Commuter Rail Service Continuation Subsidies and Discontinuance Notices

DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

49 CFR Part 1157

[STB Ex Parte No. 563]

Commuter Rail Service Continuation Subsidies and Discontinuance

Notices

AGENCY: Surface Transportation Board.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Surface Transportation Board (Board) is proposing to

remove from the Code of Federal Regulations regulations concerning

subsidies for the continuation of commuter rail service and notices of

the discontinuance of commuter rail service.

DATES: Comments are due on July 14, 1997.

FOR FURTHER INFORMATION CONTACT: Beryl Gordon, (202) 565-1600. [TDD for

the hearing impaired: (202) 565-1695.]

SUPPLEMENTARY INFORMATION: Effective January 1, 1996, the ICC

Termination Act of 1995, Pub. L. No. 104-88, 109 Stat. 803 (ICCTA),

abolished the Interstate Commerce Commission (ICC) and established the

Board. Section 204(a) of the ICCTA provides that ``[t]he Board shall

promptly rescind all regulations established by the [ICC] that are

based on provisions of law repealed and not substantively reenacted by

this Act.''

It appears that some of the regulations at 49 CFR part 1157 are

based on repealed statutes. On the other hand, statutes outside the

ICCTA refer to and hence may require the retention in substance of part

1157. We are instituting this proceeding to determine whether these

regulations may be eliminated, or whether they have continuing validity

and must be retained.

Part 1157 deals with the determination of commuter rail

continuation subsidies for the Consolidated Rail Corporation (Conrail)

(subpart A) and notices of the discontinuance of commuter rail service

by Amtrak Commuter Services Corporation (Amtrak Commuter) (subpart B).

The subpart A regulations are based in part on former 49 U.S.C. 10362,

which, together with former section 10361, pertained to the Rail

Services Planning Office (RSPO) of the former ICC.1 Both

section 10361 and section 10362 were repealed by the ICCTA.2

Moreover, the ICCTA removed the requirement in 45 U.S.C. 744(e) that

RSPO issue regulations for rail passenger subsidies for Conrail. See

section 327(3) of the ICCTA. Finally, under 49 U.S.C. 10501(c)(2) of

the ICCTA, with certain exceptions not relevant here,3 ``the

Board does not have jurisdiction under this part over mass

transportation provided by a local governmental authority.''

4 As described infra, however, the subpart A regulations are

referred to in an Amtrak Commuter statute that is still in effect.

Accordingly, we seek comment on whether subpart A can be eliminated.

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\1\ These and other statutes will be discussed in greater

detail, infra.

\2\ Besides former 49 U.S.C. 10362, the regulations in part

1157, subpart A give for their statutory authority 49 U.S.C. 10321

and 5 U.S.C. 559. Section 10321, dealing with the ICC's general

authority, has been carried over to 49 U.S.C. 721, while 5 U.S.C.

559 remains part of the Administrative Procedure Act.

\3\ The exceptions, listed in section 10501(c)(3)(A), make

safety, employee representation for collective bargaining, and other

employee-related matters subject to applicable federal laws. Also,

under section 10501(c)(3)(B), the Board has jurisdiction over

transportation by local transportation authorities relating to use

of terminal facilities (section 11102) and switch connections and

tracks (section 11103).

\4\ Under former 49 U.S.C. 10504(b)(2), the ICC did not have

jurisdiction over mass transportation provided by a local

governmental authority if the fares, or the authority to apply to

the Commission for changes in those fares, were subject to the

approval of the Governor of the state in which the transportation

was provided. The ICCTA broadened this exemption, and the Board

currently does not have jurisdiction whether or not the Governor can

approve a fare. ``This provision * * * changes the statement of

agency jurisdiction to reflect curtailment of regulatory

jurisdiction in areas such as passenger transportation. * * *

(A)lthough regulation of passenger transportation is generally

eliminated, public transportation authorities * * * may invoke the

terminal area and reciprocal switching access remedies of section

11102 and 11103.'' See H. R. Conf. Rep. No. 422, 104th Cong., 1st

Sess. 167 (1995). See also, Commuter Rail Division of the Regional

Transportation Authority of Northeast Illinois, D/B/A Metra--

Exemption-- Tariff Filing Requirements, Docket No. 41506 (STB,

served Mar. 29, 1996).

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The regulations in part 1157, subpart B are based on 49 U.S.C.

24505(e)(2).5 As noted, while the ICCTA removed references

in 45 U.S.C. 744(e) to regulations issued by RSPO, section 24505(e)(2)

still refers to RSPO prescribing regulations for Amtrak Commuter

discontinuance notices. As indicated, however, under section

10501(c)(2) the Board does not have jurisdiction over local

governmental authorities providing mass transportation. Additionally,

neither the Board (nor the ICC before it) has jurisdiction to regulate

any of Amtrak's service. We also seek comment on whether the subpart B

regulations can be eliminated.

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\5\ The statutory authority given for the regulations in part

1157, subpart B is ``49 U.S.C. 504(d)(2)'' while the text of the

regulations cites ``45 U.S.C. 504(d)(2).'' Neither of these

references is currently correct. Section 1137 of the Northeast Rail

Service Act of 1981, discussed infra, contains a section 504(d)(2)

which was originally codified at 45 U.S.C. 584(d)(2). Section 584

was repealed by Pub. L. No. 103-272, section 7(b), July 5, 1994, 108

Stat. 745, and recodified at 49 U.S.C. 24505(e)(2) as part of a

general restructuring of the United States Code ``(t)o restate the

laws related to transportation in one comprehensive title * * *.''

H.R. Rep. No. 180, 103d Cong., 2d Sess. 3 (1994), reprinted in 1994

U.S.C.C.A.N. 818, 820.

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Background

To assist parties in commenting on whether part 1157 should be

retained, we will briefly describe the rather complex statutory setting

for the regulations.

The Rail Passenger Service Act of 1970, Pub. L. No. 91-518, 84

Stat. 1327 (1970) (Amtrak Act), created the National Railroad Passenger

Corporation, known as Amtrak, a for-profit corporation. See 49 U.S.C.

24301 et seq.6 Railroads that entered into contracts with

Amtrak were relieved of their duties to provide intercity rail

passenger service.

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\6\ The Amtrak Act was originally codified at 45 U.S.C. 501-

566.

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The Regional Rail Reorganization Act of 1973, Pub. L. No. 93-236,

87 Stat. 985, 45 U.S.C. 701 et seq. (3R Act) created Conrail as a for-

profit corporation to reorganize the bankrupt rail services in the

Northeast and Midwest. Conrail was required by the 3R Act to continue

providing rail service if states or local transportation authorities

made payments to subsidize unprofitable operations. Section 304. The 3R

Act also created RSPO, which was authorized to issue standards for

defining accounting terms used in section 304. Section

205(d).7

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\7\ Under the eventual statutory codification, RSPO was

established as ``an office in the Interstate Commerce Commission.''

Former 49 U.S.C. 10361. In resolving the issue of whether final

orders or regulations of RSPO were to be considered orders or

regulations of the ICC, the court held that ``(a)lthough Congress

gave to the RSPO final administrative responsibility for certain

determinations, we conclude that the RSPO is sufficiently part of

the ICC so that its orders are to be considered orders of the ICC

for purposes of the Hobbs Act.'' Southeastern Pennsylvania Transp.

Auth. v. I.C.C., 644 F.2d 238, 240, n.3 (3rd Cir. 1981).

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Subsequently, Congress enacted the Railroad Revitalization and

Regulatory Reform Act of 1976 (4R Act), which amended portions of the

3R Act and also added new sections. The 4R Act established, inter alia,

a program of Federal financial assistance for the continuation of

certain rail commuter passenger services in the Midwest and

[[Page 32069]]

Northeast regions. Section 304(e) of the 4R Act (now codified at 45

U.S.C. 744(e)) amended the 3R Act by explicitly adding a section

pertaining to rail passenger service. Under this provision, Conrail was

to continue providing rail passenger service if a state or local

transportation authority offered a subsidy to pay for the unprofitable

service.

Of significance to this proceeding, section 309 of the 4R Act

amended section 205(d) of the 3R Act (49 U.S.C. 10362) to require RSPO

to develop standards for the computation of subsidies for the

continuation of these commuter services.8 RSPO issued the

regulations on August 3, 1976, 41 FR 32546.9 These standards

were originally codified at 49 CFR part 1127 and are now found at 49

CFR part 1157, subpart A (subsidy standards).

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\8\ The RSPO subsidy regulations are also referenced in 45

U.S.C. 744(e).

\9\ RSPO originally published a notice of proposed rulemaking

(NPR) on February 20, 1976, in Standards for the Computation of

Commuter Rail Passenger Service Subsidies, Ex Parte No. 293 (Sub-No.

8). On May 16, 1976, it published a further NPR (41 FR 20104), and

on June 30, 1976, it published a second NPR (41 FR 26936).

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Next, Congress enacted the Northeast Rail Service Act of 1981, Pub.

L. 97-35, 95 Stat. 643 (NERSA).10 In the context of part

1157, NERSA made three important changes.

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\10\ ``NERSA * * * was designed essentially to extricate

Conrail from its fiscally draining commitment to commuter services

so that it could concentrate on freight services, while ensuring the

orderly transfer of commuter services to new, viable providers.''

Conrail v. Metropolitan Transit Authority, 1996 U.S. Dist. Lexis

3519, at *4 (S.D.N.Y. 1996).

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First, under section 1136 of NERSA, codified at 45 U.S.C. 744a,

Conrail was relieved on January 1, 1983, of any legal obligation to

provide commuter service. Despite this change, however, 45 U.S.C. 744

was retained. Section 744(e), as noted, required Conrail to provide

rail passenger service if a subsidy is paid under regulations issued by

RSPO.

Second, section 1137 of NERSA amended the Amtrak Act and chartered

Amtrak Commuter. Section 1137 was originally codified at 45 U.S.C. 581-

91 and is now codified at 49 U.S.C. 24501-06. Under section

24505(a)(1), Amtrak Commuter is required to provide the commuter rail

passenger service that Conrail was obligated to provide under the 3R

and 4R Acts. Moreover, under section 24505(a)(2), Amtrak Commuter may

provide passenger service if a commuter authority pays the avoidable

costs plus a reasonable return on value less the revenues from the

transportation. RSPO was to issue the regulations for such

payments.11

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\11\ Section 24505(b)(1) provides that ``(a) commuter authority

making an offer under subsection (a)(2) of this section shall * * *

(B) make the offer according to regulations the Rail Services

Planning Office prescribes under section 10362(b) (5)(A) and (6) of

this title.''

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Finally, also under section 1137 and now codified at 49 U.S.C.

24505(e), Amtrak Commuter may discontinue rail passenger service on 60

days' notice if a commuter authority does not offer a subsidy or a

subsidy payment is not paid when due. Under section 24505(e)(2) RSPO

was directed to prescribe regulations for ``the necessary contents of

the notice required under this subsection.''

In response to NERSA, RSPO issued an NPR in Ex Parte No. 293 (Sub-

No. 8), that was published in the Federal Register on September 9, 1982

(47 FR 39700). RSPO proposed to divide the regulations at 49 CFR part

1127 (which then contained the subsidy standards) into two sections:

subpart A would contain the existing subsidy standards while subpart B

would comprise the new discontinuance notice procedures.

While RSPO proposed new regulations under subpart B for

discontinuance notices, it did not propose any changes to the subsidy

standards. Instead, the NPR implicitly proposed to adopt the subsidy

standards for use in Amtrak Commuter cases: ``After January 1, 1983,

[Amtrak Commuter] is required to take over the commuter operations

currently provided by Conrail if a commuter authority offers a subsidy

payment which complies with RSPO's Standards * * * .'' (Emphasis

supplied; citation omitted.) Final rules were adopted in a notice

published in the Federal Register on January 5, 1983 (48 FR 413).

The ICCTA was the final legislative action applicable to these

regulations. As noted, under 49 U.S.C. 10501(c)(2), ``the Board does

not have jurisdiction under this part over mass transportation provided

by a local governmental authority.'' (Emphasis supplied.) Moreover,

under the ICCTA, sections 10361 and 10362 concerning RSPO were

repealed.

As indicated, although Conrail, under 45 U.S.C. 744a, is no longer

obligated to provide commuter passenger service, 45 U.S.C. 744(e) has

not been repealed. The ICCTA did, however, eliminate from section

744(e) references to subsidy standards set by RSPO. For example, before

the ICCTA, section 744(e)(4)(C) concerned a public body that ``offers a

rail service continuation payment, pursuant to subsection (c)(2)(A) of

this section and regulations issued by (RSPO) pursuant to section

205(d)(5) of this Act . * * *'' (Emphasis supplied.) The ICCTA removed

the language pertaining to regulations issued by RSPO, and now the

statute simply describes a public body that ``offers a rail service

continuation payment, pursuant to subsection (c)(2)(A) of this section

. * * *''

On the other hand, the ICCTA did not delete references in the

Amtrak Commuter statute to RSPO regulations. Section 24505(b)(2) still

states that RSPO ``may revise and update the [subsidy] regulations'',

and section 24505(e)(2) still requires RSPO to prescribe the notice of

discontinuance regulations.

Part 1157 Regulations

The regulations in part 1157, subpart A, pertaining to the

determination of commuter rail service subsidies, are detailed and

long. The subsidy standards prescribe various responsibilities for

RSPO. Under Sec. 1157.3(d)(4), upon request of either party, RSPO will

mediate disputes about the subsidy agreement, the subsidy standards,

and certain plans. Under Sec. 1157.4, parties desiring an

interpretation of the standards can file a written petition; RSPO will

issue an interpretation unless it determines that the subsidy standards

need to be amended, in which case it will institute a rulemaking

proceeding. Under Sec. 1157.7(d), in an impasse over joint special

studies, either party may submit the dispute to RSPO for resolution.

Finally, under Sec. 1157.3(f), the subsidized carrier is to submit

financial status reports to RSPO.

The regulations at 49 CFR part 1157, subpart B, implement the

statutory requirement of section 24505(e) that the contents of an

Amtrak Commuter discontinuance notice be prescribed. The regulations

repeat the statutory criteria that Amtrak Commuter can discontinue

service on 60 days' notice if it is not offered a subsidy or a subsidy

is not paid when due. The regulations prescribe the form and content of

the notice and method of posting. They also require that the notice be

served on the subsidizer, governor, designated state agency, RSPO, and

Amtrak.

Discussion and Conclusions

The changes made by the ICCTA require us to reexamine part 1157. We

note that these regulations were issued by an office (RSPO) that has

been abolished. They provide, moreover, for continuing responsibilities

by that office, particularly in subpart A (mediation, issuing

interpretations). Thus, at a minimum, the regulations

[[Page 32070]]

must be modified to remove the references to, and continuing duties of,

RSPO. In subpart B, RSPO's only function was to receive a copy of the

notice, and this responsibility can be easily eliminated.

The Federal Circuit has recently held:

``When a statute has been repealed, the regulations based on

that statute automatically lose their vitality. Regulations do not

maintain an independent life, defeating the statutory change.''

Aerolineas Argentinas v. U.S., 77 F.3d 1564, 1575 (Fed. Cir. 1996).

The broader issue, however, is whether the remaining regulations have a

validity independent of the existence of RSPO and the jurisdiction of

the Board. While the ICCTA deleted the RSPO references at 45 U.S.C.

744(e) pertaining to Conrail, 49 U.S.C. 24505(b) still incorporates

RSPO subsidy regulations in the requirements for an offer to provide

subsidy to Amtrak Commuter. We also note that under 49 U.S.C.

10501(c)(2) the Board does not have jurisdiction over mass

transportation provided by a local government authority. On its face,

this restriction appears to eliminate our authority to modify, or

resolve disputes under, the subsidy and notice

regulations.12 Nonetheless, it can be argued that there is

still a need for the regulations, which, because of their utility, are

``frozen in time'' (at least until further statutory changes are made).

We seek comment on these issues.

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\12\ Under section 10501(c)(1)(A) (i) and (ii), the term ``local

governmental authority'' has two meanings. First, it takes the

definition of 49 U.S.C. 5302(a)(6): State political subdivision, an

authority of a state or political subdivision, an Indian tribe, or a

public corporation, commission or board established under state law.

It also ``includes a person or entity that contracts with the local

governmental authority . * * *'' Section 10501(c)(1)(A)(ii). Under

section 10501(c)(1)(B), ``Mass transportation'' means the rail

services described in section 5302(a)(7): transportation providing

regular and continuing general or specific public transportation.

By comparison, section 24501(a)(2) states that Amtrak Commuter

``provides by contract commuter rail passenger transportation for a

commuter authority. * * *'' The terms ``commuter authority'' and

``commuter rail passenger transportation'' are similar to ``local

governmental authority'' and ``mass transportation''. Under 49

U.S.C. 24102(4), commuter authority is defined as ``a State, local,

or regional entity established to provide, or make a contract

providing for, commuter rail passenger transportation.'' Under

section 24102(5), commuter rail passenger transportation is ``short-

haul rail passenger transportation in metropolitan and suburban

areas usually having reduced fare, multiple-ride, and commuter

tickets and morning and evening peak period operations.'' Thus,

under either definition, the Board appears to have no jurisdiction

over such activities.

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The Board preliminarily concludes that the removal of the rule, if

adopted, would not have a significant effect on a substantial number of

small entities. The rule removal will lessen the filing requirements of

rail passenger carriers. Any harm to passengers that are considered

small entities would be minimal and, in any event, are required by law.

The Board, however, seeks comments on whether there would be effects on

small entities that should be considered.

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 1157

Railroads, Reporting and recordkeeping requirements, Uniform System

of Accounts.

Decided: June 2, 1997.

By the Board, Chairman Morgan and Vice Chairman Owen.

Vernon A. Williams,

Secretary.

PART 1157--[REMOVED]

For the reasons set forth in the preamble and under the authority

of 49 U.S.C. 721(a), title 49, chapter X of the Code of Federal

Regulations is proposed to be amended by removing part 1157.

[FR Doc. 97-15266 Filed 6-11-97; 8:45 am]

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