Arbitration of Certain Disputes Subject to the Statutory Jurisdiction of the Surface Transportation Board

DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

49 CFR Parts 1002 and 1108

[STB Ex Parte No. 560]

Arbitration of Certain Disputes Subject to the Statutory

Jurisdiction of the Surface Transportation Board

AGENCY: Surface Transportation Board.

ACTION: Final rules.

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SUMMARY: The Surface Transportation Board (Board) adopts rules

providing a means for the binding, voluntary arbitration of certain

disputes subject to the statutory jurisdiction of the Board.

EFFECTIVE DATE: October 2, 1997.

FOR FURTHER INFORMATION CONTACT: Ellen Hanson, (202) 565-1558. (TDD for

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

SUPPLEMENTARY INFORMATION: The Railroad-Shipper Transportation Advisory

Council (RSTAC) recommended that the Board adopt rules providing for

informal dispute resolution through arbitration. In a notice of

proposed rulemaking published March 26, 1997 (62 FR 14385), we proposed

rules along the lines of those recommended by the RSTAC. We have

received comments on the proposed rules from various shipper, carrier,

and other interests, offering suggestions to enhance, modify, or

clarify the proposed rules. We have incorporated many, but not all, of

their suggestions.

This arbitration is designed for the resolution of specific

disputes between specific parties involving the payment of money or

involving rates or practices related to rail transportation or service

that is subject to the statutory jurisdiction of the Board. We believe

that this arbitration alternative will save costs and reduce litigation

burdens on parties to disputes that might otherwise have to be brought

to the Board for formal resolution. It will enable the parties to

resolve those disputes themselves informally, with only limited Board

involvement.

Additional information is contained in the Board's decision served

on September 2, 1997. To purchase a copy of the decision, write to,

call, or pick up in person from DC New & Data, Inc., Room 210, 1925 K

St. NW., Washington DC 20423, phone (202) 289-4357.

List of Subjects

49 CFR Part 1002

Administrative practice and procedure, User fees.

49 CFR Part 1008

Administrative practice and procedure, Railroads.

Decided: August 25, 1997.

By the Board, Chairman Morgan and Vice Chairman Owen.

Vernon A. Williams,

Secretary.

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 amended as follows:

PART 1002--FEES

1. The authority citation for part 1002 continues to read as

follows:

Authority: 5 U.S.C. 552(a)(4)(A) and 553; 31 U.S.C. 9701; and 49

U.S.C. 721(a).

2. Section 1002.2 is amended by adding a new paragraph (f)(87) to

read as follows:

Sec. 1002.2 Filing fees.

* * * * *

(f) * * *

(87) Arbitration of Certain Disputes Subject to the Statutory

Jurisdiction of the Surface Transportation Board under 49 CFR part

1108:

(i) Complaint.................................................. $75

(ii) Answer (per defendant), Unless Declining to Submit to Any

Arbitration................................................... $75

(iii) Third Party Complaint.................................... $75

(iv) Third Party Answer (per defendant), Unless Declining to

Submit to Any Arbitration..................................... $75

(v) Appeals of Arbitration Decisions or Petitions to Modify or

Vacate an Arbitration Award................................... $150

* * * * *

3. A new part 1108 is added to read as follows:

PART 1108--ARBITRATION OF CERTAIN DISPUTES SUBJECT TO THE STATUTORY

JURISDICTION OF THE SURFACE TRANSPORTATION BOARD

Sec.

1108.1 Definitions.

1108.2 Statement of purpose, organization, and jurisdiction.

1108.3 Matters subject to arbitration.

1108.4 Relief.

1108.5 Fees and costs.

1108.6 Arbitrators.

1108.7 Arbitration commencement procedures.

1108.8 Arbitration procedures.

1108.9 Decisions.

1108.10 Precedent.

1108.11 Enforcement and appeals.

1108.12 Additional matters.

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

Sec. 1108.1 Definitions.

(a) Arbitrator means an arbitrator appointed pursuant to these

provisions.

(b) ICC means the Interstate Commerce Commission.

(c) Interstate Commerce Act means the Interstate Commerce Act as

amended from time to time, including the amendments made by the ICC

Termination Act of 1995.

(d) RSTAC means the Rail-Shipper Transportation Advisory Council

established pursuant to 49 U.S.C. 726.

(e) STB means the Surface Transportation Board.

(f) Statutory jurisdiction means the jurisdiction conferred on the

STB by the Interstate Commerce Act, including jurisdiction over rail

transportation or services that have been exempted from regulation.

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

(a) These provisions are intended to provide a means for the

binding, voluntary arbitration of certain disputes subject to the

statutory jurisdiction of the STB, either between two or more railroads

subject to the jurisdiction of the STB or between any such railroad and

any other person.

(b) These procedures shall not be available to obtain the grant,

denial, stay or revocation of any license, authorization (e.g.,

construction, abandonment, purchase, trackage rights, merger, pooling)

or exemption, or to prescribe for the future any conduct, rules, or

results of general, industry-wide applicability. Nor are they available

for arbitration that is conducted pursuant to labor protective

conditions. These procedures are intended for the resolution of

specific disputes between specific parties involving the payment of

money or involving rates or practices related to rail transportation or

service subject to the statutory jurisdiction of the STB.

(c) The alternative means of dispute resolution provided for herein

are established pursuant to the authority of the STB to take such

actions as are necessary and appropriate to fulfill its jurisdictional

mandate and not pursuant to the Administrative Dispute Resolution Act,

5 U.S.C. 571, et seq.

(d) On January 1, 1996, the STB replaced the ICC. For purposes of

these procedures, it is immaterial whether an exemption from regulation

was granted by the ICC or the STB.

[[Page 46218]]

Sec. 1108.3 Matters subject to arbitration.

(a) Any controversy between two or more parties, subject to

resolution by the STB, and subject to the limitations in Sec. 1108.2

hereof, may be processed pursuant to the provisions of this Part 1108,

if all necessary parties voluntarily subject themselves to arbitration

under these provisions after notice as provided herein.

(b) Arbitration under these provisions is limited to matters over

which the STB has statutory jurisdiction and may include disputes

arising in connection with jurisdictional transportation, including

service being conducted pursuant to an exemption. An Arbitrator should

decline to accept, or to render a decision regarding, any dispute that

exceeds the STB's statutory jurisdiction. Such Arbitrator may resolve

any dispute properly before him/her in the manner and to the extent

provided herein, but only to the extent of and within the limits of the

STB's statutory jurisdiction. In so resolving any such dispute, the

Arbitrator will not be bound by any procedural rules or regulations

adopted by the STB for the resolution of similar disputes, except as

specifically provided in this part 1108; provided, however, that the

Arbitrator will be guided by the Interstate Commerce Act and by STB and

ICC precedent.

Sec. 1108.4. Relief.

(a) Subject to specification in the complaint, as provided in

Sec. 1108.7 herein, an Arbitrator may grant the following types of

relief:

(1) Monetary damages, to the extent available under the Interstate

Commerce Act, with interest at a reasonable rate to be specified by the

Arbitrator.

(2) Specific performance of statutory obligations (including the

prescription of reasonable rates), but for a period not to exceed 3

years from the effective date of the Arbitrator's award.

(b) A party may petition an Arbitrator to modify or vacate an

arbitral award in effect that directs future specific performance,

based on materially changed circumstances or the criteria for vacation

of an award contained in 9 U.S.C. 10.

(1) A petition to modify or vacate an award in effect should be

filed with the STB. The petition will be assigned to the Arbitrator

that rendered the award unless that Arbitrator is unavailable, in which

event the matter will be assigned to another Arbitrator.

(2) Any such award shall continue in effect pending disposition of

the request to modify or vacate. Any such request shall be handled as

expeditiously as practicable with due regard to providing an

opportunity for the presentation of the parties' views.

Sec. 1108.5 Fees and costs.

(a) Fees will be utilized to defray the costs of the STB in

administering this alternate dispute resolution program in accordance

with 31 U.S.C. 9701. The fees for filing a complaint, answer, third

party complaint, third party answer, appeals of arbitration decisions,

and petitions to modify or vacate an arbitration award will be as set

forth in 49 CFR 1002.2(f)(87). All fees are non-refundable except as

specifically provided and are due with the paying party's first filing

in any proceeding.

(b) The parties may agree among themselves who will bear the

expenses of arbitration, including compensation of the arbitrator.

Absent an agreement, each party will bear its own expenses, including,

without limitation, fees of experts or counsel. Absent an agreement,

the fees of the Arbitrator will be paid by the party or parties losing

an arbitration entirely. If no party loses an arbitration entirely (as

determined by the Arbitrator), the parties shall share equally (or pro

rata if more than two parties) the fees and expenses, if any, of the

Arbitrator, absent an agreement otherwise.

Sec. 1108.6 Arbitrators.

(a) Arbitration shall be conducted by an arbitrator (or panel of

arbitrators) selected, as provided herein, from a roster of persons

(other than active government officials) experienced in rail

transportation or economic issues similar to those capable of arising

before the STB. The initial roster of arbitrators shall be established

by the RSTAC in consultation with the Chairman of the STB, and shall

contain not fewer than 21 names. The roster shall thereafter be

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 initial roster

shall be published; thereafter the roster shall be available to the

public, upon request, at all times. For each arbitrator on the roster,

the roster shall disclose the level of the fee (or fee range) charged

by that arbitrator.

(b) The parties to a dispute may select an arbitrator (or panel of

arbitrators) and submit the name(s) (and, if not already on the roster

of arbitrators, the qualifications) of the agreed-upon person(s) in

writing to the Chairman of the STB. Any person(s) so designated who is

not already on the roster, if found to be qualified, will be added to

the roster and may be used as the arbitrator(s) for that dispute.

(c) If the parties cannot agree upon an arbitrator (or panel of

arbitrators), then each party shall, using the roster of arbitrators,

strike through the names of any arbitrators to whom they object, number

the remaining arbitrators on the list in order of preference, and

submit its marked roster to the Chairman of the STB. The Chairman will

then designate the arbitrator (or panel of arbitrators, if mutually

preferred by the parties) in order of the highest combined ranking of

all of the parties to the arbitration.

(d) The process of selecting an Arbitrator pursuant to this section

shall be conducted confidentially following the completion of the

Arbitration Commencement Procedures set forth in Sec. 1108.7 hereof.

(e) If, at any time during the arbitration process, a selected

Arbitrator becomes incapacitated, unwilling or unable to fulfill his/

her duties, or if both parties agree that the arbitrator should be

replaced, a replacement Arbitrator will be promptly selected under the

process set forth in paragraphs (b) and (c) of this section.

Sec. 1108.7 Arbitration commencement procedures.

(a) Each demand for arbitration shall be commenced with a written

complaint. Because arbitration under these procedures is both voluntary

and binding, the complaint must set forth in detail: the nature of the

dispute; the statutory basis of STB jurisdiction; a clear, separate

statement of each issue as to which arbitration is sought; and the

specific relief sought. Each complaint shall contain a sworn, notarized

verification, by a responsible official of the complaining party, that

the factual allegations contained in the complaint are true and

accurate. Each complaint must contain a statement that the complainant

is willing to arbitrate pursuant to these arbitration rules and be

bound by the result thereof in accordance with those rules, and must

contain a demand that the defendants likewise agree to arbitrate and be

so bound.

(b) The complaining party shall serve, by overnight mail or hand

delivery, a signed and dated original of the complaint on each

defendant (on a responsible official at his or her usual place of

business), and an original and two copies on the STB, accompanied by

the filing fee prescribed under Sec. 1108.5(a) and set forth in 49 CFR

1002.2(f)(87). Each complaint served on a defendant shall be

accompanied by a copy of this part 1108.

(c) Any defendant willing to enter into arbitration under these

rules must, within 30 days of the date of a

[[Page 46219]]

complaint, answer the complaint in writing. The answer must contain a

statement that the defendant is willing to arbitrate each arbitration

issue set forth in the complaint or specify which such issues the

defendant is willing to arbitrate. If the answer contains an agreement

to arbitrate some but not all of the arbitration issues in the

complaint, the complainant will have 10 days from the date of the

answer to advise the defendant and the STB in writing whether the

complainant is willing to arbitrate on that basis. Upon the agreement

of the parties to arbitrate, these rules will be deemed incorporated by

reference into the arbitration agreement.

(d) The answer of a party willing to arbitrate shall also contain

that party's specific admissions or denials of each factual allegation

contained in the complaint, affirmative defenses, and any counterclaims

or set-offs which the defendant wishes to assert against the

complainant. The right of a defendant to advance any counterclaims or

set-offs, and the capacity of an Arbitrator to entertain and render an

award with respect thereto, is subject to the same jurisdictional

limits as govern the complaint.

(e) A defendant's answer must be served on the complainant, other

parties, and the STB in the same manner as the complaint.

(f) A defendant willing to enter into arbitration under these

procedures only if it is able to obtain cross-relief against another

defendant or a non-party may serve an answer containing an agreement to

arbitrate that is conditioned upon the willingness of any such third

party to enter into arbitration as a third party defendant.

Simultaneously with the service of any such conditional answer, the

defendant making such answer shall serve a complaint and demand for

arbitration on the party whose presence that defendant deems to be

essential, such complaint and demand to be drawn and served in the same

manner as provided in paragraphs (a) and (b) of this section. A

defendant receiving such a complaint and demand for arbitration and

that is willing to so arbitrate shall respond in the same manner as

provided in paragraphs (c), (d), and (e) of this section.

(g) Upon receipt of a complaint and demand for arbitration served

by a complainant on a defendant, or by a defendant on a third-party

defendant, the STB promptly will notify the parties serving and

receiving such documents of any patent deficiencies, jurisdictional or

otherwise, which the STB deems fatal to the processing of the

complaint, and will suspend the timetable for processing the

arbitration until further notice. If the complainant is unwilling or

unable to remedy such deficiencies to the satisfaction of the STB

within such time as the STB may specify, the complaint shall be deemed

to be withdrawn without prejudice. Upon satisfaction that two or more

parties have unconditionally agreed to arbitrate under these

procedures, the STB will so notify the parties and commence procedures

for the selection of an Arbitrator.

(h) An agreement to arbitrate pursuant to these rules will be

deemed a contract to arbitrate, subject to limited review by the STB

pursuant to Sec. 1108.11(c), for the purpose of subjecting the

arbitration award to the provisions of 9 U.S.C. 9 (court enforcement of

an arbitration award), and 9 U.S.C. 10 (vacation of an arbitration

award by a court on certain limited grounds).

Sec. 1108.8 Arbitration procedures.

(a) The Arbitrator will establish rules, including timetables, for

each arbitration proceeding.

(1) The evidentiary process will be completed within 90 days from

the start date established by the arbitrator, and the arbitrator's

decision will be issued within 30 days from the close of the record.

The parties may agree to vary these timetables, however, subject to the

approval of the arbitrator. Matters handled through arbitration under

these rules are exempted from any applicable statutory time limits,

pursuant to 49 U.S.C. 10502.

(2) Discovery will be available only upon the agreement of the

parties.

(b) Evidence will be submitted under oath. Evidence may be

submitted in writing or orally, at the direction of the Arbitrator.

Hearings for the purpose of cross-examining witnesses will be permitted

at the sound discretion of the Arbitrator. The Arbitrator, at his/her

discretion, may require additional evidence.

(c) Subject to alteration by the Arbitrator or by agreement of the

parties in individual proceedings, as a general rule, where evidence is

submitted in written form, the complaining party will proceed first,

and the defendant will proceed next. The complainant will then be given

an opportunity to submit a reply. At the discretion of the Arbitrator,

argument may be submitted with each evidentiary filing or in the form

of a brief after the submission of all evidence. Page limits will be

set by each Arbitrator for all written submissions of other than an

evidentiary nature.

(d) Any written document, such as a common carrier rate schedule,

upon which a party relies should be submitted as part of that party's

proof, in whole or in relevant part. The Arbitrator will not be bound

by formal rules of evidence, but will avoid basing a decision entirely

or largely on unreliable proof.

(e) Where proof submitted to an Arbitrator addresses railroad

costs, such proof should be prepared in accordance with the standards

employed by the STB in ascertaining the costs at issue. Discovery

should be sufficient to enable parties to meet these standards.

(f) Where the Arbitrator is advised that any party to an

arbitration proceeding wishes to keep matters relating to the

arbitration confidential, the Arbitrator shall take such measures as

are reasonably necessary to ensure that such matters are treated

confidentially by the parties or their representatives and are not

disclosed by the Arbitrator to non-authorized persons. If the

Arbitrator regards any confidential submission as being essential to

his/her written decision, such information may be considered in the

decision, but the Arbitrator will make every effort to omit

confidential information from his/her written decision.

Sec. 1108.9 Decisions.

(a) Decisions of the Arbitrator shall be in writing and shall

contain findings of fact and conclusions. All such decisions shall be

served by the Arbitrator by hand delivery or overnight mail on the

parties. At the same time, the arbitrator shall notify the STB, in

writing, that a decision has been rendered.

(b) By agreeing to arbitrate pursuant to these procedures, each

party agrees that the decision and award of the Arbitrator shall be

binding and judicially enforceable in law and equity in any court of

appropriate jurisdiction, subject to a limited right of appeal to the

STB as provided below.

Sec. 1108.10 Precedent.

Decisions rendered by arbitrators pursuant to these procedures

shall have no precedential value.

Sec. 1108.11 Enforcement and appeals.

(a) An arbitration decision rendered pursuant to these procedures

may be appealed to the STB within 20 days of service of such decision.

Any such appeal shall be served by hand delivery or overnight mail on

the parties and on the STB, together with a copy of the arbitration

decision. Replies to such appeals may be filed within 20 days of the

filing of the appeal with the Board.

[[Page 46220]]

An appeal or a reply under this paragraph shall not exceed 20 pages in

length. The parties shall furnish to the STB an original and 10 copies

of appeals and replies filed pursuant to this section. The filing fee

for an appeal will be as set forth in 49 CFR 1002.2(f)(87).

(b) The filing of an appeal, as allowed in paragraph (a) of this

Sec. 1108.11, automatically will stay an arbitration decision pending

disposition of the appeal. The STB will decide any such appeal within

50 days after the appeal is filed. Such decision by the STB shall be

served in accordance with normal STB service procedures.

(c) The STB will review, and may vacate or amend, an arbitration

award, in whole or in part, only on the grounds that such award

(1) exceeds the STB's statutory jurisdiction; or

(2) does not take its essence from the Interstate Commerce Act.

(d) Effective arbitration decisions rendered pursuant to these

procedures, whether or not appealed to the STB, may only be enforced in

accordance with 9 U.S.C. 9 and vacated by a court in accordance with 9

U.S.C. 10, except that an STB decision vacating an arbitration award is

reviewable under the Hobbs Act, 28 U.S.C. 2321, 2342.

Sec. 1108.12 Additional matters.

Where an arbitration demand is filed by one or more complainants

against one or more defendants, the complainants as a group and the

defendants as a group shall be entitled to exercise those rights, with

respect to the selection of arbitrators, as are conferred on individual

arbitration parties.

[FR Doc. 97-23056 Filed 8-29-97; 8:45 am]

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