Revisions to Arbitration Procedures, 30229-30236 [2016-11238]

Agencies

• Surface Transportation Board
• Department of Transporation

[Federal Register Volume 81, Number 94 (Monday, May 16, 2016)]
[Proposed Rules]
[Pages 30229-30236]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-11238]


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DEPARTMENT OF TRANSPORATION

Surface Transportation Board

49 CFR Parts 1108 and 1115

[Docket No. EP 730]


Revisions to Arbitration Procedures

AGENCY: Surface Transportation Board.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Surface Transportation Board (Board or STB) is proposing 
to amend its arbitration procedures to conform to the requirements of 
the Surface Transportation Board Reauthorization Act of 2015.

DATES:  Comments are due by June 13, 2016. Replies are due by July 1, 
2016.

ADDRESSES: Comments on this proposal may be submitted either via the 
Board's e-filing format or in the traditional paper format. Any person 
using e-filing should attach a document and otherwise comply with the 
instructions at the E-FILING link on the Board's Web site, at

[[Page 30230]]

https://www.stb.dot.gov. Any person submitting a filing in the 
traditional paper format should send an original and 10 copies to: 
Surface Transportation Board, Attn: Docket No. EP 730, 395 E Street 
SW., Washington, DC 20423-0001. Copies of written comments will be 
available for viewing and self-copying at the Board's Public Docket 
Room, Room 131, and will be posted to the Board's Web site. Information 
or questions regarding this proposed rule should reference Docket No. 
EP 730 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 1800-877-8339.]

SUPPLEMENTARY INFORMATION: Under Section 13 of the STB Reauthorization 
Act (codified at 49 U.S.C. 11708), the Board must ``promulgate 
regulations to establish a voluntary and binding arbitration process to 
resolve rail rate and practice complaints'' that are subject to the 
Board's jurisdiction. Section 11708 sets forth specific requirements 
and procedures for the Board's arbitration process. While the Board's 
existing arbitration regulations are for the most part consistent with 
the new statutory provisions, certain changes are needed so that the 
Board's regulations conform to the requirements under Sec.  11708.\1\ 
Accordingly, the Board is proposing to modify its existing arbitration 
regulations, set forth at 49 CFR 1108 and 1115.8, to conform to the 
provisions set forth by the statute and to make other minor clarifying 
changes. The most significant changes in these proposed rules are 
discussed below.
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    \1\ In Assessment of Mediation & Arbitration Procedures, EP 699 
(STB served May 13, 2013), the Board adopted new rules governing the 
use of mediation and arbitration to resolve matters before the 
Board. The rules established a new arbitration program under which 
shippers and carriers may voluntarily agree in advance to arbitrate 
certain disputes with clearly defined limits of liability.
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    Eligible Matters. Under section 11708(b), rate disputes (i.e., 
disputes involving the reasonableness of a rail carrier's rates) are 
eligible for arbitration. Accordingly, rate disputes would now be added 
to the list of matters that are eligible for arbitration under the 
arbitration program, which currently includes disputes relating 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 rules would continue to 
allow parties to agree to arbitrate most other matters on a case-by-
case basis, subject to some exceptions. See 49 CFR 1108.4(e). 
Specifically, the current rules expressly prohibit use of the Board's 
arbitration process to enforce labor protective conditions; 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; and to arbitrate 
matters outside the statutory jurisdiction of the Board. 49 CFR 
1108.2(b). In accordance with section 11708(b)(2), two additional 
matters would be added to the list of matters not eligible for 
arbitration: Disputes to prescribe for the future any conduct, rules, 
or results of general, industry-wide applicability; and disputes that 
are solely between two or more rail carriers.
    Rate Disputes. For rate disputes, arbitration is available to the 
relevant parties only if the rail carrier has market dominance (as 
determined under 49 U.S.C. 10707). Section 11708(c)(1)(C).\2\ Section 
10707 states that ``the Board shall determine whether the rail carrier 
proposing the rate has market dominance over the transportation to 
which the rate applies,'' and it defines market dominance as ``an 
absence of effective competition from other rail carriers or modes of 
transportation for the transportation to which a rate applies.'' 
Section 10707(a), (b). For this reason, as discussed below, the Board 
proposes a separate timetable for initiating arbitration in rate cases. 
Nevertheless, the Board recognizes that making arbitration available 
only after it determines that a rail carrier has market dominance--as 
required by the statute--may significantly delay the arbitration 
process. Given that the arbitration process is voluntarily entered into 
by parties, the Board seeks comment on whether parties should be given 
the option to concede market dominance when agreeing to arbitrate a 
rate dispute (thereby forgoing the need for a determination from the 
Board) or, alternatively, whether the Board should limit the 
availability of the arbitration process in rate disputes to cases where 
market dominance is conceded. In addition, the Board seeks comments on 
other possible approaches that would help facilitate the commencement 
of arbitrating a rate dispute, given the need to make a market 
dominance determination under section 10707.
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    \2\ Additionally, section 11708(c)(3) requires arbitrator(s) 
handling rate disputes to ``consider the Board's methodologies for 
setting maximum lawful rates, giving due consideration to the need 
for differential pricing to permit a rail carrier to collect 
adequate revenues (as determined under Sec.  10704(a)(2)).''
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    Arbitration Commencement Procedures. The Board's current 
regulations are consistent with section 11708(c), which makes the 
arbitration process available only after the Board receives written 
consent to arbitrate from all relevant parties and after the filing of 
a written complaint.\3\ Under the statute, in lieu of a written 
complaint, the arbitration process also may be made available ``through 
other procedures adopted by the Board in a rulemaking proceeding.'' 
Section 11708(c)(1)(B)(ii)(II). To encourage greater use of arbitration 
to resolve disputes, the Board proposes here that, as an alternative to 
filing a written complaint, parties may submit a joint notice to the 
Board, indicating the consent of both parties to submit an issue in 
dispute to the Board's arbitration program.\4\ The joint notice would 
allow parties to utilize the arbitration process, even if the dispute 
is not pending before the Board (assuming that the other criteria for 
arbitration are met). In the joint notice, parties would state the 
issue(s) that they are willing to submit to arbitration. The notice 
would contain a statement that would indicate that all relevant parties 
are participants in the Board's arbitration program pursuant to Sec.  
1108.3(a), or, if they are not participants, that they are nonetheless 
willing to voluntarily arbitrate a matter pursuant to the Board's 
arbitration procedures. The notice would indicate whether parties have 
agreed to a three-member arbitration panel or a single arbitrator 
(discussed in more detail below). The notice would also indicate the 
relief requested and whether the parties have mutually agreed to a 
lower amount of potential liability in lieu of the monetary award cap 
that would otherwise be applicable.
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    \3\ Under 49 CFR 1108.5, arbitration commences with a written 
complaint that contains a statement that the relevant parties are 
participants in the Board's arbitration program, or that the 
complainant is willing to arbitrate the dispute pursuant to the 
Board's arbitration procedures. The respondent's answer to the 
written complaint must then indicate the respondent's participation 
in the Board's arbitration program or its willingness to arbitrate 
the dispute at hand pursuant to the Board's arbitration procedures.
    \4\ These proposed rules seek to expand, not replace, the 
current rules set forth at 49 CFR 1180.3 that govern the Board's 
arbitration program, under which shippers and carriers may 
voluntarily agree in advance to arbitrate certain disputes.
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    Monetary Relief Available. In accordance with section 11708(g), the 
maximum amount of relief that could be awarded under the arbitration 
program, which is currently capped at $200,000,

[[Page 30231]]

would be raised to $25,000,000 in rate disputes and $2,000,000 in 
practice disputes (i.e., disputes involving 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 $2,000,000 monetary award cap would also apply to 
other disputes that parties seek to arbitrate under Sec.  1180.4(e) 
that are not specifically listed as arbitration-eligible matters (yet 
also not expressly prohibited). The proposed rules would allow parties 
to mutually agree to a lower monetary award cap.
    Arbitrator Roster. Section 11708(f) provides that, unless parties 
otherwise agree, an arbitrator or panel of arbitrators shall be 
selected from a roster maintained by the Board. Therefore, we propose 
rules to establish a process for creating and maintaining a roster of 
arbitrators and selecting arbitrators from the roster in accordance 
with the statutory requirements.\5\
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    \5\ Under our current rules, parties select arbitrators from a 
list of five neutral arbitrators compiled by the Board for a 
particular arbitration proceeding. These proposed rules replace the 
selection process with the process set forth at section 11708(f).
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    Creating and Maintaining the Roster. The Board proposes that an 
initial roster be compiled by the Chairman, who would seek notice from 
all interested, qualified persons, as described below, who wish to be 
placed on the Board's arbitration roster. Under the proposed rules, the 
Chairman could augment the roster at any time to include other eligible 
arbitrators and remove from the roster any arbitrators who are no 
longer available or eligible. The roster would be made available on the 
Board's Web site. To ensure that the roster remains current, the 
Chairman would update it every year, seeking public comment on any 
modifications that should be made to the roster, including updates from 
arbitrators appearing on the roster to confirm that the biographical 
information on the file with the Board (as discussed below) remains 
accurate. Arbitrators who wish to remain on the roster would be 
required to notify the Board of their continued availability.
    Arbitrator Qualifications. Under section 11708(f)(1), arbitrators 
on the roster must be ``persons with rail transportation, economic 
regulation, professional or business experience, including agriculture, 
in the private sector.'' Additionally, under the proposed rules, 
persons seeking to be included on the roster would be required to have 
training in dispute resolution and/or experience in arbitration or 
other forms of dispute resolution. The Chairman shall have discretion 
as to whether an individual meets the qualifications to be added to the 
roster. The Board's roster would provide a brief biographical sketch of 
each arbitrator, including information such as background, experience, 
and geographical location, as well as general contact information, 
based on the information supplied by the arbitrator.
    The Parties' Selection of Arbitrators. In accordance with section 
11708(f)(3)(A), we are proposing revisions to our arbitrator selection 
process so that, if parties cannot mutually agree on a single 
arbitrator or lead arbitrator of a panel of arbitrators, the parties 
would select the single or lead arbitrator from the roster maintained 
by the Board by alternately striking names from the roster until only 
one name remains.\6\
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    \6\ Under the Board's current regulations, a panel of three 
arbitrators resolves all matters unless parties mutually agree to 
use a single arbitrator. 49 CFR 1108.6(a).
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    To make the strike process more practicable and efficient, we 
propose that the Board, through the Director of the Office of 
Proceedings, would provide parties a list of arbitrators culled from 
the Board's roster. This culled list would include not more than 15 
arbitrators to limit the number of strikes each party would have to 
make. In culling the list, the Board would consider a variety of 
factors, including relevant background and experience, acceptability, 
geographical location, and any expressed preferences of the parties. 
The culled list would have an odd number of arbitrators to ensure that 
parties have the same number of strikes.
    To select the other members for a panel of arbitrators, these rules 
propose that each party to the dispute would select one additional 
arbitrator from the roster, regardless of whether the selected 
arbitrator was included in the culled list or struck from the culled 
list by another party. See section 11708(f)(3)(B).
    These proposed rules also provide that parties share the costs 
incurred by the Board and arbitrators equally, with each party 
responsible for paying its own legal and other associated arbitration 
costs, in accordance with section 11708(f)(4).\7\
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    \7\ This rule would replace the current method of cost allotment 
under 49 CFR 1108.6 and 1108.12.
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    Arbitration Decisions. These rules propose to modify our current 
regulations regarding arbitration decisions. In accordance with section 
11708(d), an arbitration decision would: (1) Be consistent with sound 
principles of rail regulation economics; (2) be in writing; (3) contain 
findings of facts and conclusions; (4) be binding upon the parties; and 
(5) not have any precedential effect in any other or subsequent 
arbitration disputes.
    In accordance with section 11708(h), if a party appeals an arbitral 
decision, the Board would review the decision to determine if: (1) The 
decision is consistent with sound principles of rail regulation 
economics; (2) a clear abuse of arbitral authority or discretion 
occurred; (3) the decision directly contravenes statutory authority; or 
(4) the award limitation was violated.\8\
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    \8\ As discussed below, in Assessment of Mediation & Arbitration 
Procedures, the Board amended the standard of review for arbitration 
decisions set forth at 49 CFR 1115.8 and inadvertently omitted the 
standard of review for labor arbitration cases. This decision 
addresses that omission.
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    Initiation of the Arbitration Process and Timelines. Under section 
11708(e), deadlines for the selection of arbitrators, the close of the 
evidentiary process, and the arbitration decision are calculated from 
the date the Board ``initiate[s] . . . the arbitration process,'' which 
would occur ``not later than 40 days after the date on which a written 
complaint is filed or through other procedures adopted by the Board in 
a rulemaking proceeding.'' Section 11708(c)(1)(D). Specifically, 
arbitrators must be selected not later than 14 days after the Board 
decides to initiate the arbitration process. The evidentiary process 
must be completed not later than 90 days after the date on which the 
arbitration process is initiated. An arbitration decision must be 
issued not later than 30 days after the date on which the evidentiary 
period is closed.
    Accordingly, with the exception of rate dispute proceedings, these 
proposed rules provide that the Board would issue a decision to 
initiate the arbitration process within 40 days after submission of a 
written complaint, or the joint notice described above. In rate dispute 
proceedings, the Board must determine if the rail carrier has market 
dominance before making the arbitration process available. 49 U.S.C 
11708(c)(1)(C). Such a determination would likely require substantial 
additional time in cases where market dominance is contested. 
Accordingly, these rules propose that, unless the comments offer 
persuasive reasons to exclude from the arbitration program rate cases 
where market dominance is contested, the Board would initiate the 
arbitration process within 10 days after the Board issues a decision 
determining that the rail carrier in a rate dispute has market 
dominance.
    After the Board initiates the arbitration process, if parties 
cannot mutually agree on an arbitrator or lead

[[Page 30232]]

arbitrator of a panel of arbitrators, the Board would then provide 
parties with a list of arbitrators within seven days of initiating the 
arbitration process. Parties would then have seven days to select an 
arbitrator or panel of arbitrators. Section 11708(e)(1). In accordance 
with section 11708(e)(2), parties would have 90 days from the 
initiation date to conclude the evidentiary process, unless a party 
requests an extension, and the arbitrator or panel of arbitrators, as 
applicable, grants the extension request. The lead or single arbitrator 
would then have 30 days from the close of the evidentiary process to 
issue the decision. Section 11708(e)(3).
    In accordance with section 11708(e)(4), these proposed rules 
provide that the Board may extend any portion of the timetable upon 
agreement of all parties in the dispute, thus providing more 
flexibility than our rules currently allow.\9\
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    \9\ This replaces the current regulation at 49 CFR 1108.7(c), 
which provides that petitions to extend the timetable will only be 
considered in cases of arbitrator incapacitation.
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    Other Matters. In adopting final rules in Assessment of Mediation & 
Arbitration Procedures, the Board inadvertently omitted the standard of 
review for labor arbitration cases in 49 CFR 1115.8. It was not the 
intention of the Board to alter the standard of review for labor 
arbitration cases. The narrow standard articulated in the final rules, 
and codified at 49 CFR 1108.11(b), was intended to apply solely to 
reviews of arbitral decisions brought under 49 CFR pt. 1108.\10\ The 
standard of review articulated in the final rules was not intended to 
replace the Board's standard of review in labor arbitration cases, 
which was previously codified at 49 CFR 1115.8. In adopting the new 
arbitration program, Sec.  1115.8 should have reflected both the 
standard of review for arbitrations conducted pursuant to 49 CFR pt. 
1108 and the standard of review for labor arbitration cases. This 
decision corrects that omission.
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    \10\ In the final rules, the Board adopted a standard of review 
of arbitral decisions made under 49 CFR pt. 1108. The Board stated 
that, 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.
    Assessment of Mediation & Arbitration Procedures, EP 699, slip 
op. at 17 (STB served May. 13, 2013); see 49 CFR 1108.11(b).
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    The proposed rules, which would govern arbitration in Board 
proceedings, are set forth below.

Conclusion

    Regulatory Flexibility Act. The Regulatory Flexibility Act of 1980, 
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 rules 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. In its notice of proposed rulemaking, the agency must 
either include an initial regulatory flexibility analysis, 5 U.S.C. 
603(a), or certify that the proposed rules will not have a 
``significant impact on a substantial number of small entities,'' 5 
U.S.C. 605(b). The impact must be a direct impact on small entities 
``whose conduct is circumscribed or mandated'' by the proposed rules. 
White Eagle Coop. Ass'n v. Conner, 553 F.3d 467, 480 (7th Cir. 2009).
    The Board certifies under 5 U.S.C. 605(b) that these proposed 
rules, if promulgated, will not have a significant economic impact on a 
substantial number of small entities within the meaning of the 
Regulatory Flexibility Act. The proposed rules, if promulgated, would 
amend the existing procedures for arbitrating disputes before the Board 
so that the Board's regulations conform to the statutory requirements 
under 49 U.S.C. 11708.
    Although some carriers and shippers impacted by the proposed rules 
may qualify as a ``small business'' within the meaning of 5 U.S.C. 
601(3), we do not anticipate that our revised arbitration procedures 
would have a significant economic impact on a large number of small 
entities. To the extent that the rules have any impact, it would be to 
provide faster resolution of a controversy at a lower cost. The relief 
that could be accorded by an arbitrator would presumably be similar to 
the relief shippers could obtain through use of the Board's existing 
formal adjudicatory procedures, and at a greater net value considering 
that the arbitration process is designed to consume less time and 
likely will be less costly. Therefore, we do not believe that a 
substantial number of small entities would be significantly impacted.
    Paperwork Reduction Act. Pursuant to the Paperwork Reduction Act 
(PRA), 44 U.S.C. 3501-3549, and Office of Management and Budget (OMB) 
regulations at 5 CFR 1320.8(d)(3), the Board seeks comments about each 
of the proposed collections regarding: (1) Whether the collection of 
information, as modified in the proposed rule and further described 
below, is necessary for the proper performance of the functions of the 
Board, including whether the collection has practical utility; (2) the 
accuracy of the Board's burden estimates; (3) ways to enhance the 
quality, utility, and clarity of the information collected; and (4) 
ways to minimize the burden of the collection of information on the 
respondents, including the use of automated collection techniques or 
other forms of information technology, when appropriate. Information 
pertinent to these issues is included in the Appendix. This proposed 
rule will be submitted to OMB for review as required under 44 U.S.C. 
3507(d) and 5 CFR 1320.11. Comments received by the Board regarding the 
information collection will also be forwarded to OMB for its review 
when the final rule is published.

List of Subjects

49 CFR Part 1108

    Administrative practice and procedure, Railroads.

49 CFR Part 1115

    Administrative practice and procedure.

    It is ordered:
    1. The Board proposes to amend its rules as set forth in this 
decision. Notice of the proposed rules will be published in the Federal 
Register.
    2. Comments regarding the proposed rules are due by June 13, 2016. 
Replies are due by July 1, 2016.
    3. This decision is effective on the day of service.

    By the Board, Chairman Elliott, Vice Chairman Miller, and 
Commissioner Begeman.

    Decided: May 6, 2016.
Jeffrey Herzig,
Clearance Clerk.

    For the reasons set forth in the preamble, under the authority of 
49 U.S.C. 1321, title 49, chapter X, parts 1108 and 1115 of the Code of 
Federal Regulations are proposed to be amended as follows:

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

0
1. Revise the authority citation for part 1108 to read as follows:

    Authority: 49 U.S.C. 11708, 49 U.S.C. 1321(a) and 5 U.S.C. 571 
et seq.

0
2. Amend Sec.  1108.1, as follows:

[[Page 30233]]

0
a. In paragraph (b) add the words ``from the roster'' after the word 
``selected'' and remove the word ``neutral'' and add in its place 
``lead''.
0
b. In paragraph (d) add the word ``rates,'' after ``subjects:''.
0
c. In paragraph (g) add the words ``and the Surface Transportation 
Board Reauthorization Act of 2015,'' after ``1995''.
0
d. Revise paragraphs (h) and (i).
0
e. Redesignate paragraphs (j) and (k) as paragraphs (k) and (l).
0
f. Revise newly redesignated paragraph (k).
0
g. Add paragraph (m).
    The revisions and addition read as follows:


Sec.  1108.1  Definitions.

* * * * *
    (h) Lead arbitrator or single arbitrator means the arbitrator 
selected by the strike methodology outlined in Sec.  1108.6(c).
    (i) Monetary award cap means a limit on awardable damages of 
$25,000,000 in rate disputes, including any rate prescription, and 
$2,000,000 in practice disputes, unless the parties mutually agree to a 
lower award cap. If parties bring one or more counterclaims, such 
counterclaims will be subject to a separate monetary award cap.
* * * * *
    (k) Practice disputes are disputes involving 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.
* * * * *
    (m) Rate disputes are disputes involving the reasonableness of a 
rail carrier's rates.
0
3. Amend Sec.  1108.2, as follows:
0
a. In paragraph (a) introductory text remove ``$200,000'' and add in 
its place ``$25,000,000 in rate disputes, including any rate 
prescription, and $2,000,000 in other disputes'' and remove the word 
``different'' and add in its place ``lower''.
0
b. In paragraph (a)(1) remove the word ``different'' and add in its 
place ``lower''.
0
c. Revise paragraph (b) to read as follows:


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

* * * * *
    (b) Limitations to the Board's Arbitration Program. These 
procedures shall not be available:
    (1) To resolve disputes involving labor protective conditions;
    (2) 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;
    (3) To prescribe for the future any conduct, rules, or results of 
general, industry-wide applicability;
    (4) To resolve disputes that are solely between two or more rail 
carriers.
    Parties may only use these arbitration procedures to arbitrate 
matters within the statutory jurisdiction of the Board.
0
4. Amend Sec.  1108.3 as follows:
0
a. In paragraph (a) introductory text remove the word ``either''.
0
b. In paragraph (a)(1)(ii) remove the words ``different monetary award 
cap'' and add in their place ``lower monetary award cap than the 
monetary award caps provided in this part.''
0
c. Revise paragraph (a)(2).
0
d. Remove paragraph (a)(2)(i).
0
e. Add paragraph (a)(3).
0
f. In paragraph (b), add ``itself'' after ``not'' and remove ``within 
that'' and add in its place ``prior to the end of the''.
0
g. In paragraph (c), remove ``on a case-by-case basis'' and add in its 
place ``only for a particular dispute''.
    The revision and addition read as follows:


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

* * * * *
    (a) * * *
    (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. 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 lower amount than 
the monetary award cap that would otherwise be applicable.
    (3) Parties to a dispute may jointly notify the Board that they 
agree to submit an eligible matter in dispute to the Board's 
arbitration program, where no formal proceeding has begun before the 
Board. 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 
lower amount than the applicable monetary award cap.
* * * * *
0
5. Amend Sec.  1108.4 as follows:
0
a. In paragraph (a) add ``rates,'' before the word ``demurrage''.
0
b. In paragraph (b) introductory text remove ``may not exceed'' and add 
in its place ``will be subject to'' and remove ``$200,000'' and add in 
its place ``$25,000,000, including any rate prescription,'' and remove 
``arbitral proceeding'' and add in its place ``rate dispute and 
$2,000,000 per practice dispute''.
0
c. In paragraph (b)(1) remove the word ``different'' and add in its 
place ``lower''.
0
d. In paragraph (b)(2) remove the word ``different'' and add in its 
place ``lower''.
0
e. In paragraph (b)(3) remove ``$200,000'' and add in its place 
``$25,000,000, including any rate prescription,''; remove ``case'' and 
add in its place ``rate dispute and $2,000,000 per practice dispute''; 
and remove ``different'' and add in its place ``lower''.
0
f. In paragraph (c) remove the words ``arising in a docketed 
proceeding'' and add ``for a particular dispute'' after ``consent to 
arbitration''.
0
g. Amend paragraph (e) by adding a new sentence after the second 
sentence and remove ``which'' and add in its place ``that''.
0
h. Add paragraph (g).
    The revision and addition read as follows:


Sec.  1108.4  Use of arbitration.

* * * * *
    (e) * * * Such disputes are subject to a monetary award cap of 
$2,000,000 or to a lower cap agreed upon by the parties in accordance 
with paragraph (b)(2) of this section.
    (g) Rate disputes. Arbitration of rate disputes will only be 
available to parties if the rail carrier has market dominance as 
determined by the Board under 49 U.S.C. 10707. In rate disputes, the 
arbitrator or panel of arbitrators, as applicable, shall consider the 
Board's methodologies for setting maximum lawful rates, giving due 
consideration to the need for differential pricing to permit a rail 
carrier to collect adequate revenues (as determined under 49 U.S.C. 
11704(a)(2)).
0
6. Amend Sec.  1108.5 as follows:
0
a. In paragraph (a) introductory text, add ``Except as provided in 
paragraph (e) of this section,'' to the beginning of the first 
sentence, and remove ``Arbitration'' and add in its place 
``arbitration''.
0
b. In paragraph (a)(1) remove the word ``single-neutral'' and add in 
its place ``single''.
0
c. In paragraph (a)(3) remove the word ``different'' and add in its 
place ``lower'' and remove ``$200,000'' and add ``that would otherwise 
apply'' after ``cap''.
0
d. In paragraph (b)(1) remove the word ``single-neutral'' and add in 
its place ``single'' wherever it appears.
0
e. In paragraph (b)(1) introductory text, remove the words ``the 
request'' and add in their place ``that request''.

[[Page 30234]]

0
f. In paragraph (b)(1)(i) remove the word ``single-neutral'' and add in 
its place ``single''.
0
g. In paragraph (b)(1)(ii) remove the word ``single-neutral'' and add 
in its place ``single'' wherever it appears and remove ``Sec.  
1108.6(a)-(c)'' and add in its place ``Sec.  1108.6(a)-(d)'' and remove 
the word ``matter'' and add in its place ``case'' and add ``by the 
Board'' after ``adjudication''.
0
h. Revise paragraph (b)(2).
0
i. In paragraph (b)(3) remove the word ``different'' and add in its 
place ``lower'' and remove ``$200,000'' and add in its place `` 
otherwise applicable''.
0
j. Revise paragraph (e).
0
j. Add paragraphs (f) and (g).
    The revisions and additions are as follows:


Sec.  1108.5  Arbitration commencement procedures.

* * * * *
    (b) * * *
    (2) When the complaint limits the arbitrable issues, the answer 
must state whether the respondent agrees to those limitations or, if 
the respondent is already a participant in the Board's arbitration 
program, whether those limitations are consistent with the respondent's 
opt-in notice filed with the Board pursuant to Sec.  1108.3(a)(1)(i). 
If the answer contains an agreement to arbitrate some but not all of 
the arbitration-program-eligible issues in the 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.
* * * * *
    (e) Jointly-filed notice. In lieu of a formal complaint proceeding, 
arbitration under these rules may commence with a jointly-filed notice 
by parties agreeing to submit an eligible matter in dispute to the 
Board's arbitration program under Sec.  1108.3(a)(3). The notice must:
    (1) Contain a statement that all relevant parties are participants 
in the Board's arbitration program pursuant to Sec.  1108.3(a), or that 
the relevant parties are willing to arbitrate voluntarily a matter 
pursuant to the Board's arbitration procedures, and the relief 
requested;
    (2) Indicate whether parties have agreed to a three-member 
arbitration panel or a single arbitrator;
    (3) Indicate if the parties have agreed to a lower amount of 
potential liability in lieu of the otherwise applicable monetary award 
cap.
    (f) Arbitration initiation. When the parties have agreed upon 
whether to use a single arbitrator or a panel of arbitrators, the 
issues(s) to be arbitrated, and the monetary limit to any arbitral 
decision, the Board shall initiate the arbitration under Sec.  
1108.7(a) and provide a list of arbitrators as described in Sec.  
1108.6.
    (g) Arbitration agreement. Shortly after the panel of arbitrators 
or arbitrator is selected, the parties to arbitration together with the 
lead or single arbitrator, as applicable, 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 also 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.
0
7. Amend Sec.  1108.6 as follows:
0
a. In paragraph (a), remove ``Sec.  1108.5(a)(1)'' and add in its place 
``Sec.  1108.5(a)(1) and agreed to by all parties to the arbitration''.
0
b. Revise paragraph (b).
0
c. Revise paragraph (c) introductory text.
0
d. In paragraph (c)(1) remove the word ``neutral'' wherever it appears 
and in the second sentence add ``lead'' in its place.
0
e. Revise paragraph (c)(2).
0
f. Remove paragraph (c)(3).
0
g. Revise paragraph (d).
0
h. Redesignate paragraph (e) as paragraph (f).
0
i. Add a new paragraph (e).
0
j. In newly redesignated paragraph (f)(1) remove ``Sec.  1108.6(b)'' 
and add in its place ``Sec.  1108.6(d)''.
0
k. Revise newly redesignated paragraph (f)(2).
    The revisions read as follows:


Sec.  1108.6  Arbitrators.

* * * * *
    (b) Roster. Arbitration shall be conducted by an arbitrator (or 
panel of arbitrators) selected, as provided herein, from a roster of 
persons with rail transportation, economic regulation, professional or 
business experience, including agriculture, in the private sector. 
Persons seeking to be included on the roster must have training in 
dispute resolution and/or experience in arbitration or other forms of 
dispute resolution. The initial roster of arbitrators shall be 
established and maintained by the Chairman of the STB, who may augment 
the roster at any time to include other eligible arbitrators and may 
remove from the roster any arbitrators who are no longer available. The 
Board's roster will provide a brief biographical sketch of each 
arbitrator, including information such as background, experience, and 
geographical location, as well as general contact information, based on 
the information supplied by the arbitrator. The roster shall be 
published on the Board's Web site. The Chairman will update the roster 
every year. The Chairman will seek public comment on any modifications 
that should be made to the roster, including requesting the names and 
qualifications of new arbitrators who wish to be placed on the roster, 
and updates from arbitrators appearing on the roster to confirm that 
the biographical information on file with the Board remains accurate. 
Arbitrators who wish to remain on the roster must notify the Board of 
their continued availability.
    (c) Selecting the lead arbitrator. If the parties cannot mutually 
agree on a lead arbitrator for a panel of arbitrators, the Board, 
through the Director of the Office of Proceedings, shall provide the 
parties with a list of not more than 15 arbitrators selected from the 
Board's roster within seven days of the Board initiating the 
arbitration process. When compiling a list of arbitrators for a 
particular arbitration proceeding, the Board will consider a variety of 
factors, including relevant background and experience, likely 
acceptability, geographical location, and any expressed preferences of 
the parties. The parties will have seven days from the date the Board 
provides them with this list to select a lead arbitrator using a single 
strike methodology. The list will have an odd number of arbitrators to 
ensure that parties have the same number of strikes. 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 lead 
arbitrator.
    (c) * * *
    (2) The lead 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) Party-appointed arbitrators. The party or parties on each side 
of an arbitration dispute shall select one arbitrator from the roster, 
regardless of whether the arbitrator's name appears on the list of 15 
potential lead

[[Page 30235]]

arbitrators and regardless of whether the other party struck the 
arbitrator's name in selecting a lead arbitrator. The party or parties 
on each side will have seven days from the date the Board provides them 
with the list described in paragraph (c) of this section to appoint 
that side's own arbitrator. Parties on one side of an arbitration 
proceeding may not challenge the arbitrator selected by the opposing 
side.
    (e) Use of a single arbitrator. Parties to arbitration may request 
the use of a single arbitrator. Requests for use of a single arbitrator 
must be included in a complaint or an answer as required in Sec.  
1108.5(a)(1), or in the joint notice filed under Sec.  1108.5(e). 
Parties to both sides of an arbitration dispute must agree to the use 
of a single arbitrator in writing. If the single-arbitrator option is 
selected, and if parties cannot mutually agree on a single arbitrator, 
the arbitrator selection procedures outlined in paragraph (c) of this 
section shall apply.
* * * * *
    (f) * * *
    (2) If the incapacitated arbitrator was the lead or single 
arbitrator, the parties shall promptly inform the Board of the 
arbitrator's incapacitation and the selection procedures set forth in 
paragraph (c) of this section shall apply.
0
8. Revise Sec.  1108.7 to read as follows:


Sec.  1108.7  Arbitration procedures.

    (a) Initiation. With the exception of rate dispute arbitration 
proceedings, the Board shall initiate the arbitration process within 40 
days after submission of a written complaint or joint notice filed 
under Sec.  1108.5(e). In arbitrations involving rate disputes, the 
Board shall initiate the arbitration process within 10 days after the 
Board issues a decision determining that the rail carrier has market 
dominance.
    (b) Arbitration evidentiary phase timetable. Whether the parties 
select a single arbitrator or a panel of three arbitrators, the lead or 
single 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 date on which the arbitration process 
is initiated, unless a party requests an extension, and the arbitrator 
or panel of arbitrators, as applicable, grants such extension request.
    (c) Written decision timetable. The lead or single 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.
    (d) Extensions to the arbitration timetable. The Board may extend 
any deadlines in the arbitration timetable provided in this part upon 
agreement of all parties to the dispute.
    (e) 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.  1108.9  Decisions.

0
9. Amend Sec.  1108.9 as follows:
0
a. Revise paragraph (a).
0
b. In paragraph (b) remove the word ``neutral'' and add in its place 
``lead or single''.
0
c. In paragraph (d) remove the heading ``Neutral arbitrator authority'' 
and add in its place ``Lead or single arbitrator authority'' and remove 
the word ``neutral'' from the first sentence and add in its place 
``lead or single'' and add ``, if any,'' after ``what''.
0
d. In paragraph (e) remove the word ``neutral'' wherever it appears and 
add in its places ``lead or single'' and remove ``Sec.  1108.7(b)'' and 
add in its place ``Sec.  1108.7(c)''.
0
e. In paragraph (f) remove the word ``neutral'' and add in its place 
``lead or single''.
    The revision reads as follows:


Sec.  1108.9  Decisions.

    (a) Decision requirements. Whether by a panel of arbitrators or a 
single arbitrator, all arbitration decisions shall be in writing and 
shall contain findings of fact and conclusions of law. All arbitration 
decisions must be consistent with sound principles of rail regulation 
economics. The arbitrator shall provide an unredacted draft of the 
arbitration decision to the parties to the dispute, in accordance with 
Sec.  1108.7.
* * * * *
0
10. Amend Sec.  1108.11 by revising paragraph (b) introductory text to 
read as follows.


Sec.  1108.11  Enforcement and appeals.

* * * * *
    (b) Board's standard of review. On appeal, the Board's standard of 
review of arbitration decisions will be narrow. The Board will review a 
decision to determine if the decision is consistent with sound 
principles of rail regulation economics, a clear abuse of arbitral 
authority or discretion occurred; the decision directly contravenes 
statutory authority; or the award limitation was violated. Using this 
standard, the Board may modify or vacate an arbitration award in whole 
or in part.
* * * * *
0
11. Amend Sec.  1108.12 as follows:
0
a. Revise paragraph (b).
0
b. Remove paragraphs (c) and (d).


Sec.  1108.12  Fees and costs.

* * * * *
    (b) Costs. The parties shall share the costs incurred by the Board 
and arbitrators equally, with each party responsible for paying its own 
legal and other associated arbitration costs.

PART 1115--APPELLATE PROCEDURES

0
12. The authority citation for Part 1115 is revised to read as follows:

    Authority:  5 U.S.C. 559; 49 U.S.C. 1321, 49 U.S.C. 11708.

0
13. 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). For arbitrations authorized under part 1108 of this 
chapter, the Board's standard of review of arbitration decisions will 
be narrow, and relief will only be granted on grounds that the decision 
is inconsistent with sound principles of rail regulation economics, a 
clear abuse of arbitral authority or discretion occurred, the decision 
directly contravenes statutory authority, or the award limitation was 
violated. For labor arbitration decisions, the Board's standard of 
review is set forth in Chicago and North Western Transportation 
Company--Abandonment--near Dubuque & Oelwein, Iowa, 3 I.C.C.2d 729 
(1987), aff'd sub nom. International Brotherhood of Electrical Workers 
v. Interstate Commerce Commission, 862 F.2d 330 (D.C. Cir. 1988). 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

Information Collection 1

    Title: Joint Notice for Request of Arbitration.
    OMB Control Number: 2140-XXXX.
    Form Number: None.
    Type of Review: New collection.

[[Page 30236]]

    Respondents: Parties seeking to submit to arbitration certain 
matters before the Board.
    Number of Respondents: 5.
    Estimated Time per Response: No more than 1 hour.
    Frequency of Response: On occasion.
    Total Annual Hour Burden: 5 hours.
    Total Annual ``Non-Hour Burden'' Cost: No ``non-cost'' burdens 
associated with this collection have been identified.
    Needs and Uses: Under 49 CFR 1108.5, arbitration commences with 
a written complaint that contains a statement that the relevant 
parties are participants in the Board's arbitration program, or that 
the complainant is willing to arbitrate the dispute pursuant to the 
Board's arbitration procedures. The respondent's answer to the 
written complaint must then indicate the respondent's participation 
in the Board's arbitration program or its willingness to arbitrate 
the dispute at hand pursuant to the Board's arbitration procedures.
    The Board proposes here, as an alternative to filing a written 
complaint, that parties may submit a joint notice to the Board, 
indicating the consent of both parties to submit an issue in dispute 
to the Board's arbitration program. In the joint notice, parties 
would state the issue(s) that the parties are willing to submit to 
arbitration. The notice would also contain a statement that would 
indicate that all relevant parties are participants in the Board's 
arbitration program pursuant to Sec.  1108.3(a), or that the 
relevant parties are willing to arbitrate voluntarily a matter 
pursuant to the Board's arbitration procedures, and the relief 
requested. The notice would indicate whether parties have agreed to 
a three-member arbitration panel or a single arbitrator. And, the 
notice would indicate whether the parties have mutually agreed to a 
lower amount of potential liability in lieu of the monetary award 
cap that would otherwise be applicable. This alternative filing 
method would encourage greater use of arbitration to resolve 
disputes at the Board.

Information Collection 2

    Title: Arbitrator Roster.
    OMB Control Number: 2140-XXXX.
    Form Number: None.
    Type of Review: New collection.
    Respondents: Potential arbitrators.
    Number of Respondents: 40.
    Estimated Time per Response: No more than 1 hour.
    Frequency of Response: Annually.
    Total Annual Hour Burden: 40 hours.
    Total Annual ``Non-Hour Burden'' Cost: No ``non-cost'' burdens 
associated with this collection have been identified.
    Needs and Uses: Under section 11708, the Board must ``promulgate 
regulations to establish a voluntary and binding arbitration process 
to resolve rail rate and practice complaints'' that are subject to 
the Board's jurisdiction. To facilitate this process, the Board's 
proposed rules would establish a process for creating and 
maintaining a roster of arbitrators and selecting arbitrators from 
the roster in accordance with the statutory requirements.
    Pursuant to section 11708(f), unless parties otherwise agree, an 
arbitrator or panel of arbitrators would be selected from a roster 
maintained by the Board. The Board's roster would provide a brief 
biographical sketch of each arbitrator, including information such 
as background, experience, and geographical location, as well as 
general contact information, based on the information supplied by 
the arbitrator. Under the proposed rules, an initial roster would be 
compiled by the Chairman, who would seek notice from all interested, 
qualified persons who wish to be placed on the Board's arbitration 
roster. The Chairman could augment the roster at any time to include 
other eligible arbitrators and remove from the roster any 
arbitrators who are no longer available or eligible. The roster 
would be made available to the public on the Board's Web site.

[FR Doc. 2016-11238 Filed 5-13-16; 8:45 am]
 BILLING CODE 4915-01-P