of qualifications for arbitrators and no apparent vetting 
process.\71\ AAR further asserts that the Board should void the 
existing roster and institute a proceeding to establish a new list of 
arbitrators.\72\ In such a proceeding, according to AAR, the Board 
should establish objective criteria to judge whether an individual 
could be an effective arbitrator of Board-related disputes.\73\ It 
proposes that such criteria should include a minimum number of years of 
transportation experience and demonstrated neutrality.\74\
---------------------------------------------------------------------------

    \69\ AAR Comments 17-18, May 17, 2012.
    \70\ Id. at 17.
    \71\ Id. at 17.
    \72\ Id.
    \73\ Id.
    \74\ Id. at 17-18.
---------------------------------------------------------------------------

    AAR further suggests that the Board should establish clear 
procedures for selecting the third-party neutral or single arbitrator 
in a specific dispute.\75\ It proposes that, if the parties cannot 
agree on an arbitrator, the Board could establish a ``best-final 
offer'' process where each party would submit the name of each 
arbitrator to the Board with reasons backing that choice.\76\ The Board 
could then select one of the two.\77\ WCTL and NITL propose a similar 
process for the Board to select an arbitrator.\78\
---------------------------------------------------------------------------

    \75\ AAR Comments 18, May 17, 2012.
    \76\ Id.
    \77\ Id.
    \78\ WCTL Comments 10, May 17, 2012; and NITL Comments 12, May 
17, 2012.
---------------------------------------------------------------------------

    At the hearing, UP speculated that one reason why the Board's 
arbitration procedures have not been used in the past may be the 
quality of the available list of arbitrators.\79\ UP noted that, in 
other arbitration settings, it can quickly assess the qualifications 
and neutrality of an arbitrator. Typically, UP and the opposing party 
can each select an arbitrator and then either mutually agree on a third 
arbitrator or utilize a neutral arbitration organization to supply a 
list of potential arbitrators complete with extensive background 
information.\80\
---------------------------------------------------------------------------

    \79\ Public Hr'g Tr., 121, Aug. 2, 2012.
    \80\ Id. at 122.
---------------------------------------------------------------------------

    The Board recognizes that its current list of arbitrators is 
outdated and does not provide the type of information the parties have 
expressed an interest in knowing prior to an arbitrator's appointment. 
The selection process could also have been made clearer. The Board has 
incorporated the suggestions and best practices identified by the 
parties into the final rules to create a streamlined, party-driven 
arbitrator selection process, and will therefore no longer maintain a 
roster or list of arbitrators.
    The Board will provide the parties with a list of five neutral 
arbitrators to facilitate the selection of a third-neutral arbitrator, 
or a single-neutral arbitrator if the parties so agree in writing. The 
neutral arbitrator is intended to be an arbitration-process expert, 
rather than a subject-matter expert. When individual arbitration 
proceedings arise, the Board will obtain a list of potential 
arbitrators from professional arbitration associations such as the 
American Arbitration Association, Judicial Arbitration and Mediation 
Services (JAMS), and the Federal Mediation and Conciliation Service. 
The Board believes that these professional arbitration associations, 
with expansive and well-maintained rosters, will be able to provide a 
list of qualified-neutral arbitrators to the Board upon request. 
Utilizing the expertise of these

[[Page 29076]]

organizations should expedite and improve the arbitrator selection 
process. It was apparent from the comments and testimony that the 
parties have had experience utilizing arbitrators from these 
organizations and have been comfortable doing so. The list of neutral 
arbitrators will be accompanied by a detailed professional history of 
each arbitrator. Parties to arbitration will split all costs associated 
with the use of the neutral arbitrator. The Board will pay all costs 
associated with obtaining a list of arbitrators from professional 
arbitration associations.
    To select the neutral arbitrator, the Board has adopted a 
``strike'' methodology in the final rules. Specifically, after the 
Board obtains a list of five neutral arbitrators, and provides the list 
to the parties, the complainant will be responsible for striking one 
name from the list. The respondent will then have the opportunity to 
strike another name from the list. The process will repeat until only 
one name remains on the list: the individual who will be the neutral 
arbitrator. This selection should be concluded in no more than 14 days 
from the date the Board sends the arbitrator list to the parties. Each 
party to arbitration is responsible for conducting its own due 
diligence on the list of neutral arbitrators. The selection of the 
neutral arbitrator will not be challengeable before the Board. To 
permit challenges to the strike methodology would increase litigation 
costs and lengthen the arbitration process, which would contravene the 
goals of the Board's arbitration program.

Arbitration Procedures

    To carry out an effective arbitration process for all parties, 
arbitration proceedings must be conducted in a timely yet thorough 
manner. The final rules provide that when the parties select a panel of 
three arbitrators, the neutral arbitrator will establish all 
arbitration procedures including discovery, the submission of evidence, 
and the treatment of confidential information, and the evidentiary 
phase of the arbitration process must be completed within 90 days from 
the established start date. The neutral arbitrator will be required to 
issue an unredacted written decision to the parties on behalf of the 
arbitration panel within 30 days following the completion of the 
evidentiary phase. The neutral arbitrator must serve a redacted copy of 
the arbitration decision upon the Board within 60 days of the 
completion of the evidentiary phase.

Publication of Decisions and Precedential Value

    Under the proposed rules, arbitration decisions would not be made 
public in order to promote parties' willingness to utilize the 
arbitration program. The Board received comments and testimony in 
opposition to this proposal. AAR argues that making arbitration awards 
public would have three benefits: (1) Public decisions that summarize 
the position of the parties discourage extreme positions and can 
encourage voluntary settlement; (2) public decisions would create 
incentives for arbitrators to render thoughtful, well-reasoned 
decisions; and (3) public decisions would allow parties to make an 
informed decision in selecting arbitrators based on their prior 
work.\81\ As such, AAR proposes that arbitrators should be required to 
render written confidential decisions to the parties involved in 
disputes and also a shorter public summary of the decision to be 
submitted to the Board for publication on the Board's Web site.\82\ At 
the public hearing, NITL stated that it believes there are commercial 
positives to publishing arbitration decisions and that published 
decisions add a layer of transparency to the arbitration program.\83\ 
NITL also argued that publishing decisions may ease concerns about the 
program because parties can see that other parties have gone through 
the process before.\84\ NGFA stated that arbitration decisions should 
be published but with confidential materials redacted.\85\ NGFA 
expressed the view that publishing arbitration decisions would 
encourage shippers and carriers to resolve disputes prior to 
arbitration.\86\ UP suggested that the Board should publish arbitration 
decisions on the Board's Web site in order to ensure transparency of 
the arbitration process.\87\
---------------------------------------------------------------------------

    \81\ AAR Reply 10-11, June 18, 2012.
    \82\ Id. at 11.
    \83\ Public Hr'g Tr., 101, Aug. 2, 2012.
    \84\ Id. at 93.
    \85\ Id. at 21.
    \86\ Id.
    \87\ Id. at 124.
---------------------------------------------------------------------------

    During the hearing, NITL stated that published arbitration 
decisions should have no precedential value.\88\ MGGA also supports 
non-precedential arbitration decisions.\89\ NGFA states that, while 
arbitration decisions offer no precedential value, they provide 
considerable value as a published guide.\90\ UP states that it would 
support publication of arbitration decisions if they did not disclose 
confidential information, are not precedential, and are not admissible 
in future arbitrations.\91\
---------------------------------------------------------------------------

    \88\ Id. at 43.
    \89\ MGGA Comment 2, May 17, 2012.
    \90\ NFGA Comment 9, May 17, 2012.
    \91\ UP Reply 10, June 18, 2012.
---------------------------------------------------------------------------

    Based on the parties' comments, the Board will require the 
publication of arbitration decisions. The arbitrators shall, with the 
help of the parties or pursuant to the arbitration agreement, redact 
from this decision all proprietary or confidential information, and 
provide the redacted copy to the Board within 60 days of the completion 
of the evidentiary phase. The Board will then publish the redacted 
decision on its Web site. Arbitrators shall be required in all cases to 
maintain an unredacted copy of their decisions. In the event an 
arbitration decision is appealed to the Board, the neutral arbitrator 
shall be required to serve upon the Board an unredacted copy of the 
decision, but the Board will consider this decision confidential and 
will not post it on its Web site. The Board will not publish any 
proprietary or confidential information. Although arbitration decisions 
will be available on the Board's Web site, these decisions will have no 
precedential value in any proceeding including other mediations, 
arbitrations, formal Board proceedings, and court appeals of Board 
decisions.

Standard of Review

    The Board stated in its proposed rules that its standard of review 
of an arbitral decision would be narrow and that relief would be 
limited to instances involving a clear abuse of arbitral authority or 
discretion. BNSF asks the Board to allow appeals on additional grounds 
including that: (1) The arbitrator has exceeded his or her authority; 
(2) the arbitration award contravenes statutory requirements; and/or 
(3) the arbitrator has exhibited partiality.\92\ BNSF argues that a 
party is more likely to participate in the arbitration program if it 
knows that the standard of review is broad enough to allow the Board to 
review and modify or vacate an award that is clearly in error or is 
issued under circumstances where the arbitrator is biased or acts 
outside his or her authority.\93\ BNSF notes that this standard is 
similar to the standard used to review arbitration awards under the 
Federal Arbitration Act.\94\
---------------------------------------------------------------------------

    \92\ BNSF Comments 5, May 17, 2012.
    \93\ Id.
    \94\ Id.
---------------------------------------------------------------------------

    Other parties also support broadening the standard of review. For 
example, UP argues that one ground for appeal should be that an 
arbitrator failed to

[[Page 29077]]

disclose any relationship or dealing between the arbitrator and a party 
or its counsel.\95\ AAR proposes, at a minimum, that the Board should 
add the phrase ``or contravenes statutory requirements'' to the 
proposed standard of review.\96\ USDA suggests that parties should be 
able to appeal the initial arbitration decision to a proposed review 
panel before seeking the Board's review of the arbitration decision, 
except in instances involving a clear abuse of arbitral authority or 
discretion.\97\
---------------------------------------------------------------------------

    \95\ UP Comments 12, May 17, 2012.
    \96\ AAR Comments 18, May 17, 2012.
    \97\ USDA Comments 3, May 17, 2012.
---------------------------------------------------------------------------

    NITL objects to these attempts to expand the standard.\98\ It 
claims that the standard should be narrow because a broad standard 
could lead to frequent and complex appeals and could undercut a prime 
rationale for arbitration in the first place.\99\ NITL does, however, 
agree that the lack of disclosure of an arbitrator's relevant 
relationship would be a sound reason for appeal and that the Board 
should broaden its standard to accommodate that ground.\100\
---------------------------------------------------------------------------

    \98\ NITL Reply 21, June 18, 2012.
    \99\ Id.
    \100\ NITL Reply 22, June 18, 2012.
---------------------------------------------------------------------------

    Additionally, NGFA claims that, because the proposed 49 CFR 
1115.8(c) would require an arbitrator to be guided by the Interstate 
Commerce Act and by STB and ICC precedent, on appeal a party could 
argue that it was an abuse of discretion for an arbitrator to depart 
from an earlier Board or ICC decision.\101\ According to NGFA, this 
possibility would significantly broaden the standard proposed at Sec.  
1108.11(c).\102\ Therefore, NGFA asserts that the Board should not 
instruct arbitrators to be guided by prior Board or ICC decisions, 
except for jurisdictional issues.\103\ WCTL questions NGFA's 
suggestion.\104\ WCTL notes that, if the Board's decision were to 
uphold an arbitral award that was contrary to established law, the 
Board's decision would be subject to challenge in court under the Hobbs 
Act (28 U.S.C. 2321, 2342).\105\
---------------------------------------------------------------------------

    \101\ NGFA Comments 9-10, May 17, 2012.
    \102\ NGFA Comments 10, May 17, 2012.
    \103\ Id.
    \104\ WCTL Reply 7, June 18, 2012.
    \105\ Id.
---------------------------------------------------------------------------

    Upon petition by one or more parties to the arbitration, the Board 
reserves the right to review, modify, or vacate any arbitration award. 
The final rules clarify that the Board will apply a narrow standard of 
review, but which is somewhat broader than originally proposed, and 
will grant relief only on grounds that the award reflects a clear abuse 
of arbitral authority or discretion, or directly contravenes statutory 
authority. In response to BNSF's proposed standard of review, the Board 
notes that, if arbitrators exceed their authority or exhibit 
partiality, such conduct is within the scope of the adopted standard. 
The final rules provide that, under this narrow standard of review, 
arbitrators may be guided by, but need not be bound by, agency 
precedent.
    The Board notes that the review process adopted here is similar to 
the arbitral review process established by the Federal Energy 
Regulatory Commission (FERC).\106\ FERC, like the Board, is an 
independent regulatory agency with a statutory mandate to protect the 
public interest. We are broadening our proposed standard of review 
somewhat to help carry out our statutory responsibility by ensuring 
that arbitration decisions do not directly contravene statutory 
authority. We decline, however, further broadening the Board's standard 
of review because such a detailed review process could defeat the 
purpose of arbitration.
---------------------------------------------------------------------------

    \106\ See generally Alternative Dispute Resolution, 60 FR 19494, 
19499-500 (April 19, 1995) (codified at 18 CFR 385.605 (Rule 605)) 
(describing FERC's arbitral review process).
---------------------------------------------------------------------------

    Judicial review of the Board's decision reviewing an arbitral 
decision would be in the federal courts of appeals under the Hobbs Act 
(28 U.S.C. 2321, 2342) and would apply Administrative Procedure Act 
standards of review. If the parties do not seek the Board's appellate 
review of an arbitral decision, they would have the right to appeal the 
arbitral award directly to a federal district court, under the Federal 
Arbitration Act, 9 U.S.C. 9-13.

Mediation

    In the NPRM, the Board proposed new mediation rules under which the 
Board could order parties to participate in mediation of certain types 
of disputes, on a case-specific basis, and sought to clarify and simply 
the existing mediation procedures where parties to a proceeding can 
voluntarily request the Board to institute a mediation process to 
attempt to resolve a dispute. The Board also proposed to reserve the 
right to stay underlying proceedings and toll any applicable statutory 
deadlines for the duration of the mediation.
    Comments and testimony from the parties regarding the Board's 
proposed revisions to its mediation rules at Part 1109 were generally 
positive, with only one party objecting fully to the revised rules.
    At the public hearing, many of the parties expressed their support 
for the proposed mediation program. NGFA stated that it supports the 
proposed rules.\107\ NITL expressed its support for the Board's 
proposal to order parties to mediation at the request of one party, or 
at the Board's own initiative except in matters involving regulatory 
approvals and for labor disputes.\108\ NITL believed the proposed 30-
day mediation period and the option to extend the mediation period are 
reasonable.\109\ ARC stated that mediation could be one of the most 
important and useful steps for resolving disputes going forward.\110\ 
Tom O'Connor stated that he had positive experiences with Board-
sponsored mediation in the past, and that he supports continued and 
expanded use of mediation at the Board.\111\ NS also expressed its 
support for voluntary mediation provided it remains confidential and 
inadmissible in formal Board proceedings.\112\
---------------------------------------------------------------------------

    \107\ Public Hr'g Tr., 17, Aug. 2, 2012.
    \108\ Id. at 28.
    \109\ Id. at 29.
    \110\ Id. at 54.
    \111\ Id. at 58.
    \112\ Id. at 115.
---------------------------------------------------------------------------

    In its comments, UP states that it does not object to the new 
mediation proposals, but it suggests that ``applicable statutory 
deadlines'' be clarified to read ``statutory deadlines imposed on the 
Board under the Interstate Commerce Act'' so that it is clear that the 
Board cannot toll limitations and deadlines established by other 
federal or state statutes.\113\ Similarly, in its comments AAR 
expresses concerns that the Board does not have the authority to toll 
statutes of limitations on the collection of payments in the courts and 
that such statutes could run while mediation is ordered by the Board 
without consent of the parties.\114\ It asks that the Board clarify its 
authority to toll statutory deadlines while mediation is ongoing. 
Additionally, AAR questions what authority the Board has to compel 
mediation without obtaining the consent of the parties.\115\
---------------------------------------------------------------------------

    \113\ UP Comments 12, May 17, 2012.
    \114\ AAR Comments 21-22, May 17, 2012.
    \115\ Id. at 21.
---------------------------------------------------------------------------

    WCTL supports many of the mediation regulations proposed by the 
Board. It does claim, however, that the proposed regulations contain 
confidentiality provisions that differ somewhat from the 
confidentiality provisions the Board employs in SAC cases.\116\ WCTL 
argues that the existing confidentiality provisions applying to SAC 
cases have been effective, and that the Board should consider applying 
those confidentiality provisions as part

[[Page 29078]]

of its new rules to be applied to all cases, or at least consider 
eliminating the document-destruction requirement contained in proposed 
rule Sec.  1109.3(f)(1).\117\
---------------------------------------------------------------------------

    \116\ WCTL Comments 6, May 17, 2012.
    \117\ Id.
---------------------------------------------------------------------------

    The UTU-NY opposes the proposed changes to the mediation rules. It 
objects to the scope of the mediation proposal, and argues that 
mediation should not be available in labor-management disputes because 
they are better left to other agencies, statutes, or private 
resolution.\118\
---------------------------------------------------------------------------

    \118\ UTU-NY Comments 8, May 17, 2012.
---------------------------------------------------------------------------

    Having considered the comments and testimony of the parties, the 
Board revises its rules at Part 1109 to allow the Board to order 
mediation in certain types of disputes (those in which the Board is not 
required to grant or deny a license or other regulatory approval or 
exemption, and those that do not involve labor protection) before the 
Board. The final rules also permit the Board to institute mediation at 
the mutual request of all parties to a dispute. The Board may also 
order the parties to participate in mediation of a dispute when 
requested by only one party to the proceeding or on the Board's own 
initiative. Authority to grant voluntary mediation requests is 
delegated to the Director of the Board's Office of Proceedings. The 
Board may compel mediation or grant a mediation request at any time in 
an eligible proceeding.\119\ The Board will appoint one or more Board 
employees with mediation training, unless the parties mutually agree to 
a non-Board mediator and so inform the Board. If the parties use a non-
Board mediator, they shall mutually assume responsibility for paying 
the fees and/or costs of the mediator. Mediation periods shall last for 
up to 30 days, although this time may be extended upon the mutual 
request of the parties. The Board will remove the confidentiality 
requirement that parties and mediators destroy all mediation related 
notes at the conclusion of mediation. The Board reserves the right to 
stay proceedings and toll any applicable statutory deadlines pending 
the conclusion of a 30-day mediation period when all parties 
voluntarily consent to mediation. The Board will not stay proceedings 
or toll applicable statutory deadlines where one or more parties does 
not voluntarily consent to mediation or as provided in the rules 
governing rate cases.\120\
---------------------------------------------------------------------------

    \119\ Pursuant to 49 CFR 1109.4, mediation must occur soon after 
the filing of a complaint in rate reasonable cases.
    \120\ See 49 CFR part 1111.
---------------------------------------------------------------------------

    The proposed rules, which would govern both the use of mediation 
and arbitration in Board proceedings, are set forth in Appendix A.

Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, 
generally requires a description and analysis of rules that would have 
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 would have on small entities; (2) analyze effective 
alternatives that might minimize a regulation's impact; and (3) make 
the analysis available for public comment. 5 U.S.C. 601-604. Under 
Sec.  605(b), an agency is not required to perform an initial or final 
regulatory flexibility analysis if it certifies that the proposed or 
final rules will not have a ``significant impact on a substantial 
number of small entities.''
    Insofar as the goal of the RFA is to reduce the cost to small 
entities of complying with federal regulations, the RFA requires an 
agency to perform a regulatory flexibility analysis of small entity 
impacts only when a rule directly regulates those entities. In other 
words, the impact must be a direct impact on small entities ``whose 
conduct is circumscribed or mandated'' by the proposed rule. White 
Eagle Coop. Ass'n v. Conner, 553 F.3d 467, 480 (7th Cir. 2009). An 
agency has no obligation to conduct a small entity impact analysis of 
effects on entities that it does not regulate. United Dist. Cos. v. 
FERC, 88 F.3d 1105, 1170 (D.C. Cir. 1996).
    These final rules clarify and simplify the existing procedures for 
two alternative dispute resolution processes to formal adjudications 
before the Board. First, the rules permit carriers and shippers to 
agree voluntarily to resolve certain kinds of disputes before the Board 
under a newly-defined arbitration program. Second, the rules permit 
parties to agree voluntarily, and sometimes could require parties, to 
mediate certain kinds of disputes before the Board.
    Although these alternative dispute resolution processes are 
available to all rail carriers, including small entities,\121\ these 
rules will not have a significant impact on a substantial number of 
small entities. For the most part, these final rules provide for 
voluntary mediation and arbitration. Regulated entities are not 
required to engage in additional regulatory compliance as the 
procedures are optional. Even in the case of Board-ordered mediation, 
there are no additional regulatory compliance requirements as mediation 
will be conducted pursuant to a formal complaint filed with the Board. 
Under the final rules, any resolution reached through mediation would 
be the result of the mutual agreement of the parties, including small 
entities, not as a result of a Board-imposed decision. With respect to 
arbitration, which is entirely voluntary, that process is designed to 
consume less time and be less costly than formal complaint proceedings, 
thus permitting the parties to obtain relief at a greater net value. To 
the extent that these final rules have any impact, it is expected to 
result in faster resolution of controversies before the Board at a 
lower cost. Therefore, the Board certifies under 5 U.S.C. 605(b) that 
these rules will not have a significant economic impact on a 
substantial number of small entities within the meaning of the RFA.
---------------------------------------------------------------------------

    \121\ The Small Business Administration's Office of Size 
Standards has established a size standard for rail transportation, 
pursuant to which a line-haul railroad is considered small if its 
number of employees is 1,500 or less, and a short line railroad is 
considered small if its number of employees is 500 or less. 13 CFR 
121.201 (industry subsector 482).
---------------------------------------------------------------------------

Paperwork Reduction Act

    In a supplemental Federal Register notice, published at 77 FR 23208 
on April 8, 2012, the Board sought comments pursuant to the Paperwork 
Reduction Act (PRA), 44 U.S.C. 3501-3549, and Office of Management and 
Budget (OMB) regulations at 5 CFR 1320.11, regarding: (1) Whether the 
collection of information associated with the proposed arbitration 
program 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. None of the 
comments received specifically referenced these questions. Several of 
the comments discussed above, however, could be viewed to argue that 
requiring opt-in letters would be more practical and less burdensome 
than requiring opt-out letters and the final rule adopts that change.
    The proposed rules were submitted to OMB for review as required 
under the PRA, 44 U.S.C. 3507(d), and 5 CFR 1320.11. No comments were 
received from OMB, which assigned to the collection Control No. 2140-
0020. The display of a currently valid OMB control

[[Page 29079]]

number for this collection is required by law. Under the PRA and 5 CFR 
1320.11, an agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless the 
collection displays a currently valid OMB control number. As required, 
simultaneously with the publication of this final rule, the Board is 
submitting this modified collection to OMB for review.
    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 subjects: Sec. Sec.  
1002.2, 1011.7, 1108, 1109.1, 1109.2, 1109.3, 1111.10, and 1115.8, 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 adopts the final rules as set forth in this decision. 
Notice of the adopted rules will be published in the Federal Register.
    2. This decision is effective 30 days after the day of service.

Raina S. White,

Clearance Clerk.

List of Subjects

49 CFR Part 1002

    Administrative practice and procedure, Common carriers, Freedom of 
information.

49 CFR Part 1011

    Administrative practice and procedure, Authority delegations 
(Governmnent agencies), Organization and functions (Government 
agencies).

49 CFR Part 1108

    Administrative practice and procedure, Railroads.

49 CFR Part 1109

    Administrative practice and procedure, Maritime carriers, Motor 
carriers, Railroads.

49 CFR Part 1111

    Administrative practice and procedure, Investigations.

49 CFR Part 1115

    Administrative practice and procedure.

    Decided: May 10, 2013.

    By the Board, Chairman Elliott, Vice Chairman Begeman, and 
Commissioner Mulvey.
Jeffrey Herzig,
Clearance Clerk.

    For the reasons set forth in the preamble, the Surface 
Transportation Board amends parts 1002, 1011, 1108, 1109, 1111, and 
1115 of title 49, chapter X, of the Code of Federal Regulations as 
follows:

PART 1002--FEES

0
1. The authority citation for part 1002 is revised to read as follows:

    Authority: 5 U.S.C. 552(a)(4)(A) and 553; 31 U.S.C. 9701; and 49 
U.S.C. 721. Section 1002.1(g)(11) is also issued under 5 U.S.C. 5514 
and 31 U.S.C. 3717.

0
2. Amend Sec.  1002.2 by revising paragraphs (f)(87) and (f)(88) to 
read as follows:


Sec.  1002.2  Filing fees.

* * * * *
    (f) * * *

------------------------------------------------------------------------
                      Type of proceeding                           Fee
------------------------------------------------------------------------
 
                                * * * * *
------------------------------------------------------------------------
                      Part VI: Informal Proceedings
------------------------------------------------------------------------
 
                                * * * * *
(87) Arbitration of Certain Disputes Subject to the Statutory
 Jurisdiction of the Surface Transportation Board under 49 CFR
 part 1108:
  (i) Complaint                                                      $75
  (ii) Answer (per defendant), Unless Declining to Submit to          75
   Any Arbitration
  (iii) Third Party Complaint                                         75
  (iv) Third Party Answer (per defendant), Unless Declining to        75
   Submit to Any Arbitration
  (v) Appeals of Arbitration Decisions or Petitions to Modify        150
   or Vacate an Arbitration Award
(88) Basic fee for STB adjudicatory services not otherwise           250
 covered
 
                                * * * * *
------------------------------------------------------------------------

* * * * *

PART 1011--BOARD ORGANIZATION; DELEGATIONS OF AUTHORITY

0
3. The authority citation for part 1011 continues to read as follows:

    Authority: 5 U.S.C. 553; 31 U.S.C. 9701; 49 U.S.C. 701, 721, 
11123, 11124, 11144, 14122, and 15722.


0
4. Amend Sec.  1011.7 by adding paragraphs (a)(2)(xvii), (a)(2)(xviii), 
and (a)(2)(xix) to read as follows:


Sec.  1011.7  Delegations of authority by the Board to specific offices 
of the Board.

    (a) * * *
    (2) * * *
    (xvii) To authorize parties to a proceeding before the Board, upon 
mutual request, to participate in meditation with a Board-appointed 
mediator, for a period of up to 30 days and to extend the mediation 
period at the mutual request of the parties.
    (xviii) To authorize a proceeding to be held in abeyance while 
mediation procedures are pursued, pursuant to the mutual request of the 
parties to the matter.
    (xix) To order arbitration of program-eligible matters under the 
Board's regulations at 49 CFR part 1108, or upon the mutual request of 
parties to a proceeding before the Board.
* * * * *

0
5. Revise part 1108 to read as follows:

PART 1108--ARBITRATION OF CERTAIN DISPUTES SUBJECT TO THE STATUTORY 
JURISDICTION OF THE SURFACE TRANSPORTATION BOARD

Sec.
1108.1 Definitions.
1108.2 Statement of purpose, organization, and jurisdiction.
1108.3 Participation in the Board's arbitration program.
1108.4 Use of arbitration.
1108.5 Arbitration commencement procedures.
1108.6 Arbitrators.
1108.7 Arbitration procedures.
1108.8 Relief.
1108.9 Decisions.
1108.10 Precedent.
1108.11 Enforcement and appeals.
1108.12 Fees and costs.
1108.13 Additional parties per side.

    Authority: 49 U.S.C. 721(a) and 5 U.S.C. 571 et seq.


Sec.  1108.1  Definitions.

    As used in this part:
    (a) Arbitrator means a single person appointed to arbitrate 
pursuant to these rules.
    (b) Arbitrator Panel means a group of three people appointed to 
arbitrate pursuant to these rules. One panel member would be selected 
by each side to the arbitration dispute, and the parties would mutually 
agree to the selection of the third-neutral arbitrator under the 
``strike'' methodology described in Sec.  1108.6(c).
    (c) Arbitration program means the program established by the 
Surface Transportation Board in this part under which participating 
parties, including rail carriers and shippers, have agreed voluntarily 
in advance, or on a case-by-case basis to resolve disputes about 
arbitration-program-eligible matters brought before the Board using the 
Board's arbitration procedures.
    (d) Arbitration-program-eligible matters are those disputes or 
components of disputes, that may be resolved using the Board's 
arbitration

[[Page 29080]]

program and include disputes involving one or more of the following 
subjects: Demurrage; accessorial charges; misrouting or mishandling of 
rail cars; and disputes involving a carrier's published rules and 
practices as applied to particular rail transportation.
    (e) Counterclaim is an independent arbitration claim filed by a 
respondent against a complainant arising out of the same set of 
circumstances or is substantially related to the underlying arbitration 
complaint and subject to the Board's jurisdiction.
    (f) Final arbitration decision is the unredacted decision served 
upon the parties 30 days after the close of the arbitration's 
evidentiary phase.
    (g) Interstate Commerce Act means the Interstate Commerce Act as 
amended by the ICC Termination Act of 1995.
    (h) Monetary award cap means a limit on awardable damages of 
$200,000 per case, unless the parties mutually agree to a different 
award cap. If parties bring one or more counterclaims, such 
counterclaims will be subject to a separate monetary award cap of 
$200,000 per case, unless the parties mutually agree to a different 
award cap.
    (i) Neutral Arbitrator means the arbitrator selected by the strike 
methodology outlined in Sec.  1108.6(c).
    (j) Statutory jurisdiction means the jurisdiction conferred on the 
STB by the Interstate Commerce Act, including jurisdiction over rail 
transportation or services that have been exempted from regulation.
    (k) STB or Board means the Surface Transportation Board.


Sec.  1108.2  Statement of purpose, organization, and jurisdiction.

    (a) The Board's intent. The Board favors the resolution of disputes 
through the use of mediation and arbitration procedures, in lieu of 
formal Board proceedings, whenever possible. This section provides for 
the creation of a binding, voluntary arbitration program in which 
parties, including shippers and railroads, agree in advance to 
arbitrate certain types of disputes with a limit on potential liability 
of $200,000 unless the parties mutually agree to a different award cap. 
The Board's arbitration program is open to all parties eligible to 
bring or defend disputes before the Board.
    (1) Except as discussed in paragraph (b) of this section, parties 
to arbitration may agree by mutual written consent to arbitrate 
additional matters and to a different amount of potential liability 
than the monetary award cap identified in this section.
    (2) Nothing in these rules shall be construed in a manner to 
prevent parties from independently seeking or utilizing private 
arbitration services to resolve any disputes they may have.
    (b) Limitations to the Board's Arbitration Program. These 
procedures shall not be available for disputes involving labor 
protective conditions, which have their own procedures. These 
procedures shall not be available to obtain the grant, denial, stay or 
revocation of any license, authorization (e.g., construction, 
abandonment, purchase, trackage rights, merger, pooling), or exemption 
related to such matters. Parties may only use these arbitration 
procedures to arbitrate matters within the statutory jurisdiction of 
the Board.


Sec.  1108.3  Participation in the Board's arbitration program.

    (a) Opt-in procedures. Any rail carrier, shipper, or other party 
eligible to bring or defend disputes before the Board may at any time 
voluntarily choose to opt into the Board's arbitration program. Opting 
in may be for a particular dispute or for all potential disputes before 
the Board unless and until the party exercises the opt-out procedures 
discussed in Sec.  1108.3(b). To opt in parties may either:
    (1) File a notice with the Board, under Docket No. EP 699, advising 
the Board of the party's intent to participate in the arbitration 
program. Such notice may be filed at any time and shall be effective 
upon receipt by the Board.
    (i) Notices filed with the Board shall state which arbitration-
program-eligible issue(s) the party is willing to submit to 
arbitration.
    (ii) Notices may, at the submitting party's discretion, provide for 
a different monetary award cap.
    (2) Participants to a proceeding, where one or both parties have 
not opted into the arbitration program, may by joint notice agree to 
submit an issue in dispute to the Board's arbitration program.
    (i) The joint notice must clearly state the issue(s) which the 
parties are willing to submit to arbitration and the corresponding 
maximum monetary award cap if the parties desire to arbitrate for a 
different amount than the Board's $200,000 monetary award cap.
    (b) Opt-out procedures. Any party who has elected to participate in 
the arbitration program may file a notice at any time under Docket No. 
EP 699, informing the Board of the party's decision to opt out of the 
program or amend the scope of its participation. The notice shall take 
effect 90 days after filing and shall not excuse the filing party from 
arbitration proceedings that are ongoing, or permit it to withdraw its 
consent to participate in any arbitration-program-eligible dispute 
associated with their opt-in notice for any matter before the Board at 
any time within that 90 day period before the opt-out notice takes 
effect
    (c) Public notice of arbitration program participation. The Board 
shall maintain a list of participants who have opted into the 
arbitration program on its Web site at www.stb.dot.gov. Those parties 
participating in arbitration on a case-by-case basis will not be listed 
on the Board's Web site.


Sec.  1108.4  Use of arbitration.

    (a) Arbitration-program-eligible matters. Matters eligible for 
arbitration under the Board's program are: Demurrage; accessorial 
charges; misrouting or mishandling of rail cars; and disputes involving 
a carrier's published rules and practices as applied to particular rail 
transportation. Parties may agree in writing to arbitrate additional 
matters on a case-by-case basis as provided in paragraph (e) of this 
section.
    (b) Monetary award cap. Arbitration claims may not exceed the 
arbitration program award cap of $200,000 per arbitral proceeding 
unless:
    (1) The defending party's opt-in notice provides for a different 
monetary cap or;
    (2) The parties agree to select a different award cap that will 
govern their arbitration proceeding. The parties may change the award 
cap by incorporating an appropriate provision in their agreement to 
arbitrate.
    (3) Counterclaims will not offset against the monetary award cap of 
the initiating claim. A counterclaim is an independent claim and is 
subject to a monetary award cap of $200,000 per case, separate from the 
initiating claim, or to a different cap agreed upon by the parties in 
accordance with Sec.  1108.4(b)(2).
    (c) Assignment of arbitration-program-eligible matters. The Board 
shall assign to arbitration all arbitration-program-eligible disputes 
arising in a docketed proceeding where all parties to the proceeding 
are participants in the Board's arbitration program, or where one or 
more parties to the matter are participants in the Board's arbitration 
program, and all other parties to the proceeding request or consent to 
arbitration.
    (d) Matters partially arbitration-program-eligible. Where the 
issues in a proceeding before the Board relate in part to arbitration-
program-eligible matters, only those parts of the dispute

[[Page 29081]]

related to arbitration-program-eligible matters may be arbitrated 
pursuant to the arbitration program, unless the parties petition the 
Board in accordance with paragraph (e) of this section to include 
additional disputes.
    (e) Other matters. Parties may petition the Board, on a case-by-
case basis, to assign to arbitration disputes, or portions of disputes, 
not listed as arbitration-program-eligible matters. This may include 
counterclaims and affirmative defenses. The Board will not consider for 
arbitration types of disputes which are expressly prohibited in Sec.  
1108.2(b).
    (f) Arbitration clauses. Nothing in the Board's regulations shall 
preempt the applicability of, or otherwise supersede, any new or 
existing arbitration clauses contained in agreements between shippers 
and carriers.


Sec.  1108.5  Arbitration commencement procedures.

    (a) Complaint. Arbitration under these rules shall commence with a 
written complaint, which shall be filed and served in accordance with 
Board rules contained at part 1104 of this chapter. Each complaint must 
contain a statement that the complainant and the respondent are 
participants in the Board's arbitration program pursuant to Sec.  
1108.3(a), or that the complainant is willing to arbitrate voluntarily 
all or part of the dispute pursuant to the Board's arbitration 
procedures, and the relief requested.
    (1) If the complainant desires arbitration with a single-neutral 
arbitrator instead of a three-member arbitration panel, the complaint 
must make such a request in its complaint.
    (2) If the complainant is not a participant in the arbitration 
program, the complaint may specify the issues that the complainant is 
willing to arbitrate.
    (3) If the complainant desires to set a different amount of 
potential liability than the $200,000 monetary award cap, the complaint 
should specify what amount of potential liability the complainant is 
willing to incur.
    (b) Answer to the complaint. Any respondent must, within 20 days of 
the date of the filing of a complaint, answer the complaint. The answer 
must state whether the respondent is a participant in the Board's 
arbitration program, or whether the respondent is willing to arbitrate 
the particular dispute.
    (1) If the complaint requests arbitration by a single-neutral 
arbitrator instead of by an arbitration panel, the answer must contain 
a statement consenting to arbitration by a single-neutral arbitrator or 
an express rejection of the request.
    (i) The respondent may also initiate a request to use a single-
neutral arbitrator instead of an arbitration panel.
    (ii) Absent the parties agreeing to arbitration through a single-
neutral arbitrator, the Board will assign the case to arbitration by a 
panel of three arbitrators as provided by Sec.  1108.6(a)-(c). The 
party requesting the single-neutral arbitrator shall at that time 
provide written notice to the Board and the other parties if it 
continues to object to a three-member arbitration panel. Upon timely 
receipt of the notice, the Board shall the set the matter for formal 
adjudication.
    (2) When the complaint specifies a limit on the arbitrable issues, 
the answer must state whether the respondent is willing to resolve 
those issues through arbitration.
    (i) If the answer contains an agreement to arbitrate some but not 
all of the arbitration issues in the arbitration complaint, the 
complainant will have 10 days from the date of the answer to advise the 
respondent and the Board in writing whether the complainant is willing 
to arbitrate on that basis.
    (ii) Where the respondent is a participant in the Board's 
arbitration program, the answer should further state that the 
respondent has thereby agreed to use arbitration to resolve all of the 
arbitration-program-eligible issues in the complaint. The Board will 
then set the matter for arbitration, and provide a list of arbitrators.
    (3) When the complaint proposes a different amount of potential 
liability, the answer must state whether the respondent agrees to that 
amount in lieu of the $200,000 monetary award cap.
    (c) Counterclaims. In answering a complaint, the respondent may 
file one or more counterclaims against the complainant if such claims 
arise out of the same set of circumstances or are substantially 
related, and are subject to the Board's jurisdiction as provided in 
Sec.  1108.2(b). Counterclaims are subject to the assignment provisions 
contained in Sec.  1108.4(c)-(e). Counterclaims are subject to the 
monetary award cap provisions contained in Sec.  1108.4(b)(2)-(3).
    (d) Affirmative defenses. An answer to an arbitration complaint 
shall contain specific admissions or denials of each factual allegation 
contained in the complaint, and any affirmative defenses that the 
respondent wishes to assert against the complainant.
    (e) Arbitration agreement. Prior to the commencement of an 
arbitration proceeding, the parties to arbitration together with the 
neutral arbitrator shall create a written arbitration agreement, which 
at a minimum will state with specificity the issues to be arbitrated 
and the corresponding monetary award cap to which the parties have 
agreed. The agreement may contain other mutually agreed upon 
provisions.
    (1) Any additional issues selected for arbitration by the parties, 
that are not outside the scope of these arbitration rules as explained 
in Sec.  1108.2(b), must be subject to the Board's statutory authority.
    (2) These rules shall be incorporated by reference into any 
arbitration agreement conducted pursuant to an arbitration complaint 
filed with the Board.


Sec.  1108.6  Arbitrators.

    (a) Panel of arbitrators. Unless otherwise requested in writing 
pursuant to Sec.  1108.5(a)(1), all matters arbitrated under these 
rules shall be resolved by a panel of three arbitrators.
    (b) Party-appointed arbitrators. The party or parties on each side 
of an arbitration dispute shall select one arbitrator, and serve notice 
of the selection upon the Board and the opposing party within 20 days 
of an arbitration answer being filed.
    (1) Parties on one side of an arbitration proceeding may not 
challenge the arbitrator selected by the opposing side.
    (2) Parties to an arbitration proceeding are responsible for the 
costs of the arbitrator they select.
    (c) Selecting the neutral arbitrator. The Board shall provide the 
parties with a list of five neutral arbitrators within 20 days of an 
arbitration answer being filed. When compiling a list of neutral 
arbitrators for a particular arbitration proceeding, the Board will 
conduct searches for arbitration experts by contacting appropriate 
professional arbitration associations. The parties will have 14 days 
from the date the Board provides them with this list to select a 
neutral arbitrator using a single strike methodology. The complainant 
will strike one name from the list first. The respondent will then have 
the opportunity to strike one name from the list. The process will then 
repeat until one individual on the list remains, who shall be the 
neutral arbitrator.
    (1) The parties are responsible for conducting their own due 
diligence in striking names from the neutral arbitrator list. The final 
selection of a neutral arbitrator is not challengeable before the 
Board.
    (2) The parties shall split the cost of the neutral arbitrator.

[[Page 29082]]

    (3) The neutral arbitrator appointed through the strike methodology 
shall serve as the head of the arbitration panel and will be 
responsible for ensuring that the tasks detailed in Sec. Sec.  1108.7 
and 1108.9 are accomplished.
    (d) Use of a single arbitrator. Parties to arbitration may request 
the use of a single-neutral arbitrator. Requests for use of a single-
neutral arbitrator must be included in a complaint or an answer as 
required in Sec.  1108.5(a)(1). Parties to both sides of an arbitration 
dispute must agree to the use of a single-neutral arbitrator in 
writing. If the single-arbitrator option is selected, the arbitrator 
selection procedures outlined in Sec.  1108.6(c) shall apply.
    (e) Arbitrator incapacitation. If at any time during the 
arbitration process a selected arbitrator becomes incapacitated or is 
unwilling or unable to fulfill his or her duties, a replacement 
arbitrator shall be promptly selected by either of the following 
processes:
    (1) If the incapacitated arbitrator was appointed directly by a 
party to the arbitration, the appointing party shall, without delay, 
appoint a replacement arbitrator pursuant to the procedures set forth 
in Sec.  1108.6(b).
    (2) If the incapacitated arbitrator was the neutral arbitrator, the 
parties shall promptly inform the Board of the neutral arbitrator's 
incapacitation and the selection procedures set forth in Sec.  
1108.6(c) shall apply.


Sec.  1108.7  Arbitration procedures.

    (a) Arbitration evidentiary phase timetable. Whether the parties 
select a single arbitrator or a panel of three arbitrators, the neutral 
arbitrator shall establish all rules deemed necessary for each 
arbitration proceeding, including with regard to discovery, the 
submission of evidence, and the treatment of confidential information, 
subject to the requirement that this evidentiary phase shall be 
completed within 90 days from the start date established by the neutral 
arbitrator.
    (b) Written decision timetable. The neutral arbitrator will be 
responsible for writing the arbitration decision. The unredacted 
arbitration decision must be served on the parties within 30 days of 
completion of the evidentiary phase. A redacted copy of the arbitration 
decision must be served upon the Board within 60 days of the close of 
the evidentiary phase for publication on the Board's Web site.
    (c) Extensions to the arbitration timetable. Petitions for 
extensions to the arbitration timetable shall only be considered in 
cases of arbitrator incapacitation as detailed in Sec.  1108.6(e).
    (d) Protective orders. Any party, on either side of an arbitration 
proceeding, may request that discovery and the submission of evidence 
be conducted pursuant to a standard protective order agreement.


Sec.  1108.8  Relief.

    (a) Relief available. An arbitrator may grant relief in the form of 
monetary damages to the extent they are available under this part or as 
agreed to in writing by the parties.
    (b) Relief not available. No injunctive relief shall be available 
in Board arbitration proceedings.


Sec.  1108.9  Decisions.

    (a) Decision requirements. Whether by a panel of arbitrators or a 
single-neutral arbitrator, all arbitration decisions shall be in 
writing and shall contain findings of fact and conclusions of law. The 
neutral arbitrator shall provide an unredacted draft of the arbitration 
decision to the parties to the dispute.
    (b) Redacting arbitration decision. The neutral arbitrator shall 
also provide the parties with a draft of the decision that redacts or 
omits all proprietary business information and confidential information 
pursuant to any such requests of the parties under the arbitration 
agreement.
    (c) Party input. The parties may then suggest what, if any, 
additional redactions they think are required to protect against the 
disclosure of proprietary and confidential information in the decision.
    (d) Neutral arbitrator authority. The neutral arbitrator shall 
retain the final authority to determine what additional redactions are 
appropriate to make.
    (e) Service of arbitration decision. The neutral arbitrator shall 
serve copies of the unredacted decision upon the parties in accordance 
with the timetable and requirements set forth in Sec.  1108.7(b). The 
neutral arbitrator shall also serve copies of the redacted decision 
upon the parties and the Board in accordance with the timetable and 
requirements set forth in Sec.  1108.7(b). The arbitrator may serve the 
decision via any service method permitted by the Board's regulations.
    (f) Service in the case of an appeal. In the event an arbitration 
decision is appealed to the Board, the neutral arbitrator shall, 
without delay and under seal, serve upon the Board an unredacted copy 
of the arbitration decision.
    (g) Publication of decision. Redacted copies of the arbitration 
decisions shall be published and maintained on the Board's Web site.
    (h) Arbitration decisions are binding. By arbitrating pursuant to 
these procedures, each party agrees that the decision and award of the 
arbitrator(s) shall be binding and judicially enforceable in any court 
of appropriate jurisdiction, subject to the rights of appeal provided 
in Sec.  1108.11.


Sec.  1108.10  Precedent.

    Decisions rendered by arbitrators pursuant to these rules may be 
guided by, but need not be bound by, agency precedent. Arbitration 
decisions shall have no precedential value and may not be relied upon 
in any manner during subsequent arbitration proceedings conducted under 
the rules in this part.


Sec.  1108.11  Enforcement and appeals.

    (a) Petitions to modify or vacate. A party may petition the Board 
to modify or vacate an arbitral award. The appeal must be filed within 
20 days of service of a final arbitration decision, and is subject to 
the page limitations of Sec.  1115.2(d) of this chapter. Copies of the 
appeal shall be served upon all parties in accordance with the Board's 
rules at part 1104 of this chapter. The appealing party shall also 
serve a copy of its appeal upon the arbitrator(s). Replies to such 
appeals shall be filed within 20 days of the filing of the appeal with 
the Board, and shall be subject to the page limitations of Sec.  
1115.2(d) of this chapter.
    (b) Board's standard of review. On appeal, the Board's standard of 
review of arbitration decisions will be narrow, and relief will be 
granted only on grounds that the award reflects a clear abuse of 
arbitral authority or discretion or directly contravenes statutory 
authority. Using this standard, the Board may modify or vacate an 
arbitration award in whole or in part.
    (1) Board decisions vacating or modifying arbitration decisions 
under the Board's standard of review are reviewable under the Hobbs 
Act, 28 U.S.C. 2321 and 2342.
    (2) Nothing in these rules shall prevent parties to arbitration 
from seeking judicial review of arbitration awards in a court of 
appropriate jurisdiction pursuant to the Federal Arbitration Act, 9 
U.S.C. 9-13, in lieu of seeking Board review.
    (c) Staying arbitration decision. The timely filing of a petition 
for review of the arbitral decision by the Board will not automatically 
stay the effect of the arbitration decision. A stay may be requested 
under Sec.  1115.3(f) of this chapter.
    (d) Enforcement. Parties seeking to enforce an arbitration decision 
made pursuant to the Board's arbitration program must petition a court 
of

[[Page 29083]]

appropriate jurisdiction under the Federal Arbitration Act, 9 U.S.C. 9-
13.


Sec.  1108.12  Fees and costs.

    (a) Filing fees. When parties use the Board's arbitration 
procedures to resolve a dispute, the party filing the complaint or an 
answer shall pay the applicable filing fee pursuant to 49 CFR part 
1002.
    (b) Party costs. When an arbitration panel is used, each party (or 
side to a dispute) shall pay the costs associated with the arbitrator 
it selects. The cost of the neutral arbitrator shall be shared equally 
between the opposing parties (or sides) to a dispute.
    (c) Single arbitrator method. If the single arbitrator method is 
utilized in place of the arbitration panel, the parties shall share 
equally the costs of the neutral arbitrator.
    (d) Board costs. Regardless of whether there is a single arbitrator 
or a panel of three arbitrators, the Board shall pay the costs 
associated with the preparation of a list of neutral arbitrators.


Sec.  1108.13  Additional parties per side.

    Where an arbitration complaint is filed by more than one 
complainant in a particular arbitration proceeding against, or is 
answered or counterclaimed by, more than one respondent, these 
arbitration rules will apply to the complainants as a group and the 
respondents as a group in the same manner as they will apply to 
individual opposing parties.

0
6. Revise Part 1109 to read as follows:

PART 1109--USE OF MEDIATION IN BOARD PROCEEDINGS

Sec.
1109.1 Mediation statement of purpose, organization, and 
jurisdiction.
1109.2 Commencement of mediation.
1109.3 Mediation procedures.
1109.4 Mandatory mediation in rate cases to be considered under the 
stand-alone cost methodology.

    Authority:  49 U.S.C. 721(a) and 5 U.S.C. 571 et seq.


Sec.  1109.1  Mediation statement of purpose, organization, and 
jurisdiction.

    The Board favors the resolution of disputes through the use of 
mediation and arbitration procedures, in lieu of formal Board 
proceedings, whenever possible. Parties may seek to resolve a dispute 
brought before the Board using the Board's mediation procedures. These 
procedures shall not be available in a regulatory proceeding to obtain 
the grant, denial, stay or revocation of a request for construction, 
abandonment, purchase, trackage rights, merger, pooling authority or 
exemption related to such matters. The Board may, by its own order, 
direct the parties to participate in mediation using the Board's 
mediation procedures. The Board's mediation program is open to all 
parties eligible to bring or defend matters before the Board.


Sec.  1109.2  Commencement of mediation.

    (a) Availability of mediation. Mediation may be commenced in a 
dispute before the Board:
    (1) Pursuant to a Board order issued in response to a written 
request of one or more parties to a matter;
    (2) Where the Board orders mediation by its own order; or
    (3) In connection with a rate complaint, as provided by Sec.  
1109.4 and part 1111 of this chapter.
    (b) Requests for mediation. Parties wishing to pursue mediation may 
file a request for mediation with the Board at any time following the 
filing of a complaint. Parties that use the Board's mediation 
procedures shall not be required to pay any fees other than the 
appropriate filing fee associated with the underlying dispute, as 
provided at 49 CFR 1002.2. The Board shall grant any mediation request 
submitted by all parties to a matter, but may deny mediation where one 
or more parties to the underlying dispute do not consent to mediation, 
or where the parties seek to mediate disputes not eligible for Board-
sponsored mediation, as listed in Sec.  1109.1.


Sec.  1109.3  Mediation procedures.

    (a) Mediation model. The Chairman will appoint one or more Board 
employees trained in mediation to mediate any dispute assigned for 
mediation. Alternatively, the parties to a matter may agree to use a 
non-Board mediator if they so inform the Board within 10 days of an 
order assigning the dispute to mediation. If a non-Board mediator is 
used, the parties shall share equally the fees and/or costs of the 
mediator. The following restrictions apply to any mediator selected by 
the Board or the parties:
    (1) No person serving as a mediator may thereafter serve as an 
advocate for a party in any other proceeding arising from or related to 
the mediated dispute, including, without limitation, representation of 
a party to the mediation before any other federal court or agency; and
    (2) If the mediation does not fully resolve all issues in the 
docket before the Board, the Board employees serving as mediators may 
not thereafter advise the Board regarding the future disposition of the 
remaining issues in the docket.
    (b) Mediation period. The mediation period shall be 30 days, 
beginning on the date of the first mediation session. The Board may 
extend mediation for additional periods of time not to exceed 30 days 
per period, pursuant to mutual written requests of all parties to the 
mediation proceeding. The Board will not extend mediation for 
additional periods of time where one or more parties to mediation do 
not agree to an extension. The Board will not order mediation more than 
once in any particular proceeding, but may permit it if all parties to 
a matter mutually request another round of mediation. The mediator(s) 
shall notify the Board whether the parties have reached any agreement 
by the end of the 30-day period.
    (c) Party representatives. At least one principal of each party, 
who has the authority to bind that party, shall participate in the 
mediation and be present at any session at which the mediator(s) 
request that principal to be present.
    (d) Confidentiality. Mediation is a confidential process, governed 
by the confidentiality rules of the Administrative Dispute Resolution 
Act of 1996 (ADRA) (5 U.S.C. 574). In addition to the confidentiality 
rules set forth in the ADRA, the Board requires the following 
additional confidentiality protections:
    (1) All parties to Board sponsored mediation will sign an Agreement 
to Mediate. The Agreement to Mediate shall incorporate these rules by 
reference.
    (2) As a condition of participation, the parties and any interested 
parties joining the mediation must agree to the confidentiality of the 
mediation process as provided in this section and further detailed in 
an agreement to mediate. The parties to mediation, including the 
mediator(s), shall not testify in administrative or judicial 
proceedings concerning the issues discussed in mediation, nor submit 
any report or record of the mediation discussions, other than the 
settlement agreement with the consent of all parties, except as 
required by law.
    (3) Evidence of conduct or statements made during mediation is not 
admissible in any Board proceeding. If mediation fails to result in a 
full resolution of the dispute, evidence that is otherwise discoverable 
may not be excluded from introduction into the record of the underlying 
proceeding merely because it was presented during mediation. Such 
materials may be used if they are disclosed through formal discovery 
procedures established by the Board or other adjudicatory bodies.

[[Page 29084]]

    (e) Abeyance. Except as otherwise provided for in Sec.  1109.4(f) 
and part 1111 of this chapter, any party may request that a proceeding 
be held in abeyance while mediation procedures are pursued. Any such 
request should be submitted to the Chief, Section of Administration, 
Office of Proceedings. The Board shall promptly issue an order in 
response to such requests. Except as otherwise provided for in Sec.  
1109.4(g) and part 1111 of this chapter, the Board may also direct that 
a proceeding be held in abeyance pending the conclusion of mediation. 
Where both parties to mediation voluntarily consent to mediation, the 
period during which any proceeding is held in abeyance shall toll 
applicable statutory deadlines. Where one or both parties to mediation 
do not voluntarily consent to mediation, the Board will not hold the 
underlying proceeding in abeyance and statutory deadlines will not be 
tolled.
    (f) Mediated settlements. Any settlement agreement reached during 
or as a result of mediation must be in writing, and signed by all 
parties to the mediation. The parties need not provide a copy of the 
settlement agreement to the Board, or otherwise make the terms of the 
agreement public, but the parties, or the mediator(s), shall notify the 
Board that the parties have reached a mutually agreeable resolution and 
request that the Board terminate the underlying Board proceeding. 
Parties to the settlement agreement shall waive all rights of 
administrative appeal to the issues resolved by the settlement 
agreement.
    (g) Partial resolution of mediated issues. If the parties reach 
only a partial resolution of their dispute, they or the mediator(s) 
shall so inform the Board, and the parties shall file any stipulations 
they have mutually reached, and ask the Board to reactivate the 
procedural schedule in the underlying proceeding to decide the 
remaining issues.


Sec.  1109.4  Mandatory mediation in rate cases to be considered under 
the stand-alone cost methodology.

    (a) Mandatory use of mediation. A shipper seeking rate relief from 
a railroad or railroads in a case involving the stand-alone cost 
methodology must engage in non-binding mediation of its dispute with 
the railroad upon filing a formal complaint under 49 CFR part 1111.
    (b) Assignment of mediators. Within 10 business days after the 
shipper files its formal complaint, the Board will assign one or more 
mediators to the case. Within 5 business days of the assignment to 
mediate, the mediator(s) shall contact the parties to discuss ground 
rules and the time and location of any meeting.
    (c) Party representatives. At least one principal of each party, 
who has the authority to bind that party, shall participate in the 
mediation and be present at any session at which the mediator(s) 
requests that the principal be present.
    (d) Settlement. The mediator(s) will work with the parties to try 
to reach a settlement of all or some of their dispute or to narrow the 
issues in dispute, and reach stipulations that may be incorporated into 
any adjudication before the Board if mediation does not fully resolve 
the dispute. If the parties reach a settlement, the mediator(s) may 
assist in preparing a written settlement agreement.
    (e) Confidentiality. The entire mediation process shall be private 
and confidential. No party may use any concessions made or information 
disclosed to either the mediator(s) or the opposing party before the 
Board or in any other forum without the consent of the other party. The 
confidentiality provision of Sec.  1109.3(d) and the mediation 
agreement shall apply to all mediations conducted under this section.
    (f) Mediation period. The mediation shall be completed within 60 
days of the appointment of the mediator(s). The mediation may be 
terminated prior to the end of the 60-day period only with the 
certification of the mediator(s) to the Board. Requests to extend 
mediation, or to re-engage it later, will be entertained on a case-by-
case basis, but only if filed by all interested parties.
    (g) Procedural schedule. Absent a specific order from the Board, 
the onset of mediation will not affect the procedural schedule in stand 
alone cost rate cases set forth at 49 CFR 1111.8(a).

PART 1111--COMPLAINT AND INVESTIGATION PROCEDURES

0
7. The authority citation for part 1111 continues to read as follows:

    Authority:  49 U.S.C. 721, 10704, and 11701.


0
8. Amend Sec.  1111.10 by revising paragraph (b) to read as follows:


Sec.  1111.10  Meeting to discuss procedural matters.

* * * * *
    (b) Simplified standards complaints. In complaints challenging the 
reasonableness of a rail rate based on the simplified standards, the 
parties shall meet, or discuss by telephone or through email, discovery 
and procedural matters within 7 days after the mediation period ends. 
The parties should inform the Board as soon as possible thereafter 
whether there are unresolved disputes that require Board intervention 
and, if so, the nature of such disputes.

PART 1115--APPELLATE PROCEDURES

0
9. The authority citation for part 1115 continues to read as follows:

    Authority:  5 U.S.C. 559; 49 U.S.C. 721.


0
10. Revise Sec.  1115.8 to read as follows:


Sec.  1115.8  Petitions to review arbitration decisions.

    An appeal of right to the Board is permitted. The appeal must be 
filed within 20 days of a final arbitration decision, unless a later 
date is authorized by the Board, and is subject to the page limitations 
of Sec.  1115.2(d). The STB's standard of review of arbitration 
decisions will be narrow, and relief will be granted only on grounds 
that the award reflects a clear abuse of arbitral authority or 
discretion or directly contravenes statutory authority. The timely 
filing of a petition will not automatically stay the effect of the 
arbitration decision. A stay may be requested under Sec.  1115.3(f).

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

Appendix--Surface Transportation Board

Agreement To Mediate

    (1) Purpose. The parties agree to engage in mediation under the 
auspices of the Surface Transportation Board.
    (2) Commencement. The mediation process commences once the Board 
assigns a case for mediation.
    (3) Termination. The mediator may stop the mediation at any 
point if he or she feels that an impasse has been reached. The 
mediator will stop the mediation if he or she can no longer maintain 
neutrality or cannot perform his or her role in an ethical or 
effective manner. The mediator will discuss this decision with the 
parties.
    (4) Authority and Representation. The parties shall ensure that 
their representatives in mediation sessions are vested with the 
authority to negotiate and settle the issues presented in the 
docketed proceeding.
    (5) Scope. The parties are not required to reach a settlement on 
the issues presented in Docket No. --------. The parties may reach 
an agreement on some or all of the issues. The parties may engage in 
discussions and agreements on issues not presented in the docketed 
proceeding as may be necessary to reach resolution on other issues.
    (6) Procedures. Mediation will be governed by the rules and 
procedures set forth at 49 CFR part 1109 and this agreement. The 
Board's rules governing mediation found at 49 CFR part 1109 are 
expressly incorporated into this agreement by reference.

[[Page 29085]]

    (7) Role of the Mediator. The parties understand that the 
mediators are to serve as facilitators of the mediation process and 
are not to give the parties advice. The parties further understand 
that the mediators have no authority to decide the case and are not 
acting as an advocate or attorney for any party. The mediators may, 
in their best judgment, provide clarification of STB rules and 
regulations. The parties understand that they have a right to have 
legal representation present at all mediation proceedings.
    (8) Confidentiality. Mediation is a privileged and confidential 
process, subject to 49 CFR 1109.3(d) and 1109.4(e). The parties 
agree that statements and documents are to remain confidential.
    (a) Statements. The parties and their representatives agree that 
the mediation sessions are confidential settlement negotiations, 
which are not subject to discovery. Therefore, the parties and their 
representatives agree not to introduce in any subsequent forum any 
statements made during the mediation, unless a statement has been 
properly obtained through a later discovery process.
    (b) Documents. The parties and their representatives agree that 
the mediation sessions are confidential settlement negotiations, 
which are not subject to discovery. Therefore, the parties and their 
representatives agree not to introduce in any subsequent forum any 
documents produced during the mediation, unless a document has been 
properly obtained through a later discovery process.
    (c) Discovery Issues. The parties agree that mediation shall not 
be used as a shield to discovery in the event a settlement is not 
reached. Information presented at mediation that is otherwise 
discoverable shall remain so regardless of the mediation process. 
The parties agree not to subpoena the mediators or the Board's 
mediation program administrator to produce any documents prepared by 
or submitted to the mediators in any future proceedings. The 
mediators and the program administrator will not testify on behalf 
of any party or submit any type of report on the substance of the 
mediation.
    (d) Exceptions to Confidentiality. The only exceptions to 
confidentiality are those set forth in 5 U.S.C. 574(a)-(b) of the 
Administrative Dispute Resolution Act of 1996.
    (9) Settlement. No party shall be bound by anything said or done 
at the mediation unless a written settlement agreement is prepared 
and signed by all necessary parties. If a settlement is reached on 
some or all of the issues presented, the agreement shall be reduced 
to writing. The parties are responsible for reducing their 
agreements to a written document, though the mediators may assist 
the parties as necessary to reduce verbal agreements to writing.
    By signature we acknowledge that we have read, understand and 
agree to the foregoing Agreement to Mediate.

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[FR Doc. 2013-11675 Filed 5-16-13; 8:45 am]
BILLING CODE 4915-01-P