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 (Board).

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: In this proceeding, the Board is seeking public comments on

proposed rules recommended by the Railroad-Shipper Transportation

Advisory Council (RSTAC) that would provide a means for the binding,

voluntary arbitration of certain disputes subject to the statutory

jurisdiction of the Board.

DATES: Written comments on the proposed rules must be filed with the

Board no later than April 25, 1997.

ADDRESSES: An original and 10 copies of all documents must refer to STB

Ex Parte No. 560 and must be sent to the Office of the Secretary, Case

Control Unit, ATTN: STB Ex Parte No. 560, Surface Transportation Board,

1925 K Street, NW., Washington, DC 20423-0001, and serve a copy on each

member of the Railroad-Shipper Transportation Advisory Council, as

follows:

Mr. Randy G. Craver, Manager of Transportation, Coastal Coal Sales,

Inc., P.O. Box 1871, Roanoke, VA 24008

Mr. Jarvis Haugeberg, General Manager, BTR Farmers Co-Op, P.O. Box 158,

Churches Ferry, ND 58325

Mr. Jim Johnson, Traffic Manager, Empire Wholesale Lumber Co., P.O. Box

249, 162 Gault Street, Akron, OH 44309

Mr. Kevin D. Kaufman, Vice President, Louis Dreyfus Corporation, 10

West Port Road, Wilton, CT 06897-0810

Mr. Ronald A. Lane, Vice President and General Counsel, Illinois

Central Corporation, 455 N. Cityfront Plaza, Chicago, IL 60611

Mr. Anthony Lomangino, President, Waste Management of New York, 123

Varic Avenue, Brooklyn, NY 11237

Ms. Kimberly Madigan, Director, Emons Transportation Group, 122 C

Street, NW., Suite 850, Washington, DC 20001

Mr. John H. Marino, President and COO, RailAmerica, Inc., 1800 Diagonal

Road, Suite 150, Alexandria, VA 22314

Mr. James W. McClellan, Vice President-Strategic Planning, Norfolk

Southern Corporation, 3 Commercial Avenue, Norfolk, VA 23510

Mr. J.C. ``Pete'' McIntyre, President and CEO, Dakota, Minnesota &

Eastern Railroad Corporation, P.O. Box 178, Brookings Rd., SD 57066

Mr. Fred Simpson, Executive Vice President, Montana Rail Link, Inc.,

101 International Way, P.O. Box 8779, Missoula, MT 59807

Mr. Gregory T. Swienton, Senior Vice President, Coal and Agriculture

Commodities Business Unit, Burlington Northern Santa Fe Corporation,

Fort Worth, TX 76161-0051

Mr. Edwin E. Vigneaux, Manager, Rail Transportation, Reagent Chemical &

Research, Inc., 1300 Post Oak Blvd., Suite 680, Houston, TX 77056

Ms. Sheryl W. Washington, Vice President, United Parcel Service, 316

Pennsylvania Avenue, SE., Suite 300, Washington, DC 20003

Mr. Edward Wytkind, Executive Director of the Transportation Trades

Department, AFL-CIO (TTD), 400 North Capitol Street, NW., Suite 861,

Washington, DC 20001

FOR FURTHER INFORMATION CONTACT: Julia M. Farr, (202) 565-1613. [TDD

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

SUPPLEMENTARY INFORMATION: On February 19, 1997, the RSTAC, which was

established pursuant to section 726 of the ICC Termination Act of 1995,

Public Law 104-88, 109 Stat. 803, to advise the Chairman of the Surface

Transportation Board, the Secretary of Transportation, and

Congressional oversight committees with respect to rail transportation

policy issues of particular importance to small shippers and small

railroads,1 recommended that the Board adopt rules providing for

informal dispute resolution through arbitration. We agree with this

recommendation and propose to adopt formal rules along the lines of

those recommended to us by the RSTAC.

---------------------------------------------------------------------------

\1\ See Notice of Establishment of Railroad-Shipper

Transportation Advisory Council and Request for Recommendation of

Candidates for Membership, STB Ex Parte No. 526 (STB served and

published Jan. 29, 1996) (61 FR 2866).

---------------------------------------------------------------------------

The proposed rules will provide an alternative for parties to use

binding, voluntary arbitration to resolve certain disputes subject to

the statutory jurisdiction of the Board. These procedures shall not be

available to grant any license (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. 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

Board.

We believe that the procedure will increase cost-savings and

decrease litigation burdens on the parties. We are proposing these

rules with the expectation that their adoption would enable parties to

disputes that might otherwise have to be brought to the Board for

formal resolution instead to resolve the disputes themselves informally

with limited Board involvement.

Request for Comments

We invite comments on all aspects of the proposed regulations. We

are proposing nominal filing fees of $75 for each complaint and answer

filed under the proposed arbitration procedure and a filing fee of $150

for appeals to the Board of arbitration decisions. The proposed filing

fee for appeals would be the same as the fee for labor arbitration

appeals, appeals to Board decisions, and petitions to revoke. See 49

CFR 1002.2(f)(60) and (61). We encourage commenters to submit comments

as computer data on a 3.5-inch floppy diskette formatted for

WordPerfect 5.1, or formatted so that it can be readily converted into

WordPerfect 5.1. Any such diskette submission (one diskette should be

sufficient) should be in addition to the written submission (an

original and 10 copies).

Small Entities

The Board preliminarily concludes that these rules, if adopted,

would not have a significant economic effect on a substantial number of

small entities. Nonetheless, 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 at the final rule stage.

Environment

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 1002

Administrative practice and procedure, Common carriers, Freedom of

information, User fees.

49 CFR Part 1108

Arbitration, Dispute resolution.

Decided: March 12, 1997.

[[Page 14386]]

By the Board, Chairman Morgan and Vice Chairman Owen.

Vernon A. Williams,

Secretary.

For the reasons set forth in the preamble, the Board proposes to

amend part 1002 and to add a new part 1108 to title 49, chapter X, of

the Code of Federal Regulations to read 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(f) is amended by adding a new paragraph (87) to

read as follows:

Sec. 1002.2 Filing fees.

* * * * *

(f) * * *

* * * * *

Part VI * * *

(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)..................................... 75

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

(iv) Third Party Answer (per defendant)......................... 75

(v) Appeals of Arbitration Decisions............................ 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) ICA means the Interstate Commerce Act administered by the ICC.

(c) ICC means the Interstate Commerce Commission.

(d) ICCTA means the ICC Termination Act of 1995, Pub. L. No. 104-

88.

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

established by the ICCTA.

(f) STB means the Surface Transportation Board.

(g) Statutory jurisdiction means the jurisdiction conferred on the

STB by the ICCTA, as amended from time to time, including jurisdiction

over rail transportation or services that have been exempted from

active 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 grant any license

(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.

(c) 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.

(d) 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.

(e) On January 1, 1996, the STB replaced the ICC and the ICCTA

replaced the ICA. For purposes of these procedures, it is immaterial

whether an exemption from active regulation was granted by the ICC or

the STB.

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,

may be processed pursuant to the provisions of part 1108, if all

necessary parties voluntarily subject themselves to arbitration under

these provisions after adequate 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 rules or regulations adopted by the

STB for the resolution of similar disputes, except as specifically

provided in part 1108.

Sec. 1108.4 Relief.

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

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

(1) Monetary damages, with interest at a reasonable rate to be

specified by the Arbitrator; and

(2) Specific performance of statutory obligations, 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 solely on materially changed factual circumstances.

(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 program in accordance with 31 U.S.C. 9701. The fees

for filing a complaint, answer, third party complaint, third party

answer, and appeals of arbitration decisions 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) Each party will bear its own expenses, including, without

limitation, fees of experts or counsel. 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. Any fees for

petitions to modify or vacate an

[[Page 14387]]

arbitration award, as provided in Sec. 1108.4(b), may be established by

the STB and will be assessed against the party filing such petition at

the time it is filed.

Sec. 1108.6 Arbitrators.

(a) Arbitration shall be conducted by a single arbitrator who shall

be selected, as provided herein, from a roster of active or retired

federal administrative law judges or other senior officials experienced

in rail transportation or economic issues similar to those capable of

arising before the STB. The roster of Arbitrators shall be established

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

contain not fewer than 12 names. The RSTAC shall update the list of

Arbitrators annually. In the event that the RSTAC fails to maintain the

roster of Arbitrators, the STB shall do so.

(b) The Arbitrator shall be selected by the Chairman of the STB

from the roster established under paragraph (a) of this section on a

random basis, so far as is practicable.

(c) The process of selecting an Arbitrator pursuant to this

paragraph (c) shall be conducted confidentially following the

completion of the Arbitration Commencement Procedures set forth in

Sec. 1108.7. Each time the Chairman of the STB is called upon to select

an Arbitrator, the nomination promptly shall be transmitted in writing

to the parties. Upon receipt of such name, the parties shall have 7

calendar days to notify the Chairman of the STB whether the Arbitrator

so nominated is acceptable to that party. If any party finds an

Arbitrator to be unacceptable for the arbitration at hand, the Chairman

of the STB shall repeat the nomination process. No party may find more

than one Arbitrator to be unacceptable in any arbitration, except upon

a showing that an Arbitrator nominee is likely to have views highly

prejudicial to a party. The name of the Arbitrator finally agreed upon

by the Chairman of the STB and the parties shall not be made public

until this selection process is complete. Neither a party nor the

Chairman of the STB shall identify publicly any party that has found an

Arbitrator to be unacceptable.

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

Arbitrator becomes incapacitated or unable to fulfill his/her duties, a

replacement Arbitrator will be promptly selected under the process set

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

(e) If all parties to a dispute agree among themselves on the

selection of an Arbitrator from the roster, the parties shall submit in

writing to the Chairman of the STB the name of the Arbitrator agreed

to.

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 (through its legal representatives, if known, or on a

responsible official at his or her usual place of business) and 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 part 1108.

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

rules must, within 30 days of the date of a 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 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 and one-half of the complaint filing fee shall be

refunded to the complainant. 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, allowing a judgment

of a court to be entered upon an arbitration award, and 9 U.S.C. 10,

allowing a court to vacate

[[Page 14388]]

an arbitration award 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. The Arbitrator's decision

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

(2) Discovery will be permitted only with the agreement of the

parties or as directed by the Arbitrator.

(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 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 parties will then be given an opportunity to file

simultaneous replies. 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. Pagination 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.

(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 included 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 and the STB.

(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.

Arbitration decisions rendered 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 the STB. Replies to such appeals may be filed within 20

days of service of the appeal. An appeal or a reply under this

paragraph shall not exceed 20 pages in length. The filing fee for such

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

Sec. 1108.11, automatically will stay an arbitration decision pending

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

30 days of the date on which the reply is due. Such decision by the STB

shall be served in accordance with normal STB service procedures.

(c) The STB will only review cases involving issues of general

transportation importance. The STB 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 ICCTA.

(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.

Sec. 1108.12 Additional matters.

Where an arbitration demand is filed by one or more plaintiffs

against one or more defendants, the plaintiffs 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. 97-7663 Filed 3-25-97; 8:45 am]

BILLING CODE 4915-00-P