Rail Service Continuation Subsidy Standards

DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

49 CFR Parts 1152 and 1155

[STB Ex Parte No. 566]

Rail Service Continuation Subsidy Standards

AGENCY: Surface Transportation Board, DOT.

ACTION: Final rule.

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

SUMMARY: The Surface Transportation Board (Board) is removing from the

Code of Federal Regulations rules concerning standards for determining

subsidies for the continuation of rail service on rail properties not

transferred to Consolidated Rail Corporation (Conrail) under the Final

System Plan pursuant to the Regional Rail Reorganization Act of 1973.

It is also amending the regulations concerning offers of financial

assistance to provide rules for the purchase or subsidization of rail

lines that have been continuously subsidized since the inception of the

Final System Plan.

EFFECTIVE DATE: June 21, 1998.

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

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

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

served and published in the Federal Register on August 8, 1997 (62 FR

42734), the Board proposed to remove the regulations at 49 CFR part

1155 that concern subsidy standards for certain rail lines of railroads

in reorganization not included in the Final System Plan, described

infra. The NPR noted that these regulations are based, at least

partially, on statutes that are still in effect. 45 U.S.C. 744 (c) and

(d). Under the ICC Termination Act of 1995, Public Law 104-88, 109

Stat. 803 (ICCTA),\1\ however, the Rail Services Planning Office

(RSPO), the statutory body that developed the regulations, has been

abolished. See repealed 49 U.S.C. 10361-64. Moreover, the Board has in

place analogous offer of financial assistance (OFA) regulations

providing national subsidy standards. 49 CFR 1152.27. Finally, the NPR

stated that the regional subsidy regime at 45 U.S.C. 744, which applies

to ``rail service on rail properties of a railroad in reorganization,''

may be outdated and may apply only to a limited number of situations.

Accordingly, we instituted this proceeding to determine whether these

regulations may be eliminated in light of the national OFA standards,

whether portions of the part 1155 regulations could be transferred to

the national standards, or whether they have a continuing vitality and

should be retained.

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

\1\ Effective January 1, 1996, the ICCTA abolished the

Interstate Commerce Commission and established the Board within the

Department of Transportation. Section 204(a) of the ICCTA provides

that ``[t]he Board shall promptly rescind all regulations

established by the [Interstate Commerce Commission] that are based

on provisions of law repealed and not substantively reenacted by

this Act.''

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

After considering the record, we will eliminate the part 1155 rules

and modify the national OFA rules at 1152.27. Because the part 1155

rules have only limited applicability, it is unnecessary to maintain

these detailed regulations. However, to provide an opportunity for rail

service continuation and to deal with abandonments of lines that are

still being subsidized, we are modifying our national OFA regulations

at 49 CFR 1152.27 to require that the line owner give notice of the

abandonment or discontinuance to enable interested persons to purchase

or subsidize the line.

Background

Our NPR gave a detailed background for the part 1155 regulations

and will be repeated only as necessary. The part 1155 rules were based

on the Regional Rail Reorganization Act of 1973, Public Law 93-236, 87

Stat. 985, 45 U.S.C. 701 et seq. (3R Act), as amended by the Railroad

Revitalization and Regulatory Reform Act of 1976 (4R Act), Public Law

94-210, 90 Stat. 127. In response to the bankruptcy of the Penn Central

Transportation Company and seven other major railroads in the Northeast

and Midwest,\2\ the 3R Act provided for the development and ultimate

approval by Congress of a Final System Plan (Plan) for the redesign of

rail services in

[[Page 28288]]

the region. Lines that could not be operated profitably and were not

considered essential to the rail transportation system would not be

included in the Plan. The 3R Act's Plan created Conrail as a for-profit

corporation to reorganize the bankrupt rail services in the region.

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

\2\ The Lehigh Valley Railroad Company, the Central Railroad of

New Jersey, the Ann Arbor Railroad Company, the Lehigh and Hudson

Valley Railroad Company, the Boston and Maine Corporation, the Erie

Lackawanna Railway Company, and the Reading Railroad.

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

Section 304 of the 3R Act permitted the summary discontinuance of

service over those lines not included in the Plan without Interstate

Commerce Commission (ICC or Commission) approval if 60 days' notice was

given and certain parties were notified. Beginning 120 days after such

discontinuance, the summary abandonment of a line was allowed if 30

days' notice was given and the parties were notified. The 3R Act, in

effect, authorized the discontinuance and abandonment of the lines not

included in the Plan; ICC approval was not needed.\3\ However, section

304(c)(2) of the 3R Act (codified at 45 U.S.C. 744(c)(2)(A)) stated

that an abandonment or discontinuance could not be carried out if a

shipper, or public authority, or any responsible person offered a rail

service continuation subsidy.\4\ The 4R Act amended the 3R Act by

adding a new section 45 U.S.C. 744(d) which specified that a

``designated operator'' would be the rail carrier conducting operations

when a subsidizer guaranteed payment.\5\ Although not needing ICC

authority to operate or abandon, the designated operators were common

carriers.\6\

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

\3\ See Common Carrier Status of States, State Agencies and

Instrumentalities, and Political Subdivisions 49 CFR 1120A, Finance

Docket No. 28990F (ICC served July 16, 1981) at 9-10 (footnote

omitted): ``A rail line which was approved for abandonment under the

Final System Plan * * * but over which operations were continued by

a [designated operator], comes within the meaning of abandoned or

authorized for abandonment * * *.''

\4\ This subsidy ``covers the difference between the revenue

attributable to such rail properties and the avoidable costs of

providing service on such properties plus a reasonable return on the

value of such rail properties * * *.''

\5\ The subsidy payment was now defined at section 744(d) as

``the difference between the revenue attributable to such properties

and the avoidable costs of providing service on such rail

properties, together with a reasonable management fee as determined

by [RSPO].'' (Emphasis supplied.)

\6\ See Application Proc.-Construct, Acq. Or Oper. R. Lines, 365

I.C.C. 516, 523 (1982) and Exemption of Certain Designated Operators

from Section 11343, 361 I.C.C. 379 (1979), aff'd in part and

remanded in part sub nom. McGinness v. ICC, 662 F.2d 853 (D.C. Cir.

1981). See also 49 CFR 1150.16: ``Although the designated operator

will not be required to seek and obtain authority from the Board

either to commence or terminate operations, the designated operator

is a common carrier by railroad subject to all other provisions of

49 U.S.C. Subtitle IV.''

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

The use of the subsidy is limited to rail service and rail

properties of a railroad in reorganization \7\ in the region \8\ that

are not included in the Plan. 45 U.S.C. 744(a). Moreover, the subsidy

must be made within 2 years of the effective date of the Plan \9\ or

within ``2 years after the date on which the final rail service

continuation payment is received, whichever is later * * *.'' 45 U.S.C.

744(c)(1).

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

\7\ A ``railroad in reorganization'' is defined at 45 U.S.C.

702(16) as a railroad which is subject to a bankruptcy proceeding

and which has not been determined by a court to be reorganizable or

not subject to reorganization pursuant to this chapter as prescribed

in section 717(b) of this title. A `bankruptcy proceeding' includes

a proceeding pursuant to section 77 of the Bankruptcy Act and an

equity receivership or equivalent proceeding * * *.''

\8\ ``Region'' is defined at 45 U.S.C. 702(17) as ``the States

of Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode

Island, New York, New Jersey, Pennsylvania, Delaware, Maryland,

Virginia, West Virginia, Ohio, Indiana, Michigan, and Illinois; the

District of Columbia; and those portions of contiguous States in

which are located rail properties owned or operated by railroads

doing business in the aforementioned jurisdictions (as determined by

[ICC] order) * * *.''

\9\ The Plan was submitted to Congress on July 26, 1975. It was

approved when neither the House of Representatives nor the Senate

objected to it. The Plan was formally approved in section 601(e) of

the 4R Act.

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

The 3R Act, as amended by the 4R Act, also created RSPO \10\ which

was authorized to issue standards for defining the subsidy-related

terms ``revenue attributable to rail properties,'' ``avoidable costs of

providing service,'' ``a reasonable return on the value,'' and

``reasonable management fee'' found in section 304. Section

205(d)(6).\11\ Subsequently, the ICC issued regulations that are now

codified at 49 CFR 1155. The regulations define the terms noted above

(revenue attributable, avoidable costs, return on value, reasonable

management fee) for determining the subsidy payment for the

continuation of train service over lines not included in the Plan. The

regulations are largely self-executing with little role provided for

the ICC.\12\

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

\10\ 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 (3d Cir. 1981).

\11\ The language of section 205 pertaining to RSPO was

eventually codified at 49 U.S.C. 10361-64.

\12\ However, under 49 CFR 1155.3(a), a carrier giving notice of

intent to discontinue service shall submit an ``Estimate of Subsidy

Payment'' to, inter alia, RSPO. Under 49 CFR 1155.4(c), a party

desiring an interpretation of the standards can file a petition with

RSPO. Under Sec. 1155.9, if the parties cannot agree on certain

issues, the matter could be arbitrated. The ICC was not directly

involved in reviewing disputes.

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

The 4R Act also instituted the national OFA procedures. It allowed

an abandonment to be postponed for up to 6 months if a financially

responsible person offered to purchase or subsidize the line. Section

802. (This provision was originally codified at 49 U.S.C. 1a(6)(a) and

subsequently recodified without substantive change at former 49 U.S.C.

10905.) In essence, the regional subsidy provision of 45 U.S.C. 744 was

expanded to apply to all carriers. In November 1976, the ICC

promulgated regulations that were predicated on the part 1155

regulations, although, due to factual and statutory differences, there

were certain variations. The OFA rules are now found at 49 CFR

1152.27.\13\

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

\13\ The Staggers Rail Act of 1980, Public Law 96-448, 94 Stat.

1895, further revised former 49 U.S.C. 10905. Section 402. The 6-

month negotiating period was shortened and, when a carrier and

shipper could not agree to terms, the ICC upon request would set,

and the carrier was bound by, the purchase or subsidy price.

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

The ICCTA was the latest legislative action applicable to these

regulations. There was no change to 45 U.S.C. 744(c). The changes to

section 744(d) do not affect part 1155. The RSPO statutes--49 U.S.C.

10361-64--were repealed. Former 49 U.S.C. 10905 was modified and is now

found at 49 U.S.C. 10904, but the changes there do not affect our

analysis.

In our NPR, we stated that we were reexamining part 1155 because of

the changes made by the ICCTA, the availability of our national subsidy

standards, and the likelihood that few situations fall within the

regional subsidy framework. Comments were filed by the Association of

American Railroads (AAR) and the Delaware Valley Railway Company, Inc.

(DV).

Comments of the Parties

The AAR, in its brief comment, supports the removal of part 1155,

arguing that rules ``are of marginal, if any, utility * * *.''

DV is a Class III short line railroad.\14\ It has operated over a

rail line owned by a subsidiary of the Reading Company, the corporate

successor of the bankrupt Reading Railroad Company. DV expresses its

belief that the regional standards ``substantially duplicate the

National OFA standards,'' and supports removal of the part 1155

regional regulations because of the availability of the national OFA

standards. It claims that, to keep separate regulations applicable to

only a few lines and

[[Page 28289]]

another standard for all other lines, would cause ``unnecessary,

wasteful, potentially inconsistent, and duplicative regulation.'' It

seeks to amend the national OFA standards to handle the few situations

that would still fall under the regional standards.

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

\14\ DV is involved in a pending proceeding in which relief is

sought, inter alia, under 49 CFR part 1155. RailAmerica, Inc., and

the Delaware Valley Railway Company, Petition to Set Subsidy Terms

Under 45 U.S.C. 744(c) and 49 CFR Part 1155, STB Finance Docket No.

33285.

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

In response to the question of whether there are any ``railroads in

reorganization,'' DV claims that the Reading Company, while

``concededly not a railroad in reorganization under that [3R Act]

statute, is a successor to a railroad in reorganization and should be

subject to the provisions of 49 CFR part 1155 on that basis.'' \15\ It

argues that Congress did not intend that carriers could avoid

regulatory oversight by reorganizing themselves, and that the Board

should focus on the rail property and rail service at issue and not the

status of the owning entity.\16\

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

\15\ DV claims it involves ``one of the few instances, if not

the last instance, of rail service provided over railroad property

owned by the successor to a bankrupt railroad not transferred to

Conrail or another rail carrier under the [Plan].'' [Footnote

omitted.]

\16\ These concerns are moot, because we are finding that the

abandonment and discontinuance of lines still being subsidized will

fall under the special national OFA standards at 49 CFR 1152.27(n).

Formerly subsidized lines that are being abandoned or discontinued

will come under the regular OFA rules at section 1152.27.

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

Discussion and Conclusions

Because of the changes in the ICCTA and the fact that there appear

to be few lines being operated under the regional subsidy regime, we

will remove the more than 30 pages of regulations at part 1155. While

technically there may no longer be any 3R Act railroads in

reorganization, there appear to be a few lines that have been

continuously subsidized under 49 U.S.C. 744, and these lines require

special procedures. Therefore, we are issuing regulations at 49 CFR

1152.27(n) that would provide for summary abandonment and

discontinuance on notice by the carrier owning the line, and that would

allow for the opportunity to subsidize and purchase lines under the

national OFA rules.

As noted, supra, these lines were effectively approved for

abandonment and discontinuance under section 744, and, for those lines

that have been continually subsidized, we do not believe that the

approval to abandon or discontinue has been removed. Accordingly, Board

authorization is not needed for cessation of service. Lines of railroad

in the Northeast that were not included in the Plan and are no longer

being subsidized under section 744 but continue to be operated are

common carrier lines subject to the regular abandonment and national

OFA regime of the Interstate Commerce Act.

The commenters generally support the removal of part 1155 (with DV

also seeking a concomitant modification of the national OFA rules).

Moreover, the record indicates that the regulations appear to be

unnecessary. They were determined and issued by an office (RSPO) that

has been abolished by the ICCTA.\17\ Under former 49 U.S.C.

10362(b)(7), RSPO was to ``maintain, and from time to time revise and

republish * * * standards for determining the revenue attributable to

the rail properties, the avoidable costs of providing transportation, a

reasonable return on value, and a reasonable management fee * * *.'' As

noted, this section, as well as RSPO, has been abolished. There are,

however, parallel sections in force--45 U.S.C. 744(c) and (d)--that

pertain to subsidies for the continuation of rail freight service. Even

here, however, support for the subsidy regulations is uncertain,

because section 744(d)(1) and (d)(2) refer to laws repealed by the

ICCTA.\18\

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

\17\ We note that the regulations assign continuing

responsibilities to the abolished office (issuing interpretations,

receiving estimates of subsidy payments).

\18\ Under 45 U.S.C. 744(d)(1), the defunct RSPO is to determine

the terms a subsidizer is to pay a designated operator. Section

744(d)(1) states that the terms ``revenue attributable,''

``avoidable costs,'' and ``reasonable management fee'' are to be

determined by ``the Office,'' defined at 45 U.S.C. 702(12) as RSPO.

Moreover, under 45 U.S.C. 744(d)(2), the term ``reasonable

return on value'' is to be developed according to the standards of

205(d)(6) of the 3R Act, which, as noted, was codified at the now

repealed RSPO statute, 49 U.S.C. 10362.

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

Even if the ICCTA does not mandate the removal of the regulations,

there appears to be little need for the subsidy rules, because of the

availability of the national standards and because the circumstances

and conditions that the regional standards were to address have largely

expired. Under 45 U.S.C. 744(a)(1) and (c)(1), the regional subsidy

program applies to a ``rail service on rail properties of a railroad in

reorganization'' and is not available ``after 2 years from the

effective date of the [Plan] or more than two years after the last rail

service continuation payment is received, whichever is later * * *.''

There may not be any railroads in reorganization as defined by the

statute. In Consolidated Rail Corp. v. Reading Co., 654 F. Supp. 1318,

1323 (Sp. Ct. RRRA 1987) (Reading), a case arose that involved whether

personal injury claims could be brought against Conrail and National

Railroad Passenger Corporation pursuant to section 709(b) of the 3R Act

(45 U.S.C. 797h(b)). That section provided for assumption by Conrail of

personal injury claims against ``a railroad in reorganization.'' The

court looked at the definition of railroad in reorganization (45 U.S.C.

702(16)), supra, and stated that certain predecessor railroads of

Conrail were not railroads in reorganization because they were no

longer ``subject to a bankruptcy proceeding.'' These carriers had

undergone reorganization, final consummation orders had been entered,

and the carriers had been discharged in bankruptcy.19 The

court found that ``[w]here, as is the case here, the definition of a

statutory term is clear and unequivocal it is controlling.'' Id.

(citations omitted.)

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

\19\ The court noted (Id. at 1323, n.2) the following

consummation dates: Erie Lackawanna, Inc. (November 30, 1982);

Reading Co. (December 31, 1980); Penn Central Transportation Co.

(October 24, 1978); Lehigh Valley Railroad Co. (September 1, 1982);

and the Central of New Jersey (September 14, 1979). We note that

despite this ruling, section 797h(b) has not been removed.

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

As a consequence of Reading, there will, at a minimum, be no new

lines that can be added to the regional subsidy regime. This does not,

however, end our inquiry. There appears to be at least one line that

has been subsidized since the enactment of the regional subsidy

program. Such lines have already been approved for abandonment and

discontinuance. Moreover, it can be argued that these lines still fall

within the ambit of section 744. Under these circumstances, we believe

that the best approach will be to eliminate part 1155, but modify the

OFA regulations for situations involving lines that are still being

subsidized under the regional standards.

The notice periods will follow the basic regime of section 744.

Summary discontinuance of service without Board approval may be

effected if 60 days' notice is given by the owner of the line and

certain parties are notified.20 Beginning 120 days

thereafter, the summary abandonment of a line is allowed if 30 days'

notice is given and the parties are notified.

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

\20\ Notice shall be to the Board, governor and transportation

agencies and the government of each political subdivision of each

state in which such rail properties are located and to each shipper

who has used the rail service during the previous 12 months.

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

We are requiring the owner of the line, and not the designated

operator, to provide the notice that triggers the OFA process. We are

retaining the provision by which a designated operator may terminate

service in accordance with the terms of its agreement and is only

required to give notice of termination of service to the shippers on

the line. 49 CFR 1150.11. No time period is specified for the notice.

We hope that

[[Page 28290]]

the designated operator and line owner will coordinate the giving of

notice so that there will be no break in service. We recognize,

however, that under our present ``designated operator'' rules, it is

possible that the operator could terminate service before the notice

period has expired. This eventuality is a natural outcome of such

subsidy regimes where service is tied specifically to an agreement.

Nevertheless, given the specified time periods and the ability of the

Board to set terms and conditions under the national standards, we

expect that any breaks in service would be of short duration.

The New OFA Rules

We are modifying 49 CFR 1152.27 by adding a new paragraph (n).

Abandonment or discontinuance notice must be given, affording

interested persons an opportunity to purchase or subsidize the line

under our national OFA standards.21 The applicable time

limits will run from the date of the notice as the Board does not

approve the cessation of service for these lines.

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

\21\ Under the statute, the standards for subsidizing lines are

the same for both the national OFA (49 U.S.C. 10904(f)(1)(C)) and

regional subsidy (45 U.S.C. 744(c)(2)): the difference between the

revenue attributable to the line and the avoidable costs of

providing service plus a reasonable return on the value of the line.

The regional standards also provide that designated operators are to

receive a reasonable management fee discussed infra. Unlike section

744, however, the national OFA statute provides that the standard

for purchasing a line is its fair market value. This standard will

be used in processing offers under section 1152.27(n).

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

We will generally apply the national OFA standards applicable to

class exemptions found at 49 CFR 1152.27 to these summary abandonments

and discontinuances.22 For example, a party may discontinue

23 or abandon service on a line of railroad formerly in

reorganization that was not included in the Plan on 60 days' notice

and, beginning 120 days after discontinuance, on 30 days' notice,

respectively. Notice of summary abandonment or discontinuance will be

published by the Board in the Federal Register within 20 days of

filing. 49 CFR 1152.27(b)(2)(ii). Expressions of intent to file an

offer must be filed no later than 10 days after the Federal Register

publication. Paragraph (c)(2)(i) of section 1152.27. An offer must be

filed within 30 days of the Federal Register publication. Paragraphs

(b)(2)(ii) and (c)(2)(ii)(B) of section 1152.27.

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

\22\ The one significant difference is that we are incorporating

into new section 1152.27(n)(2) the reasonable management fee

standard for designated operators (4\1/2\ %) from section 1155.7(o).

\23\ As noted, the owner of the lines gives the notice that

triggers the OFA process for discontinuances. The designated

operator follows the notice requirements of 49 CFR 1150.11.

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

The Board will review offers to determine if a financially

responsible person has offered assistance. If this criterion is met,

the Board will postpone the effective date of the summary abandonment

(but not the discontinuance) 24 within 35 days of the

Federal Register publication. Paragraph (e)(2) of Sec. 1152.27. If the

carrier and financially responsible person fail to agree on the amount

or terms of subsidy or purchase, either party may request the Board to

establish the conditions and amount of the compensation. This request

must be filed within 30 days after the offer of purchase or subsidy is

made, and the Board will issue a decision within 30 days after the

request is due. Paragraphs (g)(1) and (h)(1) of Sec. 1152.27.

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

\24\ We cannot postpone the effective date of the discontinuance

because, under our rules, designated operators need only comply with

the notice requirements of 49 CFR 1150.11, and, in instances of

discontinuance, the line owner is not obligated to operate the line.

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

Lines of the former railroads in reorganization under the 3R Act

are under Board jurisdiction insofar as the institution of new rail

service is involved. See Delaware and Hudson Ry. Co.--Modified Cert. Of

PC&N, 363 I.C.C. 808 (1981) (holding that where a line had formally

been operated under subsidy and was later abandoned, the carrier was

required to file an application under former 49 U.S.C. 10901 to operate

the line). Thus, in those instances, any future abandonment or

discontinuance would be subject to the abandonment and OFA procedures

of 49 U.S.C. 10903-04.

The Board concludes that the removal of the rule and the addition

of the new rule will not have a significant effect on a substantial

number of small entities. It appears that the eliminated, as well as

the new, rule does not apply to many situations. In those situations

where the rule changes are applicable, they are consistent with the new

statutory framework. Moreover, there should not be any significant

change from current practice under the new rules.

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 1152

Administrative practice and procedure, Conservation, Environmental

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

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

and recreation areas, Reporting and recordkeeping requirements.

49 CFR Part 1155

Railroads, Uniform System of Accounts.

Decided: May 13, 1998.

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 set forth below:

PART 1152--ABANDONMENT AND DISCONTINUANCE OF RAIL LINES AND RAIL

TRANSPORTATION UNDER 49 U.S.C. 10903

1. The authority citation for part 1152 is revised to read as

follows:

Authority: 11 U.S.C. 1170; 16 U.S.C. 1247(d) and 1248; 45 U.S.C.

744; and 49 U.S.C. 701 note (1995) (section 204 of the ICC

Termination Act of 1995), 721(a), 10502, 10903-10905, and 11161.

2. In Sec. 1152.27, paragraph (n) is added to read as follows:

Sec. 1152.27 Financial assistance procedures.

* * * * *

(n) Special provisions for summary discontinuance and abandonment

of lines not part of the Final System Plan. (1) Board authorization is

not needed for the cessation of service on a line of railroad formerly

in reorganization that was not included in the Final System Plan (Plan)

under the Regional Rail Reorganization Act of 1973, 45 U.S.C. 701 et

seq., as amended by the Railroad Revitalization and Regulatory Reform

Act of 1976, if the line has been continuously subsidized since the

inception of the Plan. To provide an opportunity for rail service

continuation through offers of financial assistance, however, the owner

of the line must give not less than 60 days' notice of a

discontinuance, and beginning 120 days after discontinuance, not less

than 30 days' notice of abandonment. Designated operators need only

comply with the notice requirements of Sec. 1150.11 of this title. In

instances of discontinuance by a designated operator, the line owner is

not obligated to operate the line. Notice is to be sent by the line

owner to the Board, the governor and transportation agencies and the

government of each political subdivision of each state in which such

rail properties are located and to each shipper who has used the rail

service

[[Page 28291]]

during the previous 12 months. The Board will generally apply the OFA

procedures in this section (49 CFR 1152.27) for class exemptions to

summary abandonment and discontinuance notices (except that the Board

will not postpone the effective date of a summary discontinuance). For

example, notice of summary abandonment or discontinuance will be

published by the Board in the Federal Register within 20 days of

filing. Paragraph (b)(2)(ii) of this section. Expressions of intent to

file an offer must be filed no later than 10 days after the Federal

Register publication. Paragraph (c)(2)(i) of this section. An offer

must be filed within 30 days of the Federal Register publication.

Paragraphs (b)(2)(ii) and (c)(2)(ii)(B) of this section. The Board will

review offers to determine if a financially responsible person has

offered assistance. If this criterion is met, the Board will postpone

the effective date of the summary abandonment (but not the

discontinuance) within 35 days of the Federal Register publication.

Paragraph (e)(2) of this section. If the carrier and financially

responsible person fail to agree on the amount or terms of subsidy or

purchase, either party may request the Board to establish the

conditions and amount of the compensation. This request must be filed

within 30 days after the offer of purchase or subsidy is made, and the

Board will issue a decision within 30 days after the request is due.

Paragraphs (g)(1) and (h)(1) of this section.

(2) Where a designated operator is being used, it shall be paid a

reasonable management fee. If the parties cannot agree on this fee, it

shall be four and one-half percent of the total annual revenues

attributable to the branch.

PART 1155--[REMOVED]

3. Part 1155 is removed.

[FR Doc. 98-13592 Filed 5-21-98; 8:45 am]

BILLING CODE 4915-00-P