Abandonment and Discontinuance of Rail Lines and Rail Transportation Under 49 U.S.C. 10903

DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

49 CFR Parts 1105 and 1152

[STB Ex Parte No. 537]

Abandonment and Discontinuance of Rail Lines and Rail

Transportation Under 49 U.S.C. 10903

AGENCY: Surface Transportation Board, DOT.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The ICC Termination Act of 1995 revised the law governing

applications by rail carriers to abandon or discontinue service over

lines of railroad and related offers of financial assistance that would

continue rail service after approval of abandonment or discontinuance

by the Surface Transportation Board (Board). The Board proposes to

revise part 1152 to implement the changes and to streamline and update

the pertinent regulations and to make conforming changes to the

environmental rules at part 1105.

DATES: Comments are due on May 3, 1996.

ADDRESSES: Send comments (an original and 10 copies) referring to STB

Ex Parte

[[Page 11175]]

No. 537 to: Surface Transportation Board, Office of the Secretary, Case

Control Branch, 1201 Constitution Avenue NW., Washington, DC 20423.

FOR FURTHER INFORMATION CONTACT: Joseph H. Dettmar, (202) 927-5660.

[TDD for the hearing impaired: (202) 927-5721.]

SUPPLEMENTARY INFORMATION: The ICC Termination Act of 1995, Pub. L. No.

104-88, 109 Stat. 803 (ICCTA), enacted on December 29, 1995, abolished

the Interstate Commerce Commission (ICC) and transferred the

responsibility for economic regulatory oversight of rail

transportation, including the proposed abandonment and discontinuance

of rail lines, to a new Surface Transportation Board (Board). The

transfer took effect on January 1, 1996. Section 204(b)(1) of the ICCTA

provides that proceedings and applications pending before the ICC on

January 1, 1996, insofar as they involve functions retained by the

ICCTA, including abandonment proceedings and applications, shall be

decided under the law in effect prior to January 1, 1996. Abandonment

applications and proceedings filed on or after January 1, 1996, shall

be decided under the law as revised in the ICCTA. Under section 204(a),

regulations, including those at 49 CFR part 1152, issued by the ICC and

effective as of January 1, 1996, shall remain in effect ``until

modified, terminated, superseded, set aside, or revoked in accordance

with law by the Board * * *.'' In this notice, the Board is proposing

to revise part 1152 to implement the changes brought about by the ICCTA

and to streamline and update the regulations. Included in the proposed

revisions are deletions of obsolete references. While we are not

proposing major revisions at this time to our environmental rules at 49

CFR part 1105, or our Trails Act rules at 49 CFR 1152.29, we are

proposing some notice and timing changes to those regulations in this

proceeding, because the changes are directly related to our efforts to

streamline and improve the abandonment process. For the same reason, we

are proposing here some conforming changes to our procedures for

handling abandonments exempted as a class, and petitions for individual

abandonment exemptions, to reflect statutory changes resulting from the

ICCTA.

In the supplementary information portion of this notice, when

referring to the provisions of the United States Code affected by the

ICCTA, we use the word ``former'' to refer to sections of the law in

effect prior to January 1, 1996, and the word ``new'' to refer to

sections of the law in effect on and after January 1, 1996. In the

proposed rules themselves, the section references are to the law in

effect on and after January 1, 1996.

Availability

The full text of the proposed rules is available to all persons for

a charge by phoning DC News and Data, Inc., at (202) 289-4357. This

represents a change from prior practice, but because of limited

resources, we are no longer able to publish in full, or make available

at no cost, the text of the proposed regulations.

Background

The key changes brought on by the ICCTA, insofar as part 1152 is

concerned, are found in new sections 10903 and 10904 (49 U.S.C. 10903

and 10904). Implementation of these two sections is the focus of this

notice of proposed rulemaking. New section 10903 (``Filing and

procedures for application to abandon or discontinue'') has replaced

former section 10903 (``Authorizing abandonment and discontinuance of

railroad lines and rail transportation'') and former section 10904

(``Filing and procedure for applications to abandon or discontinue'').

New section 10904 (``Offers of financial assistance to avoid

abandonment and discontinuance'') has replaced former section 10905

bearing the same title.

Revisions found in three other new sections bear directly on the

procedures found in part 1152. New section 10905 (``Offering abandoned

rail properties for sale for public purposes'') has replaced former

section 10906 bearing the same title. New section 10907 (``Railroad

development'') has replaced former section 10910 bearing the same

title. New section 10502 (``Authority to exempt rail carrier

transportation'') has replaced former section 10505 bearing the same

title.

New section 10903 retains the requirement that rail carriers may

abandon or discontinue service only if the present or future public

convenience and necessity require or permit the abandonment or

discontinuance. The new section also generally preserves requirements

for public notice and the opportunity for public participation in

development of a record upon which abandonment and discontinuance

applications will be decided. New section 10903 has not retained the

specific processing timetable found in former section 10904, but new

section 10904 (in preserving the opportunity in former section 10905 to

offer financial assistance for continuation of rail service) has

established a 4-month deadline after an application is filed for the

submission of offers of financial assistance. In large part due to this

4-month deadline, which would seem to dictate a Board decision on the

abandonment before the submission of an offer of financial assistance,

we are proposing a processing schedule for abandonment and

discontinuance applications that would provide for a Board decision on

the merits of an application in all cases before expiration of this 4-

month period.

With the above-noted changes found in new sections 10903 and 10904

central to our preliminary analysis, we are seeking public comments on

proposed revisions to part 1152, which would establish a process and

schedule to accommodate the new law. Not every specific change to the

existing regulations will be discussed here, but we will highlight the

most significant proposed changes, additions, and deletions.

We view the ICCTA as reform legislation. As a result, we are taking

this opportunity to examine, reform and streamline the existing rules

and process. Our goal is to revise part 1152 to meet the letter and

spirit of the ICCTA. We are proposing new procedures but propose to

retain elements of the current part 1152 that are consistent with

streamlining, expedited development of a record in each proceeding, and

prompt decisionmaking. We have also attempted to update the regulations

to improve notice to the public and ensure ample opportunity for full

public participation early in our proceedings, which we believe will

ultimately result in an expeditious resolution satisfactory to the

interested parties. Finally, certain obsolete or otherwise unnecessary

references are proposed for deletion. Because of the importance of

proposing rules to implement the new law as soon as possible, we

recognize that we may have overlooked some potential improvements or

may have proposed to retain provisions or language that no longer

serves a useful purpose. We therefore welcome public comments on these

proposals, and on any other areas where changes might be made, to

streamline our abandonment regulations further and to assist us in

carrying out the will of the Congress in the most efficient manner

possible.

Discussion

1. Uniform Schedule

One of the major changes we are proposing here is a new uniform

schedule for processing all abandonment applications within the

[[Page 11176]]

statutory parameters of new sections 10903 and 10904. While new section

10903 does not contain the requirement of former section 10904(a)(1)

that railroads file a ``notice of intent'' with the Board (previously,

with the ICC), the new statute continues to require that rail carriers

prepare, publicize, and serve on designated entities advance notice of

an abandonment or discontinuance application. We view the notice as a

critical step in meeting the new timeframes applicable to the

abandonment process, because the notice apprises the public of proposed

abandonments and ensures that potential concerns are brought to light

at an early stage in the process and addressed. Because of these

important benefits and because of the similarity in the handling of

notice under the former and the new statute, we propose to retain the

existing rules regarding notices of intent, including the requirement

that an applicant serve its notice of intent on the board. As before,

the notice of intent would be due no more than 30 days and no less than

15 days before the application is filed. We are also proposing to

update the list of entities due to receive the notice, including the

addition of the Rails to Trails Conservancy and the National

Association of Reversionary Property Owners, to provide the earliest

possible notice that a particular right-of-way might be used as a

trail, helping to assure more timely trail use requests, and to

facilitate our meeting our trail use and rail banking responsibilities

under the National Trails System Act, 16 U.S.C. 1247(d) (Trails

Act).\1\ These responsibilities have not been altered by the new law.

\1\ Someone interested in trail use could become a party in the

abandonment proceeding by filing written comments or a protest. 49

CFR 1152.25(a). Every document filed with us must be served on all

parties to the abandonment proceeding. 49 CFR 1104.12(a).

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As part of our effort to make conforming changes to our

environmental rules, we are proposing to amend 49 CFR 1105.7 and 1105.8

to require railroads to serve their environmental and/or historic

reports on the required agencies at least 20 days prior to filing with

us their application, petition for exemption, or notice invoking the

class exemption.\2\ Furthermore, as discussed in more detail below, a

Federal Register notice would be published at the beginning of the

abandonment application process, which has not been the case in

abandonments decided under former 49 U.S.C. 10903, or in petitions for

exemption under former section 10505. In addition, to facilitate

identification of the lines proposed for abandonment we propose to

require that railroads identify lines proposed to be abandoned by

United States Postal Service ZIP Codes.

\2\ The earlier distribution would expedite the environmental

review process (by giving participating agencies additional lead

time to conduct their analysis and review) without being unduly

burdensome on the railroads (which would be filing the same reports

that are now required, only sooner). Also, because consulting

agencies should be able to complete their review in a more timely

manner, this timing change could reduce the number of environmental

and historic conditions imposed in abandonment decisions.

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To permit development of a sufficient public record in all cases

within the statutory time frames of the ICCTA, we are proposing that

applicants present their entire case with the application, that

protestants submit their entire opposition case no later than 45 days

after the application is filed, and that any reply by applicants be

filed no later than 60 days after an application is filed. This would

produce a complete record by the 60th day after the application is

filed. We also propose that the Board's decision on the merits be

served no later than 110 days after the application is filed (10 days

before the latest date for filing offers of financial assistance). A

final decision on the merits would normally be scheduled to take effect

in 30 days (by day 140).

We propose to have no appeal of right to the Board's decision on

the merits, but instead to permit only petitions to reopen, in

accordance with the procedures set out in the proposed rules. Changes

to the rules regarding processing of offers of financial assistance

have also been proposed to reflect the changes made in new section

10904.

We anticipate that the Board often would not need all of the time

set out in the proposed schedule for issuance of a final decision on

the merits, especially in those instances where there is little

opposition to the application. Therefore, we want to make clear that,

should final decisions be served before day 110, offers of financial

assistance would be due 10 days after the service date of that decision

rather than on day 120. We see the 4-month statutory deadline as an

outer limit, which does not require us to delay resolution of

proceedings where the entire time is not needed.

We anticipate that the application (which would include the

applicant's case in chief), the opposition case in chief, and a reply

would constitute a sufficient record for a decision on the application

in almost all instances. In some cases, however, it could be

appropriate also to hold an oral hearing. To help us identify such

cases as early as possible, we propose that any request for oral

hearing be due to be filed no later than 10 days after the application

is filed. (Given the proposed requirement that a notice of intent to

file an application continue to be filed between 15 and 30 days before

the application, this means that a person that would potentially seek

an oral hearing would have notice of the application at least 25 days

before the oral hearing request would be due.) We also propose that the

Board would promptly decide by day 15 after the filing of the

application whether to schedule an oral hearing so that a final

decision by the Board on the merits of the application could be reached

by day 110.

Accordingly, we are proposing the following schedule for Board

consideration and decisions in abandonment and discontinuance

application proceedings from the time the application is filed until

the time of the Board's decision on the merits:

Day 0--Application filed, including applicant's case in chief.

Day 10--Due date for oral hearing requests.

Day 15--Due date for Board decision on oral hearing requests.

Day 20--Due date for Notice of Application to be published in the

Federal Register.

Day 45--Due date for protests and comments, including opposition case

in chief, and for public use and trail use requests.

Day 60--Due date for applicant's reply to opposition case and for

applicant's response to trail use requests.

Day 110--Due date for service of decision on the merits.

Day 120--Due date for offers of financial assistance, except that if an

application has been granted by decision issued sooner than Day 110,

the offer of financial assistance shall be due 10 days after service of

the decision granting the application.

2. Federal Register Publication

Former section 10905 required that grants of abandonment

applications be published in the Federal Register to provide notice to

persons who might wish to make offers of financial assistance, with the

due date triggered by the Federal Register publication itself. The

current rules at part 1152 reflect this requirement and embrace a

process through which a grant of an abandonment application or a

petition for exemption for abandonment is announced to the public

through Federal Register publication at the time of the grant. We

propose instead to publish notice of an abandonment application or a

petition for an individual exemption for abandonment

[[Page 11177]]

20 days after the application or petition is filed. The notice would

describe the abandonment proposal and advise the public that offers of

financial assistance would be due 10 days after the application or

petition is granted or 120 days after the application or petition is

filed, whichever occurs sooner. And, the notice would advise that

requests for public use and trail use conditions would be due 45 days

after the application is filed, or 40 days after the petition is filed,

as the case may be. We also propose that abandonment applicants and

petitioners be required to file draft Federal Register notices that the

Board might use to announce the filing. Under our proposal, there would

be no further Federal Register publication if and when the application

or petition is granted.

We propose no change for the publication of Federal Register

notices for the procedural timing of abandonments covered by the class

exemption embraced in subpart F. We are, however, exploring the

possibility of proposing a new class exemption, or broadening the

existing class exemption, and would welcome either general or specific

public suggestions on whether and how to do so. Comments on this issue

may be filed in this proceeding or by a separate request for new rules

relating to the class exemption. We anticipate that any suggested

changes to the class exemption proposed by participants in this

proceeding would be the subject of further public comment before the

adoption of any final substantive changes to the class exemption.

3. System Diagram Maps

The new law retains the requirement that rail carriers prepare,

file, and amend, as appropriate, system diagram maps that identify

lines that are, or soon will be, the subject of an abandonment

application. We are proposing several changes to part 1152 regarding

the system diagram maps intended to eliminate unnecessary regulatory

and paperwork burdens. First, because of the potential burden on small

carriers related to preparing and filing these maps, we propose to

require only Class I and Class II railroads to prepare and file them.

Second, in lieu of the annual filing of these maps, which is now

required, we are proposing a one-time filing of a complete and current

set of maps within 60 days of the effective date of these regulations.

While the railroad would continue to have to revise its maps when

changing the category of its lines, we propose generally to leave it to

the carrier to determine when changes have been extensive enough to

warrant the filing of a new, completely updated system diagram map. We

would, however, retain the discretion to require a carrier to file an

updated system diagram map if that became necessary (i.e., because of a

need to have a clear, usable map available for public planning

purposes). Third, we propose to require only three (instead of six)

copies whenever a system diagram map or an update is filed.

We also propose to reject an abandonment application of a Class I

or Class II railroad for a line that has not been identified on a

system diagram map in category 1 (all lines or portions of lines which

the carrier anticipates will be the subject of an abandonment or

discontinuance application to be filed within the 3-year period

following the date upon which the diagram, or any amended diagram, is

filed with the Board) for at least 30 days. New section 10903 no longer

prohibits the grant of an abandonment application for a line that has

not been identified in category 1 for at least 4 months and where the

abandonment faces significant opposition, but we believe that

Congressional retention of the system diagram map requirement indicates

a desire on the part of the Congress to provide some time for advance

planning by shippers and state and local governments in the face of

impending abandonments. We believe that a period of 30 days for

identification on a system diagram map in category 1 would be adequate

to meet planning needs.

4. Summary Application

Because we are proposing one uniform, streamlined process for all

applications, we propose to delete the ``Summary Application''

provisions.

5. Abandonment Procedures for Bankrupt Railroads

Because our proposed streamlined process and regulations would pare

back the filing requirements for all applications, we see no need for

the separate procedures in subpart E for bankrupt railroads. Therefore,

we propose to delete subpart E. We do propose, however, to include as

special provisions for bankrupt railroads in the general abandonment

procedures the requirements that abandonment applications filed by

bankrupt railroads, and protests or other public responses to the

applications, be filed with the bankruptcy court; that Board decisions

or reports on abandonment applications by bankrupt railroads be filed

with the bankruptcy court; and that special processing schedules would

be established to meet court deadlines, so long as a reasonable period

of time is allowed to obtain public responses and build a record in an

abandonment application by a bankrupt railroad.

6. Due Dates for Filing Public Use Requests and Trail Use Requests

Our proposals for filing of public use and trail use requests

reflect our interest in compiling a full record for disposition as

early as possible. In abandonment applications, we are proposing that

trail use requests and public use requests be filed at the same time as

protests and other written comments (within 45 days after the

application is filed). A railroad applicant would then be required to

respond regarding willingness to negotiate for trail use within 15 days

(or within 60 days after the application is filed). For abandonments

covered by the class exemption for out-of-service lines, we propose to

continue to require trail use/rail banking requests to be filed within

10 days after Federal Register publication of the exemption and public

use requests to be filed within 20 days after Federal Register

publication. For petitions for individual exemption, we propose to

require that trail use/rail banking requests and public use requests be

filed within 20 days after Federal Register publication of the notice

of the filing of the petition (40 days from the filing for the

petition). For both class exemptions and petitions for exemptions, we

propose to require the rail carrier to respond to trail use/rail

banking requests within 10 days after the request is filed.

7. Notice of Consummation

Although the practice was never codified, until 1984 the ICC

required a railroad to send the agency a letter confirming that it had

consummated, or fully exercised, an abandonment within 1 year after the

abandonment was authorized.3 Since then, some carriers have

continued to send in these letters. Moreover, the courts have

considered these letters in determining whether a line is still part of

the interstate rail network, and thus available for trail use under 16

U.S.C. 1247(d), or public use under former 49 U.S.C. 10906 (now 49

U.S.C. 10905).

\3\ An ICC (and now Board) decision authorizing abandonment is

not a compulsory order, but rather permissive authority that the

railroad may or may not decide to exercise. The railroad may, in

fact, resume operations on a line that has been authorized for

abandonment, and thereby retain that line in common carrier service

without further approval from us.

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In recent years, an increasing amount of ICC staff resources have

been devoted to determining whether or not a

[[Page 11178]]

railroad's actions demonstrated an intent to consummate an abandonment.

There also have been a significant number of court challenges involving

this issue, particularly by landowners alleging that the ICC had lost

jurisdiction over the property by the time a trail condition was

imposed.

To help clarify the consummation issue, conserve the Board's

limited resources, and be fair to landowners, trail groups, the

railroads, and the public, we propose to include in our new rules a

requirement that carriers file with the Board a notice of consummation,

once they intend to fully abandon the line (i.e., to discontinue

operations, salvage the track, and intend that the property be removed

from the interstate rail network). We have not proposed a deadline for

filing, however, because carriers may want to hold open the possibility

that new shippers will seek rail service or that the right-of-way could

be used as a trail, subject to rail banking. Nor have we proposed a

penalty for not filing notices of consummation. But under our proposal,

notices that are filed would be deemed conclusive on the point of

consummation if there are no legal or regulatory barriers to

consummation (i.e., outstanding conditions). If no notice of

consummation of abandonment has been filed, we would continue to look

at the other facts and circumstances to determine if consummation of

the abandonment had occurred.

8. Certificates of Abandonment

The new law does not appear to require that ``certificates'' be

issued when abandonment applications are granted. As a result, we

propose to dispense with the issuance of certificates and will instead

simply issue ``decisions granting'' an application. Our proposed rules,

however, continue to refer to ``Certificates of Interim Trail Use or

Abandonment'' in the trail use context in part to distinguish an

application proceeding from an exemption proceeding. Public comments

are welcome on whether we can or should similarly dispense with use of

the ``certificate'' label in that context.

9. Contents of the Application

As previously noted, we propose to require applicants to submit

their entire case as part of the application. Applicants would have to

include all relevant workpapers and supporting documents with each

application. We are, however, also proposing significant reforms

regarding application data requirements, as explained below.

a. Service Data

We are proposing to streamline the requirements for abandonment

applications by excluding all branch line (line proposed for

abandonment) service data for time periods prior to the Base Year

period, with the exception of data on changes in train service. The

current regulations require data for the 2 preceding calendar years and

that portion of the current calendar year for which data are available.

This change had been proposed by the ICC in a notice of proposed

rulemaking in Abandonment Proceedings: Elimination of the Revenue and

Cost Data for All Years Prior to the Base Year Period, Ex Parte No. 274

(Sub-No. 26) (ICC served Nov. 9, 1992), to reduce the reporting burden

on the carriers. Favorable comments were received but a final rule was

never issued. We propose to incorporate this change here for inclusion

in final Board regulations. The revised regulations, if adopted, would

not include any data for periods prior to the Base Year, except as

noted above.

We are also proposing changes to the service data required to be

provided in three specific areas. First, the carload data on the line

would have to show only the total carloads for each commodity group.

Second, data pertaining to overhead or bridge traffic would have to be

included only if the serving carrier will not retain this traffic after

approval of the abandonment. Finally, only changes in train service in

the last 2 years (instead of the last 5 years) would need to be

discussed.

b. Financial Data

We also propose to exclude computations for the revenue and cost

data developed for the branch line for the prior 2 calendar years and

any portion of the current year. Revenue and cost data would be

computed only for the Base Year, Forecast Year, and Subsidy Year. These

changes also had been proposed in the ICC's rulemaking in Ex Parte No.

274 (Sub-No. 26).

We also propose to delete the requirements that the impact of the

abandonment on the carrier's net railway operating income (NROI) for

the past 2 calendar years be developed, and that the impact on the NROI

of other carriers operated under common control of the abandoning

railroad be submitted. In addition, we propose to delete the

requirement that the railroad's balance sheet and income statements be

filed.

c. Other Application Changes

We propose to delete the requirements that the carrier identify in

detail the sources of alternate transportation available and describe

its efforts to solicit traffic on the line. Instead, we would require

only a general description of alternative transportation sources. We do

not believe that it is the responsibility of the carrier to identify

all of the options available to the shippers on the line. Most, if not

all, of these are already known and/or used by the shippers. Moreover,

the carrier would no longer be required to describe its efforts to

solicit traffic on the branch line in every case. Rather the carrier

could provide a description of its efforts if it believes that the

information would aid its case regarding potential increases in traffic

claimed by protestants or regarding claims of deliberate downgrading.

10. Offers of Financial Assistance

In addition to the time limits previously discussed, new section

10904 contains other changes for handling offers of financial

assistance. To begin the negotiation process now, we need only find

that the offeror is a financially responsible person, and we propose to

revise our rules accordingly. Under new section 10904, the Board has 30

days, rather than 60 days as before, from the date requested to issue a

decision establishing the conditions and amount of compensation for the

purchase or subsidy of the line. To meet the new deadline, we propose

to require the requesting party to submit its case in chief at the time

it makes its request and to serve the other party(ies) with a copy by

overnight mail. The other party(ies) would have 5 days from the date of

filing to file a reply. As before, our rules would automatically stay

the effective date (or revoke as necessary for a class exemption) of

the underlying abandonment decision. The rules would also continue to

provide that, if a request to set terms and conditions is not made to

the Board, a decision making the underlying abandonment approval (or

exemption) effective would be served within 10 days of the due date for

making the request.

New section 10904 also contains an important limit on the Board's

involvement with financial assistance in the form of an operating

subsidy. The statute now places a 1-year limit on subsidies imposed by

the Board, unless otherwise mutually agreed by the parties. As a

result, under our proposed rules, subsidy agreements imposed by the

Board would end after 1 year. Beyond this period any subsidy would

[[Page 11179]]

be strictly a contractual agreement between the carrier and the

subsidizer without the involvement of the Board.

Also regarding subsidies, we propose that the rules continue to

provide for interim financial status reports, as presently included in

the abandonment regulations. However, with certain exceptions, the

subsidizer's final responsibility would be limited to a maximum of 15%

over the agreed-to amount of the operating subsidy. The exceptions

would be: (1) If the subsidizer is notified of a higher amount within

the first 10 months of the agreement; or (2) the increase results from

an expense that has been preapproved by the subsidizer. We believe that

limiting potential liability in this fashion would provide needed

certainty for a party that wishes to subsidize operation of a line

approved for abandonment.

11. Return on Investment

Past experience with the rules for establishing return on

investment has resulted in the identification of several problem areas.

To address these problems, we are proposing changes regarding the

determination of the net liquidation value (NLV) of road properties on

the branch line, a component used in calculating return on investment.

These changes involve the inclusion of assets with negative net salvage

values, adjustments to right-of-way land values, and the bases used to

value right-of-way land.

a. Negative Salvage Values

There are instances where the cost to remove and dismantle a

particular asset on the branch line is higher than its resale value.

This occurs most frequently with bridges where the cost of removal

exceeds the market value of the salvaged materials. The Board proposes

that these assets be included if the asset would actually be removed

for whatever reason. For example, as a result of an abandonment

approval, municipal zoning requirements or the land use regulations of

a state or other governmental agency may require that a structure be

removed or torn down. This is the type of situation where the inclusion

of a negative net salvage value is proper. Another instance where

inclusion might be appropriate would be when the carrier decides on its

own to dismantle the structure even though it is not required to do so.

b. Adjustments to Land Values

In abandonment proceedings, land values are often reduced below

their fair market value. This reduction results from imputed real

estate commissions, selling expenses, or discounting the present value

of the land due to a projected sell-off period of 1 or more years. In

past ICC cases, there has oftentimes been a lack of support for these

types of reductions to the land value. Accordingly, our proposed

regulations emphasize the need for parties adequately to support and

explain any adjustments. Without the necessary support and explanation,

we will reject these adjustments.

c. Bases for Valuing Land

There are several methodologies acceptable for appraising right-of-

way land acreage. The methodology most frequently used is the ``across-

the-fence'' (ATF) method. This procedure estimates the values of the

surrounding land parcels using recent comparable sales, and then

adjusts them to reflect the physical and economic characteristics of

the specific parcels appraised.

In the past, parties have sometimes failed to support the

application of unadjusted ATF values to value railroad rights-of-way.

Differing physical characteristics such as elevation, grading and

drainage would warrant some adjustment to the ATF value. Therefore, we

propose, at a minimum, that some explanation be given as to why no

adjustment is necessary. Conversely, some parties have made adjustments

to the ATF value to arrive at right-of-way values without explaining

the nature of the adjustments. We propose to require justification for

the use of either unadjusted or adjusted ATF values for land acreage on

the railroad right-of-way.

12. Holding Gains and Losses

Holding gains and losses are computed for freight cars,

locomotives, and road property accounts. Currently, parties may

determine the holding gain or loss for the particular type of asset or

parties may use the Gross National Product (GNP) Implicit Price

Deflator rate. The GNP deflator is published by the U.S. Department of

Commerce, Bureau of Economic Analysis (Commerce).

In 1991, Commerce introduced a comprehensive revision of the

national income and product accounts, including a shift to the use of

the Gross Domestic Product (GDP), rather than the GNP, as the primary

measure of production. The GDP is similar to the GNP, but covers only

goods and services produced in the United States. The GDP is generally

regarded as a better indicator of the performance of this country's

economy.

We propose to include the GDP deflator as the alternate basis of

estimating the holding gain or loss in rail abandonment and subsidy

proceedings in our new rules. This would bring our rules in line with

the current measures used at Commerce, which has concluded that the GDP

is ``the appropriate measure'' for most short-term monitoring of the

U.S. economy.

13. Appendix Listing of Carriers and AB Numbers

We propose to delete the Appendix to part 1152 that lists carriers

and their assigned AB numbers. We preliminarily conclude that the list

serves no useful purpose. Interested persons could instead contact the

Board's Office of the Secretary if they have a need to ascertain a

particular carrier's assigned AB number.

Small Entities

The Board certifies that these regulations, if adopted, would not

have a significant economic effect on a substantial number of small

entities. The Board seeks comment on whether there would be effects on

small entities that should be considered. If comments provide

information that there would be significant effects on small entities,

the Board will prepare a regulatory flexibility analysis before

adopting final regulations.

Environmental Finding

This action will not significantly affect either the quality of the

human environment or the conservation of energy resources.

List of Subjects

49 CFR Part 1105

Environmental impact statements, Reporting and recordkeeping

requirements.

49 CFR Part 1152

Administrative practice and procedure, Conservation, Environmental

protection, National forests, National parks, National trails system,

Public lands-grants, Public lands-rights-of-way, Railroads, Recreation

and recreation areas, Reporting and recordkeeping requirements.

Decided: March 13, 1996.

By the Board, Chairman Morgan, Vice Chairman Simmons, and

Commissioner Owen. Vice Chairman Simmons commented with a separate

expression.

Vernon A. Williams,

Secretary

[FR Doc. 96-6546 Filed 3-18-96; 8:45 am]

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