Railroad Contracts

DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

49 CFR Part 1313

[STB Ex Parte No. 541]

Railroad Contracts

AGENCY: Surface Transportation Board, DOT.

ACTION: Final rule.

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SUMMARY: The Surface Transportation Board (Board) adopts revised

regulations governing contracts under 49 U.S.C. 10709 that are entered

into between one or more rail carriers and one or more purchasers of

rail services for the transportation of agricultural products. The

revised regulations reflect the reduced regulatory oversight of rail

transportation contracts introduced by the ICC Termination Act of 1995,

Public Law 104-88, 109 Stat. 803 (1995) (ICCTA).

EFFECTIVE DATE: These rules are effective on January 29, 1997.

FOR FURTHER INFORMATION CONTACT: Beryl Gordon, (202) 927-5660. (TDD for

the hearing impaired: (202) 927-5721.)

SUPPLEMENTARY INFORMATION: In a notice of proposed rulemaking (NPR)

served October 17, 1996 (61 FR 54144), the Board proposed revised

regulations to reflect the reduced regulatory oversight of rail

transportation contracts introduced by the ICCTA. The revised

regulations were proposed by the Board after consideration of comments

received from major shipper and carrier interests in response to an

advance notice of proposed rulemaking served March 26, 1996 (61 FR

13147).

Comments in response to the NPR were received from the Association

of American Railroads, the Kansas Grain and Feed Association, the

Montana Wheat and Barley Committee (MWBC), and the National Grain and

Feed Association. None of the commenters objects to the proposed

regulations, and we will adopt them without substantive change.

While not objecting to the proposed regulations, per se, MWBC

states that it is difficult and expensive for many small grain shippers

to obtain timely information regarding contract summary filings, and

that, in the past, many grain shippers have been unaware of contracts

that might affect them until after the complaint period has passed.

MWBC suggests that the Board institute a procedure to post the contract

summaries filed each day on a ``world wide web internet page readily

accessible to the grain shippers.''

The Board does not currently have the capability to disseminate

information, either its own decisions or materials filed with it, over

the Internet. We do, however, support improvements in the dissemination

of information, and are in the process of developing capability to

disseminate information electronically in the future. Nevertheless, we

cannot at this time determine the feasibility of disseminating

electronically materials filed with us, such as railroad contract

summaries, and thus cannot grant MWBC's request at this time. However,

we are certainly prepared to consider alternative requirements as they

become feasible.

In the meantime, it is important to note that the filing

requirements contained in the proposed regulations have been in effect

for many years, and other shippers and shipper groups have apparently

been able to meet their information needs under the existing filing

requirements, as no commenter other than MWBC has raised the issue. We

are aware of the existence of independent service providers (generally

referred to as watching services) that monitor contract summary filings

for their clients and advise them when filings of interest are made.

MWBC might wish to investigate the feasibility of using such a service.

1 Additionally, MWBC can investigate the feasibility of obtaining

the needed information directly from the rail carriers pursuant to the

information availability requirements of Sec. 1313.5(a)(2) of the

proposed regulations.

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\1\ MWBC states that mail delivery from Washington takes as long

as 5 to 6 days, but the watching services advise us that they can

and do send contract summaries to their clients by facsimile

transmission.

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Small Entities

The Board certifies that these rules will not have a significant

economic effect on a substantial number of small entities. They merely

eliminate obsolete

[[Page 68669]]

provisions where regulatory oversight was eliminated, reflect certain

other modest changes effected by the ICCTA, and largely continue

existing contract disclosure requirements for agricultural products.

Environment

This action will not significantly affect either the quality of the

human environment or the conservation of energy resources.

List of Subjects in 49 CFR Part 1313

Agricultural products, Contract summaries, Rail carriers,

Transportation contracts.

Decided: December 17, 1996.

By the Board, Chairman Morgan, Vice Chairman Simmons and

Commissioner Owen.

Vernon A. Williams,

Secretary.

For the reasons set forth in the preamble, the Board revises part

1313 of title 49, chapter X, of the Code of Federal Regulations to read

as follows:

PART 1313--RAILROAD CONTRACTS FOR THE TRANSPORTATION OF

AGRICULTURAL PRODUCTS

Sec.

1313.1 Scope; definition of terms.

1313.2 Contract summary filing requirement.

1313.3 Board review; contract disapproval.

1313.4 Filing procedures and formats for contract summaries.

1313.5 Contract and contract summary availability.

1313.6 Contract summary for agricultural commodities.

1313.7 Contract summary for grain products--involving a port.

1313.8 Contract summary for grain products--not involving a port.

1313.9 Grounds for complaints and contract review.

1313.10 Procedures for complaints and discovery.

Authority: 49 U.S.C. 721(a) and 10709.

Sec. 1313.1 Scope; definition of terms.

(a) This part addresses the provisions of 49 U.S.C. 10709 that

require rail carriers to file with the Board a summary of each contract

for the transportation of agricultural products (including grain, as

defined in 7 U.S.C. 75 and products thereof) and that allow complaints

to be filed with the Board regarding such contracts.

(b) The provisions of this part do not apply to any transportation

that is exempted from the Board's contract regulation pursuant to an

exemption issued under 49 U.S.C. 10502 or former 49 U.S.C. 10505

(repealed effective January 1, 1996).

(c) For purposes of this part, the term contract means an

agreement, including any amendment thereto, entered into by one or more

rail carriers and one or more purchasers of rail services to provide

specified transportation of agricultural products (including grain, as

defined in 7 U.S.C. 75 and products thereof) under specified rates and

conditions. The term amendment includes contract modifications agreed

to by the parties.

(d) An amended contract is treated as a new contract under this

part. Remedies are revived and review is again available, upon

complaint.

Sec. 1313.2 Contract summary filing requirement.

(a) Rail carriers subject to the jurisdiction of the Surface

Transportation Board under 49 U.S.C. 10501 must promptly file with the

Board a summary of each contract entered into for the transportation of

agricultural products.

(b) Contract summaries not in compliance with this part may be

rejected by the Board. If a contract summary is rejected, it will be

considered as not filed, and the carrier must promptly file a corrected

contract summary to replace the rejected summary.

Sec. 1313.3 Board review; contract disapproval.

(a) Board review. (1) No later than 30 days after a contract

summary is filed, the Board may, on complaint, begin a proceeding to

review such contract on the grounds described in Sec. 1313.9.

(2) If the Board begins a proceeding, it shall determine, within 30

days after the proceeding is commenced, whether the contract is in

violation of 49 U.S.C. 10709.

(b) Contract disapproval. If the Board finds that the contract is

in violation of 49 U.S.C. 10709, it will:

(1) Disapprove the contract; or

(2) Where the Board finds unreasonable discrimination, in

accordance with 49 U.S.C. 10709(g)(2)(B)(i), order the contracting

carrier(s) to provide to the complainant(s) rates and service

substantially similar to those contained in the contract at issue, with

such differences in terms and conditions as are justified by the

evidence.

(c) Applicable rates/charges if a contract is disapproved. If the

Board disapproves a contract (or contract amendment), the appropriate

non-contract rates/charges (or the contract provisions otherwise in

effect) will be applicable.

Sec. 1313.4 Filing procedures and formats for contract summaries.

(a) Filing of Summaries. (1) Two copies of each contract summary,

containing the applicable information specified in Secs. 1313.6,

1313.7, or 1313.8, as appropriate, must be filed with the Board as soon

as possible, but no longer than 7 days after the date of the contract

(or contract amendment).

(2) The outside envelope or wrapper containing one or more contract

summaries must be prominently marked ``Rail Contract Summary'' and

addressed to: Tariffs Branch, Surface Transportation Board, Washington,

DC 20423.

(3) A transmittal letter identifying the submitted publication(s),

and the name and telephone number of a contact person, must accompany

each filing of one or more contract summaries. Each transmittal letter

shall clearly indicate in the upper left-hand corner thereof:

(i) The assigned alpha code of the filing carrier;

(ii) The number of summaries transmitted;

(iii) The filing fee enclosed, the account number to be billed, or

the credit card to be charged;

(iv) The transmittal number if the filer utilizes transmittal

numbers; and

(v) If the filing fee is charged to a credit card, the information

must include the credit card number and expiration date, and an

authorized signature.

(b) Contract summary title page. The title page of each contract

summary must contain only the following information:

(1) In the upper right corner, the contract summary number (see

paragraph (c) of this section), followed by the amendment number if an

amended contract summary.

(2) In the center of the page, the filing carrier's name, followed

by the words ``CONTRACT SUMMARY'' or ``AMENDED CONTRACT SUMMARY'', as

applicable, in large print.

(3) Date of contract and its effective date.

(4) In the center lower portion, the individual submitting the

filing, and the name of the individual(s) for service of complaints (if

not the same individual). If not otherwise noted, a complainant may

rely on service to the individual submitting the filing.

(c) Contract summary numbering system. (1) The contract summary

identification number must include the word ``STB,'' the standard

carrier alphabetic code for the filing railroad (limited to four

letters), the letter ``C,'' and a sequential number, with each

separated by a hyphen. The following is

[[Page 68670]]

an example: the 357th contract summary filed by the Conrail would have

the following identification number: ``STB-CR-C-357.''

(2) At its option, the carrier may issue contract summaries with

nonconsecutive numbers if it assigns blocks of numbers for specific

uses. An index to the blocks of reserved numbers shall be filed with

the Board.

(d) Format requirements for contract summary information. (1) The

contract summary must enumerate and have each item required in

Secs. 1313.6, 1313.7 or 1313.8 of this part, as applicable, completed.

When the item does not pertain to the contract, the term ``Not

Applicable'' (``NA'') shall be used.

(2) Changes in prior contract summaries must be underscored and

must be followed by the words ``addition,'' ``deletion,''

``extension,'' ``cancellation,'' or other appropriate descriptive

phrase in parentheses. If the change to the contract is only in

confidential matter, a statement to that effect must be made in the

amended contract summary and must indicate the particular feature to

which the change applies (i.e., rate, special feature, etc.). If ``not

applicable'' is permitted in the original summary under Secs. 1313.6

through 1313.8 of this part, the amended summary may use ``not

applicable'' with a notation that a change pertained only to

confidential data.

(3) Amended contract summaries may not substitute phrases such as

``not applicable'' or ``no change'' where disclosure was required in

the original contact summary (such as in the commodity description);

amended contract summaries must set forth all required non-confidential

terms in the contract, whether amended or not.

Sec. 1313.5 Contract and contract summary availability.

(a)(1) A contract summary filed under these rules shall be made

available for public inspection in the Tariffs Branch of the Surface

Transportation Board.

(2) A contract summary filed under these rules also shall be made

available by the carrier(s) participating in the contract, upon

reasonable request.

(b) Where not already required by Sec. 1313.10(a)(5) of this part,

the contract for which a summary is filed under these rules shall be

provided immediately to the Board, upon request, for its use in

carrying out its functions under the statute.

Sec. 1313.6 Contract summary for agricultural commodities.

(a) Summary information. The summary of a contract for the

transportation of agricultural commodities must contain the following

information:

(1) Carrier names. A list, alphabetically arranged, of the

corporate names of all carriers that are parties to the contract, and

their addresses for service of complaints.

(2) Specific commodity. The specific commodity or commodities to be

transported under the contract. Vague commodity descriptions such as

``grain'' are not permitted, even if that is the commodity description

in the contract.

(3) Shipper identity. The specific identity of the shipper party to

the contract, as well as any other party or parties on whose behalf

that shipper is acting (to the extent known).

(4) Specific origins, destinations, transit points, and other

shipper facilities. (i) Each specific origin and destination point to

and from which the contract applies. Vague descriptions such as

``various points in Kansas'' are not acceptable. Broad geographic

descriptions such as ``all stations in Kansas'' are permitted only to

the extent such terms are actually used in the contract and such

origins and destinations are subject to specific identification by

reference to available publications.

(ii) Each port involved.

(iii) Each transit point identified in the contract.

(iv) Each shipper facility affecting performance under the contract

(if not included in the origin/destination points or transit points),

to the extent identified in the contract or known to the contracting

parties.

(5) Contract duration. (i) The date on which the contract has or

will become applicable to the transportation services covered by the

contract.

(ii) The termination date of the contract, and any terms for

automatic extension or renewal of the contract.

(iii) Any provisions for optional extension.

(6) Rail car data. (i) Either the information in paragraph

(a)(6)(A) of this section or the certified statement in paragraph

(a)(6)(B) of this section as follows:

(A) The number of dedicated cars (or, at the carrier's option, car

days), by major car type, to be used to fulfill the contract or

contract options, including those that are:

(1) Available and owned by the carrier(s) listed in paragraph

(a)(1) of this section;

(2) Available and leased by those carrier(s), with average number

of bad-order cars identified; and

(3) (Optional) On order (for ownership or lease), along with

delivery dates.

(B) A certified statement that:

(1) The shipper will furnish the rail cars used for the

transportation provided under the contract, and that those rail cars

will not be leased from the carrier; or

(2) The contract is restricted to services which do not entail car

supply.

(ii) For contract summaries filed on or before September 30, 1998,

a certified statement that the cumulative equipment total for all

contracts for the transportation of agricultural commodities (including

forest products, but not including wood pulp, wood chips, pulpwood or

paper) does not exceed 40 percent of the capacity of carrier-owned and

-leased cars by applicable car type.

(7) Rates and charges. (i) The specific base rates and/or charges

that would apply without the contract.

(ii) A summary of any escalation provisions in the contract.

(8) Volume. All volume, car and/or train size requirements, as set

forth in the contract, including:

(i) Movement type (single-car, multiple-car, unit-train).

(ii) Minimum and actual volume requirements under the contract, by

applicable period(s) (annual, quarterly, etc.).

(iii) Volume breakpoints affecting the contract.

(9) Special features. The existence (but not the terms or amount)

of any special features, such as transit-time commitments, credit

terms, discounts, switching, special demurrage, guaranteed or minimum

percentages, etc.

(b) Supplemental information. In the event a complaint is filed

that is directed at a carrier's ability to fulfill its common carrier

obligation with carrier-furnished cars, the carrier(s) shall

immediately supplement the information contained in the contract

summary by submitting to the Board, and supplying to the complainant,

additional data on the cars used to fulfill the challenged contract.

This additional data shall include (by major car type used to fulfill

the contract):

(1) Total bad-car orders;

(2) Assigned car obligations; and

(3) Free-running cars.

Sec. 1313.7 Contract summary for grain products--involving a port.

(a) Summary information. The summary of a contract for the

transportation of grain products that involves service to or from a

port must contain the following information:

(1) Carrier names. A list, alphabetically arranged, of the

corporate names of all carriers that are parties to

[[Page 68671]]

the contract, and their addresses for service of complaints.

(2) Specific commodity. The specific commodities to be transported

under the contract. Broad commodity descriptions such as ``grain

products'' are permitted only to the extent that is the commodity

description in the contract.

(3) Contract duration. (i) The date on which the contract has or

will become applicable to the transportation services covered by the

contract.

(ii) The termination date of the contract, and any terms for

automatic extension or renewal of the contract.

(4) Rates and charges. (i) The specific base rates and/or charges

that would apply without the contract.

(ii) The existence (but not the terms or amount) of any escalation

provisions.

(5) Volumes. The existence (but not the terms or amount) of any

provisions regarding movement type (e.g. single-car, multiple-car,

unit-train) or minimum volume requirements.

(6) Special features. The existence (but not the terms or amount)

of special features such as transit time commitments, guaranteed car

supply, minimum percentage of traffic requirements, credit terms,

discounts, etc.

(7) Rail car data. Either the information in paragraph (a)(7)(i) of

this section or the certified statement in paragraph (a)(7)(ii) of this

section as follows:

(i) The number of dedicated cars (or, at the carrier's option, car

days), by major car type, to be used to fulfill the contract or

contract options, including those that are:

(A) Available and owned by the carrier(s) listed in paragraph

(a)(1) of this section;

(B) Available and leased by those carrier(s), with average number

of bad-order cars identified; and

(C) (Optional) On order (for ownership or lease), along with

delivery dates.

(ii) A certified statement that:

(A) The shipper will furnish the rail cars used for the

transportation provided under the contract, and that those rail cars

will not be leased from the carrier; or

(B) The contract is restricted to services which do not entail car

supply.

(8) Ports. (i) The port(s) involved.

(ii) Either the mileages (rounded to the nearest 50 miles) between

the port and each inland origin or destination, or the specific inland

origin and destination points.

(b) Supplemental information. In the event a complaint is filed

that is directed at a carrier's ability to fulfill its common carrier

obligation with carrier-furnished cars, the carrier(s) shall

immediately supplement the information contained in the contract

summary by submitting to the Board, and supplying to the complainant,

additional data on the cars used to fulfill the challenged contract.

This additional data shall include (by major car type used to fulfill

the contract):

(1) Total bad-car orders;

(2) Assigned car obligations; and

(3) Free-running cars.

Sec. 1313.8 Contract summary for grain products--not involving a port.

(a) Summary information. The summary of a contract for the

transportation of grain products that does not involve service to or

from a port must contain the information specified in Sec. 1313.7,

paragraphs (a)(1), (2), (3) and (7). It must also contain the

information specified in Sec. 1313.7(a)(6) if the contract contains

such terms.

(b) Supplemental information. In the event a complaint is filed

that is directed at a carrier's ability to fulfill its common carrier

obligation with carrier-furnished cars, the carrier(s) shall

immediately supplement the information contained in the contract

summary by submitting to the Board, and supplying to the complainant,

additional data specified in Sec. 1313.7(b).

Sec. 1313.9 Grounds for complaints and contract review.

(a) A complaint may be filed against a contract covered by this

part:

(1) By any shipper on the ground that such shipper individually

will be harmed because the contract unduly impairs the ability of the

contracting rail carrier or carriers to meet their common carrier

obligations to the complainant under 49 U.S.C. 11101;

(2) By a port on the ground that such port individually will be

harmed because the contract will result in unreasonable discrimination

against such port; and

(3) By a shipper of agricultural commodities on the ground that

such shipper individually will be harmed because:

(i) The rail carrier has unreasonably discriminated by refusing to

enter into a contract with such shipper for rates and services for the

transportation of the same type of commodity under similar conditions

to the contract at issue, and that such shipper was ready, willing, and

able to enter into such a contract at a time essentially

contemporaneous with the period during which the contract at issue was

offered; or

(ii) The contract constitutes a destructive competitive practice.

(b) Unreasonable discrimination, for purposes of paragraph

(a)(3)(i) of this section, has the same meaning as the term has under

49 U.S.C. 10741.

Sec. 1313.10 Procedures for complaints and discovery.

(a) Complaints, discovery petitions, replies, and appeals--(1)

Initial filing. Complaints must be filed by the 18th day after the

contract summary is filed. Any discovery petition must accompany the

complaint.

(2) Complaint. A complaint must contain the correct, unabbreviated

names and addresses of the complainant(s) and defendant(s). The

complainant must set out the statutory provisions under which it has

standing to file a complaint, and its reasons for requesting that the

Board find the challenged contract unlawful.

(3) Discovery petition. A discovery petition must note on the front

page ``Petition for Discovery of Rail Contract'' and note the contract

(and any applicable amendment) number. It should provide the following

information:

(i) Standing--grounds. The ground upon which the petitioner's

complaint is based under Sec. 1313.9.

(ii) Standing--affected party. Pertinent information regarding the

petitioner's actual or potential participation in the relevant market,

including:

(A) The nature and volume of petitioner's relevant business.

(B) The relevant commodities that petitioner ships or receives.

(C) Comparisons of the petitioner's commodities, locations of

shipping facilities and serving carriers, actual or potential traffic

patterns and serving carrier(s), with the traffic patterns and serving

carrier(s) identified in the contract summary. State whether petitioner

is a consignor or consignee.

(D) The petitioner's ability to ship the commodity in question at a

time generally simultaneous with the challenged contract.

(E) The potential effect of the contract on the petitioner's

relevant business.

(F) Any additional supporting information, including prior

negotiations, if any.

(iii) Relevance. The relevance of the information sought to the

petitioner's challenge to the contract.

(iv) Nexus. Where the complaint challenges a carrier's ability to

perform its common carrier obligation, the nexus between the

information sought and the common carrier obligation of the contracting

carrier(s).

(4) Service of pleadings. The complainant must certify that 2

copies of the complaint, and discovery petition if filed, have been

sent to the

[[Page 68672]]

contracting carrier(s) either by hand, express mail, or other overnight

delivery service the same day as filed at the Board. The contracting

carrier shall in turn serve the contracting shipper with a copy of the

complaint and petition. Replies shall be served in the same manner on

complainant/petitioner.

(5) Submission of contract. Immediately upon the filing of a

complaint, the rail carrier filing the contract summary shall forward

to the Board, by hand, express mail, or other overnight delivery

service, the subject contract or amended contract.

(6) Replies. Replies to the complaint/petition are due within 5

days from the date of filing of the complaint/petition, and in no event

later than noon on the 23rd day following filing of the contract

summary.

(7) Copies. An original and 10 copies of complaints, petitions and

replies must be filed with the Board in a package marked ``Confidential

Rail Contract Material''.

(8) Discovery appeals. If action on a petition for discovery is

taken under delegated authority, that action may be appealed to the

Board, subject to the following:

(i) An appeal must be received within 2 days of the initial

decision, but in no event later than the 28th day after the contract

summary is filed.

(ii) The appeal must be marked ``Appeal of Delegated Authority

Action Regarding Rail Contract Discovery''.

(iii) Telegraphic notice or its equivalent must be given to the

opposing parties.

(iv) Replies to the appeal must be filed within one day after the

appeal is filed.

(v) An original and 10 copies of appeals and replies must be filed

with the Board.

(9) Furnishing of information. If discovery is granted, the carrier

must furnish the required information to the petitioner by the 1st

working day after the Board issues its decision.

(b) Informal discovery. (1) Prior to filing a petition for formal

discovery under paragraph (a) of this section, a petitioner may request

discovery from the carrier.

(2) The carrier must promptly grant or deny the request.

(3) Agreements between carriers and shippers for informal discovery

are permitted under these rules.

(c) Confidentiality. If confidential contract data are filed with

the Board in a pleading, the party filing these data should submit them

as a separate package, clearly marked on the outside ``Confidential

Material Subject to Protective Order.'' The order in paragraph (d) of

this section applies to the parties specified in the order who receive

confidential information through proceedings before the Board or

through informal discovery.

(d) Protective order. Petitioner and carriers, and their duly

authorized agents, shall limit to the contract complaint proceeding the

use of contract information or other confidential commercial

information which may be revealed in the contract, the complaint,

reply, or in any other pleading relating to the contract. This

restriction shall be a condition to release of any contract term to a

petitioner/complainant and shall operate similarly on a carrier in

possession of confidential information which may be contained in a

complaint, petition for discovery, or request for informal disclosure.

Any information pertaining to parties to the contract or subject to the

contract (including consignors, consignees and carriers), or pertaining

to the terms of the contract, or relating to the petitioner's/

complainant's confidential commercial information, must be kept

confidential. Neither the information nor the existence of the

information shall be disclosed to third parties, except for:

consultants or agents who agree, in writing, to be bound by this

regulation; information which is publicly available; information which,

after receipt, becomes publicly available through no fault of the party

seeking to disclose the information after it has become publicly

available, or is acquired from a third party free of any restriction as

to its disclosure. The petitioner/complainant or carrier must take all

necessary steps to assure that the information will be kept

confidential by its employees and agents. No copies of the contract

terms or other confidential information are to be retained by the

parties not originally privy to the data subsequent to the termination

of the proceeding.

(e) Contract review proceeding. If the Board institutes a

proceeding to review the contract, the complainant's case-in-chief is

due 9 days after the institution of the proceeding, but no later than

39 days after the filing of the contract summary. Replies are due 16

days after the institution of the proceeding, but no later than 46 days

after the filing of the contract summary.

[FR Doc. 96-33152 Filed 12-27-96; 8:45 am]

BILLING CODE 4915-00-P