Regulations on Safety Integration Plans Governing Railroad Consolidations, Mergers, Acquisitions of Control, and Start Up Operations; and Procedures for Surface Transportation Board Consideration of Safety Integration Plans in Cases Involving Railroad Consolidations, Mergers, and Acquisitions of Control

DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

49 CFR Part 244

[FRA Docket No. SIP-1, Notice No. 1]

Surface Transportation Board

49 CFR Part 1106

[STB Ex Parte No. 574]

RIN 2130-AB24

Regulations on Safety Integration Plans Governing Railroad

Consolidations, Mergers, Acquisitions of Control, and Start Up

Operations; and Procedures for Surface Transportation Board

Consideration of Safety Integration Plans in Cases Involving Railroad

Consolidations, Mergers, and Acquisitions of Control

AGENCIES: Federal Railroad Administration, Surface Transportation

Board, DOT.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Railroad Administration (FRA) and the Surface

Transportation Board (STB or Board), working in conjunction with each

other, have developed complementary proposed regulations establishing

procedures for the development and implementation of safety integration

plans (SIPs) by railroads proposing to engage in certain specified

merger, consolidation, or acquisition of control transactions with

another railroad. The scope of the transactions covered under the two

rules would be identical except that FRA would also require carriers

engaged in ``start up'' transactions to prepare SIPs.

Under FRA's proposed rule, railroads seeking to consummate a

covered transaction would be required to file a proposed SIP with FRA.

(A SIP is a written document explaining how each step in implementing a

contemplated transaction would be performed safely.) FRA would then

review the SIP and advise the Board as to whether it provides a

reasonable assurance of safety for the transaction. The rule would

further require a railroad to have an approved SIP by FRA before it

could execute operations over property subject to the transaction.

Where the Board has been involved in authorizing the transaction, FRA

would consult with the Board at all appropriate stages of

implementation.

Likewise, rail carriers seeking to carry out a transaction within

the Board's jurisdiction for which the Board has concluded such

consideration is necessary, would be required to file a SIP with FRA

and the Board when they file their application or exemption. FRA would

review the SIP and file written comments with the Board's Section of

Environmental Analysis (SEA). After reviewing the SIP, SEA's analysis,

and comments provided by interested persons during the STB's

environmental review process, the Board would then independently

evaluate the transaction and decide whether to approve it. Should the

Board approve the transaction, FRA would monitor the implementation of

the SIP, consult with the Board at all appropriate stages of

implementation, and advise the Board when the proposed integration has

been safely completed. FRA would be authorized to exercise its full

enforcement remedies should either FRA or the STB reject the proposed

SIP or a railroad fails to implement the terms of an approved SIP.

The proposed rules are designed to enable the Board and FRA to

ensure adequate and coordinated consideration of safety integration

issues in covered rail transactions while minimizing the burdens on the

participants. FRA and the STB believe that the joint rule will serve

the public interest in promoting safety in the railroad industry,

consistency in decisions, and efficiency in compliance, enabling the

agencies to employ their areas of expertise to fulfill their statutory

objectives.

DATES: Submit written comments on or before March 1, 1999. Neither FRA

nor the STB intends to hold a public hearing at this time on its

respective proposed rules. Nevertheless, anyone who desires that either

of the two agencies hold a public hearing must notify both the FRA

Docket Clerk (either by telephone (202-493-6030) or by mail) and the

STB Secretary ((202) 565-1650 or by mail), on or before February 1,

1999, specifying which of the two agencies it wants to hold a public

hearing, and explaining why a hearing should be required.

ADDRESSES: Because of the close interrelationship between FRA and the

STB on these proposed rules, copies of any comments on the proposed

rules should be served on both FRA and the STB. However, commenters

should clearly identify the rule on which they are commenting by using

the FRA Docket No. SIP-1 for comments on FRA's proposed rule, and STB

Ex Parte No. 574 for comments on STB's proposed rule.

Procedures for written comments to FRA: Submit one copy to the

Department of Transportation Central Docket Management Facility located

in room PL-401 at the Plaza level of the Nassif Building, 400 Seventh

Street, S.W., Washington, D.C., 20590. All docket material on the FRA

rule will be available for inspection at this address and on the

Internet at http://doms.dot.gov. (Docket hours at the Nassif Building

are Monday-Friday, 10 a.m. to 5 p.m., excluding Federal holidays.)

Persons desiring to be notified that their comments have been received

by FRA should submit a stamped, self-addressed postcard with their

comments. The FRA Docket Clerk will indicate on the postcard the date

on which the comments were received and will return the card to the

addressee.

Procedures for written comments to the STB: Send an original and 10

paper copies referring to STB Ex Parte No. 574 to Office of the

Secretary, Case Control Unit, Surface Transportation Board, 1925 K

Street, N.W., Washington D.C., 20423. In addition to paper copies, the

parties must also submit their pleadings to the Board on a 3.5-inch

diskette formatted for WordPerfect 7.0 (or in a format readily

convertible into WordPerfect 7.0). All pleadings submitted on diskettes

will be posted on the Board's website (www.stb.dot.gov).

FOR FURTHER INFORMATION CONTACT: Jon Kaplan, Trial Attorney, Office of

Chief Counsel, FRA, 1120 Vermont Avenue, Mailstop 10, Washington, D.C.,

20590 (telephone: (202) 493-6053); and Evelyn G. Kitay, Office of the

General Counsel, STB, 1925 K Street, N.W., Washington, D.C., 20423

(telephone: (202) 565-1563) [TDD for the hearing impaired: (202) 565-

1695.].

SUPPLEMENTARY INFORMATION:

Joint FRA/STB Introduction

FRA and STB are jointly responsible for promoting a safe rail

transportation system.

Under Federal law, primary jurisdiction, expertise and oversight

responsibility in rail safety matters are vested in the Secretary of

the Department of Transportation, and delegated to the Federal Railroad

Administrator. 49 U.S.C. 20101 et seq.; 49 CFR 1.49. FRA has authority

to issue regulations to promote safety in every area of railroad

operations and reduce railroad-related accidents and injuries. 49

U.S.C. 20101 and 20102. FRA has exercised its jurisdiction to protect

the safety of railroad operations through the issuance and enforcement

of regulations, partnering with railroad labor organizations and

management of particular railroads to identify and develop solutions to

safety problems, actively participating in STB rail proceedings, and

monitoring railroad

[[Page 72226]]

operations during the implementation of STB-approved transactions.

The Board is also responsible for promoting a safe rail

transportation system. The rail transportation policy (RTP), 49 U.S.C.

10101, which was adopted in the Staggers Rail Act of 1980, Pub. L. 96-

448, 94 Stat. 1895, and amended in the ICC Termination Act of 1995,

Pub. L. 104-88, 109 Stat. 803 (1995), establishes the basic policy

directive against which all of the statutory provisions the Board

administers must be evaluated. The RTP provides, in relevant part,

that, ``[i]n regulating the railroad industry, it is the policy of the

United States Government * * * to promote a safe and efficient rail

transportation system'' * * * [by allowing rail carriers to] ``operate

transportation facilities and equipment without detriment to the public

health and safety * * * .'' 49 U.S.C. 10101(8). The rail transportation

policy applies to all transactions subject to the Board's jurisdiction.

Thus, both FRA and STB are vested with authority to ensure safety

in the railroad industry. Each agency, however, recognizes the other

agency's expertise in regulating the industry. FRA has expertise in the

safety of all facets of railroad operations. Concurrently, the Board

has expertise in economic regulation and assessment of environmental

impacts in the railroad industry. Together, the agencies appreciate

that their unique experience and oversight of railroads complement each

other's interest in promoting a safe and viable industry.

In the Conrail Acquisition proceeding, 1 the two

agencies recognized the need to work together to ensure that the

proposed transaction would be safely implemented. Both agencies took a

proactive role in analyzing the complex transaction involving two large

railroads--Norfolk Southern Railway Company (NS) and CSX

Transportation, Inc. (CSXT)--in their acquisition of a third large

railroad, Consolidated Rail Corporation (Conrail). FRA conducted a

formal safety assessment and recommended to the STB that the railroads

be required to file SIPs explaining how they intended to safely

integrate their operations if the transaction were approved. The Board

agreed with FRA's suggestion, and directed NS and CSXT to file SIPs. NS

and CSXT subsequently filed SIPs detailing each step of the integration

process in their operating plans. Since then, both railroads have

continued to coordinate with FRA in implementing the SIPs consistent

with the agency's guidelines, and FRA has advised the Board on each

carrier's progress in executing the plans. The lessons learned from

this process are that safety plays a significant role in a regulated

transaction and must be addressed before integration commences.

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\1\ CSX Corporation and CSXT Transportation, Inc., Norfolk

Southern Corporation and Norfolk Southern Railway Company--Control

and Operating Leases/Agreements--Conrail Inc. and Consolidated Rail

Corporation, STB Finance Docket No. 33388 (Conrail Acquisition).

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Based on this experience, FRA and STB have decided to formalize

this partnership in regulating future rail consolidation transactions

among Class I, Class II, commuter, and intercity passenger railroads by

issuing a joint notice of proposed rulemaking. The proposed rules are

intended to accomplish the safety objectives of both agencies, avoid

gaps and inconsistencies in the two agencies' regulatory requirements,

and impose as little burden as possible on the participating parties.

Joint Discussion of Framework of the Proposed Rules

FRA's proposed rule. FRA proposes to require certain railroads

seeking to merge, consolidate, or acquire control of another railroad,

or ``start up'' operations as a railroad to file proposed SIPs with FRA

before consummating the regulated transaction. The transactions covered

would be as follows: (1) A Class I railroad, a railroad providing

intercity passenger service such as the National Railroad Passenger

Corporation (Amtrak), or a commuter railroad seeking to acquire, merge,

or consolidate with a Class I or Class II railroad, a railroad

providing intercity passenger service, or a commuter railroad; (2) a

Class II railroad proposing to consolidate, merge, or acquire another

Class II railroad with which it connects so as to involve the

integration of operations; (3) any merger, consolidation, or

acquisition resulting in operations that would generate revenue in

excess of the Class I railroad threshold, except those transactions

involving Class III freight only railroads; and (4) all start up

operations involving the establishment of a new line for passenger or

freight service generating revenue that would exceed the Class II

railroad threshold.

Such SIPs must systematically describe how each applicant railroad

would integrate its operations in all areas of rail safety. FRA would

then review the proposed SIPs to ensure that they provide a reasonable

assurance of safety. Should the plans be approved, FRA would monitor

the applicants' implementation of the SIPs until integration of

operations is complete. Each railroad must carry out the specific

measures addressed in an approved SIP at all times during the

integration phase. The rule proposes authorizing FRA to exercise its

enforcement remedies should a railroad conduct operations either

without an approved SIP or in violation of the same. Enforcement may

involve legal or equitable remedies, authorizing the agency to assess

civil penalties or issue emergency or compliance orders against a

recalcitrant railroad.

STB's proposed rule. The STB's proposed rule encompasses all of the

transactions covered by FRA's proposed rule, other than ``start up''

operations. The STB's proposed rule builds on FRA's proposed rule by

requiring a SIP containing information required under the FRA rule to

be filed by an applicant railroad involved in a covered transaction

with the STB as well as with FRA. The SIP would be required to be

submitted to the STB, and FRA, no later than the date the application

or exemption for authority to execute such a transaction is filed with

the STB. The Board would conduct an environmental review of the

application, and FRA would provide written comments on the adequacy of

the SIP to the Board's SEA, which is responsible for preparing the

Board's environmental documents. SEA would then include the SIP and any

additions or revisions based on continued discussions with FRA in the

draft environmental documentation. Should the Board approve the

transaction and require compliance with a SIP, FRA, as contemplated by

these rules, would work with the applicants to ensure safe integration

of the applicants' operations in accordance with the SIP, and any

revisions or modifications agreed to by FRA. The rule proposes that FRA

advise the Board on the status of implementation in accordance with an

agreement reached between STB and FRA for each proceeding. FRA also has

undertaken to advise the Board in writing when the proposed integration

of applicants' operations has been safely completed.

Below are FRA's and STB's separate and independent statements of

basis and purpose for the rules that each agency is proposing,

including a section-by-section analysis and the text of each agency's

proposed rules themselves.

FRA's Statement of Basis

Mergers and other rail transactions can result in safety problems

if not carefully planned and implemented, as evidenced by recent

mergers. The scope of rail mergers among, and acquisitions by, Class I

railroads has changed

[[Page 72227]]

dramatically in ways that present serious safety issues. As these

carriers, and the consolidations in which they are involved, become

larger and more complex, integrating operations, facilities, personnel,

safety practices, and corporate culture while maintaining safe

operations becomes more of a challenge. Two specific examples of

shortcomings experienced by railroads carrying out ``mega-mergers'' are

discussed below.

The mergers of the Union Pacific Railroad Company (UP) and the

Southern Pacific Transportation Company (SP) (collectively referred to

as UP/SP) and Burlington Northern Railroad Company (BN) and the

Atchison, Topeka and Santa Fe Railway Company (ATSF) (collectively

referred to as the BNSF) have demonstrated that integrating railroads

into an even larger carrier present significant challenges in a great

many areas, including: harmonizing information systems; coordinating

marketing; training dispatchers; modifying operational practices and

procedures; implementing personnel policies and bargaining agreements;

integrating corporate cultures; determining appropriate staffing needs;

and providing adequate rail facilities, infrastructure and equipment.

The following is a summary of the safety problems FRA identified with

respect to these two mergers. FRA refers interested persons to the

agency's regulatory evaluation for a more detailed discussion of these

problems, a copy of which has been placed in the docket for FRA's

proposed rule.

UP/SP, for instance, experienced severe congestion and related rail

service difficulties in integrating the two railroads with their

different histories, cultures, and operating practices. The post-merger

force reductions of 1,500 or more employees, coupled with inadequate

rail facilities, infrastructure and equipment, and increased traffic

led to service delays and disruptions, and congestion of lines in

Texas, as well as increased exposure to incidents and injuries as

overworked supervisors and train crew employees tried to cope with the

dilemma. As a result, the company suffered substantial financial losses

and safety problems surfaced.

FRA believes that this spike in UP/SP accidents and incidents is

attributed to management decisions that focused on reducing or

consolidating existing labor resources and reaching operating

efficiencies and productivity goals. For example, UP/SP offered

voluntary separation awards to seasoned SP employees and authorized

former UP employees to conduct operations on territory in which they

lacked the training on operating rules or practices governing such

operations. During its post-merger safety survey, FRA identified other

deficiencies, including incompatible computer database systems,

inadequate training of train dispatchers, and a failure to conduct

alcohol and drug testing consistent with UP's program. These

deficiencies culminated in a fundamental breakdown in sound railroad

safety practices, exposing unforeseen problems.

Likewise, BNSF encountered operational and safety problems when it

implemented its merger. FRA attributes the Cajon Pass freight train

derailment in February 1996, which was shortly after the merger, to a

lack of communication between railroad officials in the field and top

management officials in the corporate headquarters about the fact that

two-way end-of-train telemetry devices (EOT) on BNSF trains operating

over the pass did not function properly. Had the EOT device on the

derailed train functioned properly, the accident may have been averted.

See National Transportation Safety Board Accident Report PB96-916305

(Feb.1, 1996); FRA's final rule on Two-Way End-of-Train Telemetry

Devices, 62 FR 278, 279, Jan. 2, 1997. The derailment of 4 locomotives

and 45 freight cars (including 4 cars containing hazardous materials)

resulted in the death of the conductor and brakeman, serious injury to

the engineer, the burning of hazardous materials carried on the train,

the evacuation of the surrounding community, and the closing of

Interstate 15 for two days. Although BNSF was one of the first of the

major railroads to equip its trains with EOT devices in response to a

similar accident in 1994, pre-merger operating practices at BN did not

ensure for correct use of the equipment. In many cases the rear-end

device could not communicate with the head-end device. This fact was

never reported to top management for correction. In other instances,

train crews failed to use or activate the EOT equipment because of a

lack of instruction or training. A properly prepared and implemented

safety plan would have promoted communication that may have remedied

these conditions.

FRA has identified other safety problems attributed to the BNSF

merger. These include incompatible electronic database systems used by

BN and ATSF, resulting in terminal offices generating inaccurate and

incomplete train consist lists, which compromised the safety of train

crews hauling the shipments; a lack of coordination between the train

dispatching systems used by BN and ATSF when the merger was

implemented, resulting in a breakdown in many functional areas

endangering employees; following the merger, instructions were issued

to identify trains by using the initials ``BNSF'' before the locomotive

number, causing a potentially dangerous situation whereby two

locomotives (one BN and the other ATSF) could be identified as the same

locomotive; and BNSF's failure to communicate operational and safety

policies and procedures on the entire system when the merger went into

effect. Rather, the railroad continued to use the individual standards

established by the separate rail entities, thereby confusing

dispatchers, train crews, and roadway workers when working on or

operating equipment in unfamiliar territory. FRA believes that BNSF's

inadequate safety planning before implementing this complex transaction

contributed to these operational difficulties.

``Mega-mergers,'' consolidations, or acquisitions of control

clearly present implementation challenges that necessitate careful

planning to ensure safety. FRA believes that other rail transactions

covered by its rule, each of which involves significant changes to

existing rail operations, also pose serious challenges to rail safety.

These challenges include establishing a uniform corporate safety

culture, harmonizing information systems, training employees

responsible for moving trains and maintaining equipment and

infrastructure, and implementing standard operating practices and

procedures governing railroad operations.

FRA has found that even small railroads experience difficulties

when they attempt to integrate operations of an acquired property. To

illustrate, the Wisconsin Central, Limited, the parent company of the

Wisconsin Central Railroad (WC), a large regional railroad, purchased

the Fox Valley and Western Railroad Company (FVW) in 1995. Before the

merger, FVW lost many of its covered service employees due to buyouts,

retirement, or other employment opportunities. Recognizing that the FVW

had a shortage of available employees, WC migrated its managers to

repair track, inspect rolling stock, and operate trains and engines on

the FVW property. As a result, WC's accident rate remained static in

1995 and 1996, declining only from 13.79 to 10.54 per 1,000,000 train

miles.

FRA attributes WC's lack of progress in reducing its accident rate

to the migration directive. Managers were preoccupied with carrying out

railroad

[[Page 72228]]

operations instead of overseeing the workforce. WC's failure to conduct

effective efficiency testing of employees or monitor closely field

personnel on operating rules governing railroad operations jeopardized

the integrity of the railroad system, and may have contributed to the

elevated accident rate. Although WC, in partnership with FRA, has made

tremendous advances regarding this issue, the agency believes that

advance planning would have identified this shortcoming, necessitating

the parent company to hire employees to meet this labor shortage and

enable the managers to execute their traditional tasks.

Based on lessons learned from the UP/SP and BNSF mergers, the

Board, with FRA assistance, has taken steps to ensure the safe

implementation of rail transactions subject to its jurisdiction. As a

result of safety and operational problems associated with the UP/SP and

BNSF mergers that could have been avoided with sufficient advance

planning, FRA carefully examined the filings of the applicants Norfolk

Southern Railway Company's (NS) and CSX Transportation, Incorporated's

(CSXT) submissions in the Conrail Acquisition proceeding before the

Board. FRA's initial findings were not encouraging. After reviewing the

applicants' safety plans, the agency determined that the railroads had

not submitted comprehensive assessments of the safety effects of the

proposed acquisition. Neither railroad presented a systematic plan

explaining the manner in which it intended to implement the

transaction. As a result, FRA requested the Board to require the

carriers to provide detailed information on how they proposed to

provide for the safe integration of their corporate cultures and

operating systems, if the Board were to approve the proposed

transaction.

The Board followed FRA's recommendation and required the applicants

to file detailed SIPs pursuant to guidelines developed by

FRA.2 The railroads' submissions were made part of the

environmental record in that proceeding and addressed in the ongoing

environmental review process in that case. The SIPs were included in

the Draft Environmental Impact Statement, to enable review and comment

by interested persons. The Board's SEA also independently reviewed the

plans.

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\2\ Conrail Acquisition, STB Decision No. 52, served Nov. 3,

1997.

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FRA and SEA (in its Final Environmental Impact Statement (Final

EIS)) concluded that applicants had satisfactorily addressed the safety

implementation concerns presented by the transaction to date. Moreover,

shortly before the Final EIS was issued, the Board entered into a

Memorandum of Understanding (MOU) with FRA, to establish an ongoing

monitoring process while the proposed Conrail Acquisition was being

implemented.3 The MOU clarifies the actions FRA and the

Board will take to ensure that the SIPs are successfully implemented.

Under the terms of the MOU, FRA will monitor, evaluate, and review NS's

and CSXT's progress. The MOU provides that FRA may request action by

the Board in exercising its oversight over the applicants to correct

identified safety deficiencies resulting from the transaction. When

requesting Board action, FRA will provide recommendations to remedy the

deficiencies. FRA will also report periodically to the Board on the

safety integration of the Conrail Acquisition, but not less than

biennially. FRA will also report significant integration issues to the

Board if and when they are identified. FRA's reporting will continue

until FRA advises the Board in writing that the proposed integration

has been safely completed.

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\3\ In the Board's decision approving the Conrail Acquisition,

the Board imposed environmental mitigation conditions requiring the

applicants to (1) comply with their SIPs (and any modifications or

updates needed to respond to evolving conditions) and (2)

participate and fully cooperate with the ongoing regulatory

activities associated with the ongoing safety integration process

described in the MOU.

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Having developed a vehicle by which to evaluate safety integration

issues in Conrail Acquisition, the Board issued an advanced notice of

proposed rulemaking (ANPRM) requesting comments on the advisability of

promulgating rules to extend this process to other rail transactions

subject to the Board's jurisdiction.4 62 FR 64193, Dec. 4,

1997.

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\4\ The Board has required the same type of showing in the

proposed merger between Canadian National Railway Company and

Illinois Central Railroad Company, which is now pending before the

Board. Canadian National Railway Company, Grand Trunk Corporation,

and Grand Trunk Western Railroad Incorporated--Control--Illinois

Central Corporation, Illinois Central Railroad Company, Chicago,

Central and Pacific Railroad Company, and Cedar River Railroad

Company, STB Finance Docket No. 33556 (STB Decision Nos. 5 and 6,

served June 23, 1998, and Aug. 14, 1998).

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Based on the comments received in response to the ANPRM and the

Board's experience with the SIP process in Conrail Acquisition, the

Board issued a decision on July 27, 1998, finding sufficient merit to

warrant further exploration of establishing regulations addressing the

safe implementation of Board-approved transactions. The Board directed

the Board staff to develop a joint notice of proposed rulemaking,

addressing the issues that have arisen in this proceeding and that are

of concern to FRA, and to submit the proposed rule for the Board's

evaluation and approval before publishing the proposal.5

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\5\ This joint approach was predicated upon assurances by DOT

that a joint process would not subject the exercise by the Board of

its rulemaking authority in this proceeding to review by the Office

of Management and Budget, in contravention of the STB's

Congressionally mandated independence.

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Following the issuance of the July 27, 1998, decision, the STB

staff met informally with FRA staff and developed this joint rulemaking

document. The proposed rules are designed to establish procedures to

enable the Board and FRA to ensure adequate and coordinated

consideration of safety integration issues in rail transactions, while

minimizing the burdens on the participants.

FRA's Section-by-Section Analysis For Its Proposed Rule

FRA proposes to add part 244 to title 49, Code of Federal

Regulations, prescribing regulations on safety integration plans

governing railroad consolidations, mergers, acquisitions of control,

and start up operations. Below is an analysis of the regulatory

propositions proposed in the rule.

Section 244.1 Scope, Application, and Purpose.

Section 244.1(a) states the types of transactions and the parties

involved in such transactions that would require the filing of a SIP.

Section 244.1(a)(1) provides that a Class I railroad, a railroad

providing intercity passenger service, or a commuter railroad seeking

to acquire, merge, or consolidate with a Class I or Class II railroad,

a railroad providing intercity passenger service, or a commuter

railroad would be subject to this part. A Class II railroad proposing

to consolidate, merge, or acquire another Class II railroad with which

it would connect so as to involve the integration of operations would

require the filing of a plan. Also, any merger, consolidation, or

acquisition, excluding a transaction involving a Class III freight only

railroad, resulting in operations that would generate revenue in excess

of the Class I railroad threshold would be governed by part 244.

Finally, all start up operations as defined by this rule would trigger

part 244.

FRA intends to regulate significant transactions that left

unregulated, may compromise railroad safety. The agency believes that

railroads generating operating revenue, measured in 1991 dollars, in

excess of $250 million per year, i.e., the Class I railroad threshold,

[[Page 72229]]

are entities transporting a large volume of freight that need to be

scrutinized when they want to join with another large-scale carrier.

Given the problems identified with recent Class I mergers, FRA proposes

regulating Class I transactions.

Correspondingly, FRA believes that passenger railroads, whether

they are intercity or commuter operations, that participate in a

regulated transaction are sophisticated operations requiring Federal

Government oversight. Class II railroads seeking to execute a

transaction in which they would directly interchange traffic and all

transactions, excluding Class III freight only railroads, in which the

consummation of operations would produce revenue in excess of the Class

I revenue threshold, irrespective of geographic limitations, would also

be regulated. Class II railroads have operating revenues, measured in

1991 dollars, between $20 million and $250 million per year and include

such carriers as WC, Florida East Coast Railway, and Montana Rail Link,

Inc. FRA posits that these entities seeking to directly interchange

freight with each other present a complex transaction involving the

transfer or sharing of employees or equipment. Similarly, large-scale

transactions generating revenue in excess of $250 million per year

would create a railroad of complex magnitude. Again, the rule proposes

requiring plans from these applicants, setting out the manner and

methods in integrating such transactions.

The proposed rule would also govern start up railroads. ``Start

ups'' involve the establishment of a new rail line for intercity or

commuter passenger service or freight service generating revenue that

would exceed the Class II railroad threshold. See proposed Section

244.9 for the definition of ``start up operation.'' Commencing railroad

operations present the development and deployment of an infrastructure

system never before tried or tested. The use of rail equipment, track,

and signals, and the employment of operating rules governing the

movement of trains and designation of roadway work demands familiarity

with the new system and advance planning of operations scheduled to be

conducted. A SIP captures the need to forecast the step-by-step

implementation of a new line from construction to completion.

At this time, FRA does not intend to regulate the merger of Class

II railroads that do not directly interchange traffic or transactions

involving terminal railroads; rail line sales; or trackage rights

requests. The proposed rule further does not cover Class III freight

only railroads, i.e., those railroads that generate revenue, measured

in 1991 dollars, of less than $20 million per year. The agency believes

that these railroads engage in transactions that are not so complex or

hazardous as to warrant regulation. Nevertheless, FRA solicits comments

from interested parties as to whether the final rule should cover these

transactions, including transactions involving Class III railroads over

which passenger service would be provided, and whether the railroads

involved should prepare ``full blown'' SIPs or meet lesser safety

informational requirements. The comments should articulate a detailed

rationale for regulating these transactions and the types of

information that should be required together with evidence of any

consequences in leaving these transactions unregulated.

Paragraph (b) of this section explains the basis for the rule. SIPs

are designed to achieve a reasonable level of safety while regulated

transactions are being implemented. The source of the rule is premised

on the complexity of large transactions and the need to plan ahead

before carrying out such activities. FRA is confident that plans

setting out how railroads will merge, consolidate, acquire another

railroad, or start up business will promote efficiency, economy, and

safety in the railroad industry.

Section 244.1(c) advises applicants that part 244 applies only to

FRA's disposition of a regulated transaction. It does not apply to the

Board's process in reviewing transactions subject to its jurisdiction.

See 49 CFR part 1106 for regulations governing transactions regulated

by STB. The rule proposes that transactions within the Board's purview

would require a SIP process involving both FRA and STB before a

railroad may consummate a proposed transaction and conduct operations

over the affected property.

Section 244.3 Preemptive Effect.

Section 244.3 informs the public as to FRA's views regarding the

preemptive effect of the proposed rule. Section 20106 of title 49,

United States Code, provides that all regulations prescribed by the

Secretary relating to railroad safety preempt any State law,

regulation, or order covering the same subject matter, except a

provision necessary to eliminate or reduce an essentially local safety

hazard that is not incompatible with a Federal law, regulation, or

order, and that does not unreasonably burden interstate commerce. With

the exception of a provision directed at an essentially local safety

hazard, 49 U.S.C. 20106 preempts any State regulatory agency rule

covering the same subject matter as these regulations proposed.

Section 244.5 Penalties.

Section 244.5 identifies the penalties that FRA may assess upon any

person, including a railroad, or employees of a carrier, that violates

any requirements of this part. The penalty provision, which parallels

penalty provisions contained in other FRA-issued regulations, is

authorized by 49 U.S.C. 21301, 21304, and 21311. In essence, any person

who violates any requirement of this part or causes the violation of

any such requirement is subject to a civil penalty of at least $500 and

not more than $11,000 per violation. FRA may assess civil penalties

against individuals only for willful violations, and it may assess a

penalty of up to $22,000 per violation where a grossly negligent

violation or a pattern of repeated violations creates an imminent

hazard of death or injury to persons, or causes death or injury. Each

day a violation continues constitutes a separate offense. A person may

be also subject to criminal penalties for knowingly and willfully

falsifying entries or reports required by these regulations.

Paragraph (b) of Sec. 244.5 provides that FRA may invoke any of its

other enforcement remedies available under the safety laws if a

railroad fails to comply with this part. In particular, the agency

advises the regulated community that it is authorized to issue an

emergency or compliance order or seek the issuance of an injunction

prohibiting certain conduct should a railroad violate Sec. 244.21 of

this part. See, e.g., 49 CFR part 209, Appendix A. For example, should

FRA reject a proposed SIP and an applicant commence railroad operations

on property subject to the plan anyway, the agency may order the

railroad to cease operations until it receives approval of the plan.

FRA believes that the inclusion of penalty provisions for failure

to comply with the regulations is important to ensure that applicants

obtain agency approval of a proposed SIP before implementing a

regulated transaction and execute all measures provided in an approved

plan. The final rule will include a schedule of civil penalties in

Appendix A to 49 CFR part 244, to be used in connection with this part.

Because such penalty schedules are statements of policy, notice and

comment are not required before their issuance. See 5 U.S.C.

553(b)(3)(A). Nevertheless, commenters are invited to recommend the

appropriate penalties

[[Page 72230]]

corresponding to the relative seriousness of each type of violation.

Section 244.7 Waivers.

Proposed Sec. 244.7 sets forth the procedures for seeking a waiver

of compliance with the requirements of FRA's rule. A request for such a

waiver may be filed by any party subject to part 244. FRA will conduct

its own independent investigations to determine if an exception to the

general criteria can be made without compromising or diminishing rail

safety.

In filing a petition for a waiver, FRA respectfully refers an

interested party to the requirements enunciated at 49 CFR part 211 for

the procedures that must be followed. FRA recognizes that certain

transactions may arise that the agency did not intend to regulate. FRA

would thus entertain such a petition, provided that the petitioner can

show that the transaction at issue involves an incidental impact on

rail operations that would not pose a risk to rail safety. The burden

rests with the entity requesting the waiver to meet this criterion.

FRA may grant the petition should it determine that it is in the

public interest and is consistent with rail safety. FRA also reserves

the right to institute any conditions on the petition as it believes

are necessary to promote rail safety. The agency advises the regulated

community that it enjoys plenary authority to approve or reject any

petition for a waiver of this rule and its decision is ``agency

discretion by law.'' 5 U.S.C. 701(a)(2); see also Heckler v. Chaney,

470 U.S. 821 (1985).

Section 244.9 Definitions.

This section contains an extensive set of definitions introducing

the regulations. FRA promulgates these definitions to clarify the

meaning of important terms as they are used in the text of the proposed

rule. The proposed definitions are carefully worded to minimize any

possible misinterpretation of the rule. Several terms introduce new

concepts not published in any other FRA regulations. These definitions

require further discussion as set forth below.

The term ``amalgamation of operations'' is intended to cover the

migration, combination, or unification of one set of railroad

operations with another set of railroad operations. For example, if a

purchasing railroad intends to change personnel responsible for

conducting field operations, or replace, rehabilitate, refurbish, or

renovate existing track, bridges, radio, or signal and train control

systems, then it is amalgamating operations as defined. Similarly, an

applicant deploying, relocating, or transferring roadway equipment or

rolling stock from one railroad property to another is conducting

activities within the purview of this definition. In other words,

amalgamation is triggered when a railroad allocates human or capital

resources that impact operations from one entity to another.

The definitions of ``applicant'' and ``Class I or Class II

railroad'' are self-explanatory. ``Applicant'' covers a Class I or

Class II railroad, a railroad providing intercity passenger service, or

a commuter railroad that seeks to consummate a regulated transaction.

``Class I or Class II railroad'' is defined by regulations issued by

the Board, which are found at 49 CFR 1201; General Instructions 1-1.

Generally, STB classifies a Class I railroad as having an annual

carrier operating revenue of $250 million or more, and a Class II

railroad as having an annual carrier operating revenue between $20

million and $250 million. (A Class III railroad has an annual carrier

operating revenue of less than $20 million.) In accordance with the

Board's regulations, the annual carrier operating revenue is measured

in 1991 dollars.

The term ``best practices'' means the safest and most efficient

rules or instructions governing rail operations that are issued by a

railroad. FRA does not intend to substitute its judgment for that of a

railroad in determining safety and efficiency. Rather, the agency will

defer to an applicant's understanding and application of its operating

rules and practices that promote these interests.

The definition of ``corporate culture'' is new. As proposed, the

term means the attitudes, commitments, directives, and practices of

railroad management with respect to safe railroad operations. FRA

intends corporate culture to encompass a railroad management's

attitudes, directives, planning and resource allocations on the subject

of safety. Corporate culture thus represents a company's attitude

toward safety as identified in its operating rules and practices, and

its policies in eliminating individual deficiencies and planning for a

harmonious integration of railroad operations. FRA solicits comments

whether persons agree with this definition.

``Control,'' ``consolidation,'' ``merger,'' and ``start up'' are

terms describing the types of transactions governed by this part. The

definition of ``control'' is borrowed from the statutory definition at

49 U.S.C. 10102. FRA intends to regulate a proposed transaction in

which one or more railroads seek to acquire or exercise control of

property. One example is NS's and CSXT's acquisition of Consolidated

Rail Corporation (Conrail) in 1998, which involved the dividing up of

an existing Class I railroad by two separate Class I railroads. NS and

CSXT will now own and operate over property that was once possessed by

an independent carrier. Such a transaction fits within the meaning of

``control.''

As defined in this part, ``merger'' means an equity purchase of a

Class I or Class II railroad, a railroad providing intercity passenger

service, or a commuter railroad by another Class I or Class II

railroad, a railroad providing intercity passenger service, or a

commuter railroad. The transaction must involve the purchase of assets

and shareholder equity, and assumption of liabilities held by the

railroad acquired. Similarly, ``consolidation'' exists when a railroad

takes over another railroad's assets and/or liabilities with the

resulting entity having the combined capital, powers, and subsidiaries

and affiliates, if applicable, of all of its individual constituents.

Put another way, a merger occurs when a corporation, known as the

surviving corporation, buys another corporation, with the result that

the former company's existence continues whereas the latter company's

existence ceases. This principle is best expressed in the following

equation: A Corporation + B Corporation = A Corporation. In contrast, a

consolidation occurs when two or more constituent corporations cease to

exist and a new consolidated corporation emerges. This principle is

best expressed in the following equation: A Corporation + B Corporation

= C Corporation. In either transaction, the surviving or consolidated

corporation takes over the assets of the former constituent corporation

and assumes its liabilities.

A ``start up operation'' exists when an entity initiates railroad

operations on a rail line or lines involving intercity or commuter

passenger service or freight service in excess of the Class II railroad

threshold, i.e., revenue in excess of $20 million per year.

The definition of ``railroad'' is based on 49 U.S.C. 20102 (1) and

(2), and encompasses any person providing railroad transportation

directly or indirectly, including a commuter rail authority that

provides railroad transportation by contracting out the operation of

the railroad to another person, as well as any form of nonhighway

ground transportation that runs on rails or electromagnetic guideways,

but excludes urban rapid transit not connected to the general system.

[[Page 72231]]

The term ``Safety Integration Plan'' means a comprehensive written

plan submitted to and approved by FRA in compliance with this part that

details the measures for ensuring safe railroad operations during

implementation of a proposed transaction and assures compliance with

the safety laws. FRA intends a SIP to be a formal written document that

systematically describes how each element set out in Sec. 244.13 will

be integrated safely into the operations of the applicant railroad. The

SIP must comprehensively consider and analyze all significant sources

of increased safety risk, and discuss the sound procedures to be

adopted for implementing the transaction.

Finally, FRA borrows the definitions of ``environmental

documentation'' and ``Section of Environmental Analysis'' from the

definitions enumerated in the Surface Transportation Board's portion of

the joint rule. The meaning and application of these definitions may be

found at 49 CFR part 1106, which is the Board's counterpart of this

rule.

Section 244.11 Contents of a Safety Integration Plan

Proposed Sec. 244.11 sets out the structure of the SIP an applicant

must file. The litany identifies elements that must be addressed in

each subject matter area provided in Sec. 244.13. In general, the

regulatory proposition requires a railroad to prepare a roadmap or play

book explaining the practices and procedures, financial commitment, and

time frame for integrating or commencing field operations subject to

the transaction.

Paragraph (a) of Sec. 244.11 is bifurcated based on the type of

transaction proposed. A railroad proposing to start up operations must

address the physical and operational characteristics of the new line or

lines and the best practices to be adopted. For instance, an applicant

intending to construct a new line must provide information about the

terrain over which operations will commence and the establishment of

divisions and districts governing rail operations. In contrast, an

applicant seeking to merge, consolidate, or acquire control of another

railroad will be required to explain the different characteristics

between itself and the other railroads subject to the transaction. In

either case, the applicant must address the best practices of the

resulting transaction, meaning the safest and most efficient rules

employed in the railroad industry.

Next, the regulation requires a specific description of the manner

and method of operations proposed in a step-by-step chronology. Again,

an applicant must anticipate how it will safely implement the proposed

transaction for each subject matter area defined. The plan must also

describe the human and capital resources appropriated to carry out the

proposed transaction, the measures to comply with the safety laws, and

a proposed timetable, from start to finish, to implement the

transaction. FRA believes that the contents serve as a foundation for

implementing the plan. The contents must be descriptive, coherent, and

logical to lend credibility to the plan. FRA posits that a well

organized proposal setting out a plan of execution of detailed action

items will serve the agency's and railroad's interest in safely

integrating operations.

Section 244.13 Subjects To Be Addressed in a Safety Integration Plan

Involving an Amalgamation of Operations or Start Up Operations

This section contains the substantive information that must be

discussed in a SIP when a railroad seeks to amalgamate operations in a

regulated transaction. As explained above, a transaction in which a

railroad intends to transfer employees or rolling equipment from one

entity to another, or make changes in existing infrastructure,

precipitates an amalgamation under this part. FRA believes that these

operational changes are complex in nature and require thoughtful

analysis before they are carried out. A comprehensive assessment of

certain subject matter areas serves to direct applicants to focus on

instituting a safe transition of railroad operations. Again, the

premises are that advance planning, systematic thinking, and a written

plan promote safe implementations.

The subject matter areas are divided into two categories--physical

safety and cultural environment. The physical safety rubric contains

seven functional areas, which are track, bridges, and structures;

dispatching centers; operating practices; car and equipment maintenance

and inspection; signals and train control; hazardous materials; and

highway-rail grade crossings. FRA has identified these areas as

critical disciplines that are impacted by a regulated transaction when

operations are amalgamated. To protect the integrity of rail

operations, FRA proposes that these elements be addressed in a plan.

Paragraph 244.13(a) requires each applicant to explain the basis

for its safety culture. Specifically, the rule proposes requiring a

railroad to identify and describe differences in corporate cultures for

each safety-related area; describe how these cultures lead to different

practices governing rail operations; and explain how the proposed

integration of corporate cultures will result in a system of ``best

practices'' when the proposed transaction is implemented.

Historically, each railroad has possessed distinctive ways of

conducting its business that its employees identify as its way of

managing affairs, and that they are usually inclined to consider the

correct or best way of executing tasks. Mergers, consolidations,

acquisitions, and start up operations are complicated transactions,

requiring management and labor to embrace a culture that powerfully

emphasizes safety and good communications among management, employees,

and the employees' union representatives. It is imperative that the

applicant describe how it intends to produce the desired corporate

culture that underscores safe railroad operations.

FRA believes safety culture is an instrumental element in achieving

rail safety. For purposes of the proposed rule, the term ``corporate

culture'' means management's attitudes, directives, planning, and

resource allocations on the subject of safety. These elements

ultimately provide the vision and direction for all levels of railroad

employees and influence their training, health, morale, and safety

practices and habits. The safety culture of U.S. railroad companies,

especially the major Class I railroads, is established by the

railroad's chief executive officer and permeates throughout the entire

rank-and-file of employees. Management's attitudes, directives,

planning, and resource allocations all reflect the mission and vision

of a company, and influence the training, morale, and safety practices

of carrier employees. Successful integration requires a railroad to

evaluate its underlying priorities, practices, and philosophies during

the transition phase. For example, FRA views UP's and BNSF's immediate

post-merger reduction in employment to reach financial efficiencies

created a loss of talent and institutional knowledge for the two

railroads. This shortcoming led to a lack of familiarity with railroad

operations, employee misunderstandings, and communication gaps,

increasing the railroads' exposure to accidents, incidents, and

fatalities. FRA anticipates that a SIP addressing an applicant's

attitudes and practices toward safety will enhance the harmonious

integration of a unified system of operations.

Against this background, a railroad is required to discuss the

different cultures

[[Page 72232]]

within the various disciplines and explain how it will adopt the ``best

practices'' when the proposed transaction is implemented. Besides

reviewing the safest practices to be instituted, FRA is interested in

learning the methodology employed in developing the final work product.

An applicant is thus encouraged to trace the steps taken to reach the

ultimate measures to be adopted.

Most important, an applicant must designate safety as its highest

priority. Although productivity and efficiency drive the transaction,

there must be commitment to rail safety at all levels of a corporate

organization. Evidence has shown that when productivity eclipses

safety, congestion and service difficulties arise, leading to

operational hazards and increases in derailments and collisions. FRA

believes that a systematic analysis of a railroad's safety culture will

center the applicant's attention on safety, eliminating the ``root

cause'' of accidents and incidents. Communications patterns about

safety matters are especially important. When safety information is not

communicated clearly and promptly both up and down the corporate

hierarchy, safety problems ensue. That said, FRA invites the regulated

community to comment on whether the agency should regulate ``corporate

culture'' at all, and an applicant's ability to apply this element to

its business practices and the manner necessary to comply with this

requirement.

Section 244.13(b) requires each applicant to discuss its training

and educational programs to ensure that its employees and supervisors

responsible for field operations are proficient and qualified. The

specific employees include train and engine service employees,

dispatchers and operators, roadway workers, signal employees,

mechanical officials, and hazardous materials personnel. These

employees are on the ``front lines'' of the industry and need to be

familiar with all aspects of their occupations. A plan should include

details identifying the scope and depth of the type of training

operating personnel will receive. Training should also discuss the

resources allocated to conduct and complete training, and a proposed

schedule for accomplishing this task.

Proposed paragraph 244.13(c) provides the operating practices

information that must be contained in a SIP. There are five elements

that are within the discipline--operating rules, accidents/incidents,

hours of service laws, and the alcohol and drug and locomotive engineer

qualification and certification programs. Each requirement is self-

explanatory as enumerated in the regulatory text and must be addressed

in a plan.

FRA is convinced that railroad safety is best ensured by the strict

adherence to operating rules established by a railroad. Given that many

railroads either issued their own independent operating rules or

adopted operating rules published by the Northeast Operating Rules

Advisory Committee or General Code of Operating Rules, operations are

being governed by different sets of rules. To ensure that operations

are properly executed, an applicant must specify the operating rules,

timetables, and timetable special instructions that will govern these

activities.

A railroad must also identify the reporting procedures for any

reportable accident under 49 CFR part 225, and its policy on harassment

and intimidation, including a copy of its internal control plan as

required by 49 CFR 225.33. The applicant must address measures it will

take to comply with the Railroad Accidents/Incidents regulations found

at 49 CFR part 225, administer the monthly reporting requirements as

mandated by law, and inform employees about procedures available for

those who perceive intimidation and harassment under part 225.

The rule would further require a railroad to identify its post-

accident toxicological testing, reasonable cause testing, and random

alcohol and drug testing programs as required under 49 CFR part 219 and

how it intends to integrate operations subject to the transaction with

the existing programs. An applicant would also be required to set out

the qualification and certification program of locomotive engineers to

be employed and the manner in which it will integrate the new divisions

with the program. Finally, the plan must discuss an applicant's

proposed measures to comply with the hours of service laws and hours of

service recordkeeping regulations and FRA's interpretations of the

same. The plan must also address efforts taken to minimize fatigue of

covered service employees, i.e., employees who perform train and

engine, dispatching, or signal system service. FRA believes that

employee fatigue has caused or contributed to accidents and incidents

precipitated by human error. Employees who are well rested and

refreshed are less likely to commit errors affecting rail operations.

Thus, initiatives taken to minimize fatigue enhance safety in the

field, necessitating its inclusion in a SIP.

Section 244.13(d) would require a railroad to identify the

qualification standards for employees who inspect, maintain, or repair

rolling stock and designate the facilities that will repair the rolling

equipment. A plan must provide adequate assurances that mechanical

officials who are responsible for performing required inspections and

tests of the equipment are proficient in mechanical practices to

safeguard the use of freight or passenger cars and locomotives on a

railroad. The plan must further disclose the inspection facilities to

be employed for repairing rolling stock. This provision will ensure

that an applicant plans which roundhouses will be retained to maintain

equipment in compliance with the safety laws while efficiently using an

existing engine or car fleet. Paragraph (e) of Sec. 244.13 states that

a railroad must identify the signal and train control systems employed,

and maintenance, capital improvement, and research and development

projects planned for signal and train control operations. FRA is

interested is reviewing a SIP proposing to migrate or integrate an

acquired property or line segment system with an existing signal

system. Where an incompatibility between signal and train control

systems is found, safety may be jeopardized. The plan should discuss a

railroad's proposal to reconcile or harmonize dissimilar signal

practices and standards to avoid any possible misunderstandings or

miscommunications that may impact safety. Likewise, Sec. 244.13(f)

requires a railroad to identify the maintenance and inspection programs

for track and bridges. The plan should provide assurances that the

structures are safe or will be repaired, rehabilitated, or replaced, if

necessary, to ensure the integrity of the property.

Section 244.13(g) proposes requiring an applicant to address

hazardous materials in a SIP. There are two parts to this requirement.

First, an applicant must set out a hazardous materials inspection

program covering field inspection practices, communication standards

(i.e., shipping descriptions, certification, marking, labeling,

placarding, and emergency response information), and emergency response

procedures. Second, the railroad must explain its development and

delivery of an automated system for records of hazardous materials

shipments. FRA asserts that a SIP must include this information to

enable the agency to assess the safety of the railroad's hazardous

materials transportation system. A plan quantifying inspections of

hazardous materials shipments, shipping papers, and emergency response

measures provides a baseline

[[Page 72233]]

to evaluate the integrity of the program. Concurrently, information

about the computer software system retaining hazardous materials data

is vital to determine the reliability and accuracy of the data entered

and retained. FRA expects railroads embracing the latest technology to

install automated systems offering ``fail-safe'' features to prevent

the entry of ``freight all kinds'' for hazardous materials shipments or

incorrect waybills generated from electronic data interchange or

Standard Transportation Commodity Codes (STCC) information received

from a shipper. The program deployed must make information on hazardous

materials shipments immediately available for inspection and

photocopying by FRA officials during normal business hours. Above all,

an applicant must ensure that the automated system provides timely

availability of hazardous materials shipping papers to train crews,

clerical personnel, and agency officials.

Paragraph 244.13(h) sets out four criteria on dispatching

operations that a plan must address. They are the dispatching system to

be adopted, the migration of the existing system to the adopted one, if

applicable, the qualifications for determining duties performed by

dispatchers or operators, and the volume of work assigned to

dispatchers or operators. Undoubtedly, train dispatching is an integral

element in moving trains, engines, and rolling equipment in a safe and

efficient manner. To accomplish this task, a railroad must discuss

which dispatching system or systems will direct traffic on the property

subject to the transaction. The plan should address how a dispatching

system will be integrated in a deliberate manner to prevent service

disruptions and the measures to be taken to combat excess service.

Excess service fatigues dispatchers and operators, and railroads are

encouraged to develop initiatives reducing workload capacities to

further reduce the risk of dispatcher error.

Highway-rail grade crossing safety is another element that a SIP

must address. The plan must provide a program discussing grade crossing

signal system safety, emergency response measures, public education

initiatives, and proposals to improve grade crossings and grade

crossing system warning devices. Statistics show that the vast majority

of fatalities and injuries during railroad operations occur at grade

crossings due to collisions or trespass incidents. It has been FRA's

experience that a railroad consummating a transaction will increase

traffic on certain designated lines. Before increasing traffic density

in a territory, the carrier needs to consider its impact on safety at

grade crossings. Accordingly, an applicant should discuss its

commitment to improve existing grade crossing signal systems and

warning devices and educate the public about grade crossing safety in

its plan. FRA believes that a prevention program will elevate rail

safety by reducing accidents and injuries occurring at crossings.

Section 244.13(j) covers personnel staffing. A SIP must provide

data on the number of employees, both current and proposed, for certain

occupations associated with railroad operations. The eight specific

tasks are enumerated in the regulation. FRA believes that immediate

staff reductions in these areas may be detrimental to safety.

Institutional knowledge is essential to ensure a smooth transition in

operations. Unilateral dismissals will adversely impact certain crafts

by placing more responsibility on less trained or experienced

personnel. This feature, coupled with an increased workload, may place

undue pressure on these employees to execute tasks. Consequently, there

is a greater likelihood of human error, thereby compromising safety in

the field. Therefore, a railroad needs to plan the number of employees

necessary to carry out the assignments. The proposed rule in no way

establishes a guideline or yardstick for staffing purposes. Rather, the

rule requires an applicant to contemplate staffing levels and their

impact on discharging operations. A plan should simply provide a nexus

between staffing needs and adequate rail safety.

Paragraph 244.13(k) requires an applicant to set out its capital

investment program. The program must describe the railroad's intended

investments in the company's infrastructure, including its track and

structures, signals and train control systems, and locomotives, freight

cars, and other forms of rolling stock. The plan must also address

changes to existing investment forecasts and explain those differences.

Capital investment requires advance planning, which is the root of

this proposed rule. Transition in operations necessitates improvement

in existing infrastructure to increase capacity, volume, and

efficiency, and enhance safety. The rule would require an applicant to

identify a blueprint for allocating resources serving these objectives.

FRA anticipates that a SIP directing a railroad to appropriate capital

for infrastructure needs would improve performance while eliminating

systemic deficiencies that impair a transportation network.

Proposed section 244.13(l) provides that an applicant must describe

the relationship of freight and passenger service on railroad lines

subject to a regulated transaction. For instance, if an intercity

passenger or a commuter railroad operates on property that is within

the terms and conditions of a proposed merger, consolidation, or

acquisition, the railroad must address the manner in which it will

coordinate passenger and rail service to maintain a safe co-existence

between the two services. A SIP should explain the level of

communication between a freight railroad and a passenger railroad about

the operating rules and practices that will govern these operations

should the transaction be approved. FRA encourages applicants to

discuss their emergency response programs, joint safety exercises, and

efforts to coordinate automated systems programs in their plans. The

SIP, in short, must identify the potential safety impact on the

services and the measures directed to minimize any consequences.

Proposed paragraph 244.13(m) identifies the final element that must

be discussed in a plan. That element--information systems

compatibility--is essential for integrating an applied technology

system and providing continuity in an information database network that

ensures safe operations and protects customer service. An applicant

must address the steps it intends to execute to provide data on train

consists, freight car and locomotive movements and movement history,

dispatching operations, accident/incident reporting and recordkeeping

requirements, and emergency cessation of operations. The information

system must provide a single interface of data with a railroad's

customers, transmitting and receiving information without interruption.

Such planning requires the coordination and consensus of the parties in

a regulated transaction, enabling interested persons and FRA officials

to track the movement of shipments and equipment and download

information to determine compliance with the safety laws. Thoughtful

and careful planning will ensure a smooth and safe transition of

operations in the technology area.

Section 244.15 Subjects To Be Addressed in a Safety Integration Plan

Not Involving an Amalgamation of Operations or Start Up Operations.

The rule proposes requiring a railroad engaging in a transaction

that does not involve an amalgamation of operations or start up

operations to file a more

[[Page 72234]]

limited SIP. Those subject matter areas are training (Sec. 244.13(b)),

personnel staffing (Sec. 244.13(j)), and capital investment

(Sec. 244.13(k)).

FRA submits that these transactions do not involve a change in rail

operations because there is little, if any, migration of personnel or

equipment. FRA's principal interest in reviewing and approving SIPs is

to secure commitments from a railroad when infrastructure changes are

expected, which impact operations and correspondingly, safety. The

transactions described under this proposed section are akin to ``paper

transactions'' rather than ``operational transactions,'' meaning that

aside from revisions to corporate letterhead, any changes in operations

are minimal. In an abundance of caution, however, FRA believes that a

plan addressing training, employment, and capital investment would be

instructive for an applicant to be sensitive to topics that impact rail

safety in general. FRA welcomes comments from interested persons as to

whether railroads engaging in these transactions should be required to

file a more limited SIP, or a SIP at all.

Section 244.17 Procedures.

Proposed Sec. 244.17 sets out the procedures applicants must follow

in filing a SIP with FRA. Paragraph 244.17(a) explains that a railroad

must file a SIP with FRA and, for those transactions within the Board's

jurisdiction, file the same with STB no later than the date it submits

its application or exemption to the Board. FRA, however, intends to

make itself available to work with an applicant before it files its

proposed SIP on the elements that must be addressed in the plan. To

illustrate, the agency extended its assistance to the Canadian National

Railway Company (CN) before it filed its application to purchase the

Illinois Central Railroad Company (IC). The agency met and conferred

with CN corporate officials about its SIP and delineated specific

subject matter areas that the plan had to discuss to satisfy FRA's

concerns. As a result, CN was better positioned to file an acceptable

SIP with the agency and the Board within the STB's statutory time

frame. FRA will review the proposed SIP and provide comments, if any.

The rule provides that the applicant must file additional information

supporting its plan should FRA require the same. FRA expects that the

applicant and agency will engage in an iterative process to resolve any

questions about the foundation and implementation of the plan.

Paragraph 244.17(d) proposes requiring FRA to issue its findings of

fact and conclusions on the proposed SIP to the STB for those

transactions requiring Board approval. (FRA's standard of review of a

proposed SIP is discussed below.) FRA (and STB in its proposed rule)

propose requiring FRA to submit its report to the Board's SEA at a date

sufficiently in advance of the Board's issuance of the draft

environmental documentation in the case to permit incorporation in the

draft environmental record. The schedule will enable STB to issue its

draft environmental documentation, which will incorporate FRA's

comments. If the rail carriers have not produced a SIP that is fully

acceptable to FRA, FRA's filing to the Board will note the progress

that has been made and the areas that the carriers still need to

address. FRA intends to continue working with the applicants after the

SEA files its draft environmental documentation, but before the Board

disposes of the applications. This process was followed in the Conrail

Acquisition case and the proposed merger of CN and IC. FRA believes

that a flexible response is necessary to enable an applicant to

complete an acceptable comprehensive plan.

Section 244.17(e) requires an applicant to coordinate with FRA in

carrying out the transaction in accordance with the SIP, assuming FRA

and, if applicable, STB approve the proposed plan. In other words, the

rule proposes FRA to continue exercising oversight of a railroad after

its proposed SIP is approved to ensure that it correctly implements the

plan. FRA believes that safety is a continuum that begins with the

filing of a proposed SIP and continues until the transaction is

implemented consistent with the plan. Therefore, FRA would monitor a

railroad's performance in carrying out the plan until integration is

complete. In furtherance of its role, FRA envisions consulting with the

Board at all appropriate stages of the SIP implementation, and advising

the Board on the status of the implementation process consistent with a

MOU executed between FRA and STB. FRA's communication with the Board

would continue until integration is complete. The interplay between FRA

and the Board is set out in paragraph 244.17(f). These reports will

enable the STB to exercise its oversight of transactions that it

approves.

Section 244.19 Disposition.

Section 244.19 addresses FRA's review and approval process of a

proposed SIP. Paragraph 244.19(a) enumerates the agency's standard of

review. The plan must be thorough, complete, and clear, and detail a

logical and workable transition from conditions existing before the

proposed transaction to conditions intended to exist after the

transaction is consummated. Put another way, the plan must explain in a

comprehensive manner how the railroad intends to go from start to

finish in carrying out the proposed transaction. FRA underscores the

importance of addressing each of the subject matter elements within the

framework of the SIP's contents as provided in Sec. 244.11.

FRA then would evaluate the SIP to ensure that it provides a

reasonable assurance of safety at every step of the proposed

transaction. The plan must be sufficient to comply with the safety laws

and otherwise provide for safe railroad operations, and rational to

satisfy expectations of integration of operations. FRA emphasizes that

it has no intention of operating the railroad or questioning management

decisions implementing the SIP. Instead, the agency sees it role as

conducting a rational basis review of the SIP, meaning that the plan

must be reasonable. Should the SIP prove satisfactory, FRA would issue

its notice of approval. Approval is conditioned on the applicant's

successful execution of all of the subject matter elements in the plan,

including all later developments subject to FRA approval that could not

be completed before the agency's approval of the plan.

Finally, the rule proposes authorizing a railroad to amend its SIP

with FRA's approval or for FRA to require a railroad to amend its

approved plan should circumstances dictate. Plan approval is contingent

upon fulfillment of the elements enunciated in the plan and execution

of operations that were unforeseen when the proposed SIP was filed. For

example, NS and CSXT in the Conrail Acquisition, and CN and IC in their

intended merger continue to update their respective plans when they

identify resources, commitments, or schedules that were not anticipated

when they filed their proposed SIPs. FRA perceives a SIP and its

implementation as an evolutionary process requiring fine-tuning when

conditions warrant. Should the agency identify a shortcoming of an

approved SIP during implementation, it reserves the right to require

the railroad to amend its plan consistent with rail safety.

[[Page 72235]]

Section 244.21 Compliance and Enforcement.

Paragraph 244.21 explains FRA's role in enforcing the rule and

ensuring compliance with the regulations. Each railroad seeking to

carry out a regulated transaction must have an approved SIP before it

may change its operations on the property subject to the transaction.

FRA further notes that where the Board has been involved in authorizing

the transaction, FRA would consult with the Board at all appropriate

stages of SIP implementation. Additionally, each railroad must

successfully execute each measure within its approved SIP. FRA reserves

the right to exercise any of its enforcement remedies available under

the safety laws should a railroad not comply with either one of these

requirements. These legal and equitable remedies, which are more fully

discussed in Sec. 244.5 above, include civil or criminal prosecution of

any violation identified. FRA expects to exercise its enforcement

remedies in a judicious fashion.

Regulatory Impact of FRA's Proposed Rule

Executive Order 12866 and DOT Regulatory Policies and Procedures

FRA's proposed rule has been evaluated in accordance with existing

policies and procedures and is considered to be nonsignificant under

Executive Order 12866 and significant under DOT policies and procedures

(44 FR 11034, Feb. 26, 1979). The agency's proposal is deemed

significant under DOT's policies and procedures because this rulemaking

action embodies joint rules issued by independent regulatory agencies.

FRA has prepared and placed in the docket a regulatory evaluation of

the proposed rule. This evaluation estimates the costs and consequences

of the proposed rule as well as its anticipated economic and safety

benefits. It may be inspected and photocopied during normal business

hours by visiting the FRA Docket Clerk at the Office of Chief Counsel,

FRA, Seventh Floor, 1120 Vermont Avenue, N.W., in Washington, D.C.

Photocopies may also be obtained by submitting a written request by

mail to the FRA Docket Clerk at the Office of Chief Counsel, Federal

Railroad Administration, 1120 Vermont Avenue, N.W., Mail Stop 10,

Washington, D.C., 20590.

FRA prepared an analysis of this proposal which may be found, in

its entirety in the docket for this rulemaking. Principally, for a

Class I railroad, FRA estimates that a SIP will cost between $300,000

to $800,000 to prepare, but will prevent between $1,500,000 to

$12,000,000 in accident costs. For a Class II railroad, FRA estimates

that a plan will cost between $50,000 to $200,000 to prepare, but will

prevent between $60,000 to $1,200,000 in accident costs. The rule will

not apply to small entities, i.e., Class III freight railroads. In

addition, a railroad may avoid substantial service difficulties by

carrying through the safety planning process. This could save the

railroad hundreds of millions or billions of dollars. In the first

three quarters of 1998, UP reported losses of over $900,000,000 due to

service difficulties. The societal costs of these delays is probably

much greater as the figures only quantify costs incurred by UP.

FRA derived its estimates of accident reduction benefits from UP's

merger with SP, which created several unsafe conditions and encountered

several serious accidents, at least one of which was likely due to

inadequate safety planning. UP's service difficulties were reported in

its 10-Q filed with the Securities and Exchange Commission for the

third quarter of 1998. FRA's estimates of SIP costs are based on the

reported costs of NS and CSXT, which prepared respective SIPs in their

acquisition of Conrail.

Regulatory Flexibility Act

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq.,

requires an assessment of the impact of proposed rules on ``small

entities.'' The proposed rule relates to mergers, consolidations, and

acquisitions involving, in general, Class I or Class II railroads, and

would not apply to Class III freight railroads as currently drafted.

Given FRA's recently published interim policy establishing ``small

entities'' as being railroads that meet the line haulage revenue

requirements of a Class III railroad, FRA certifies that this

proceeding will not have a significant economic impact on a substantial

number of small businesses. See Interim Statement of Policy Concerning

Small Entities Subject to the Railroad Safety Laws (Policy Statement),

62 Fed. Reg. 43024, Aug. 11, 1997.

FRA adds that in its Policy Statement, it interprets commuter

railroads as ``small governmental jurisdictions'' as defined under the

RFA. ``Small governmental jurisdictions'' apply to communities ``with a

population of less than 50,000'' under RFA. 5 U.S.C. 601(5). FRA

submits that to the extent the proposed rule affects Class III commuter

railroads, they serve communities exceeding 50,000 persons.

Accordingly, FRA certifies that the proposal will not affect ``small

governmental jurisdictions,'' obviating the need to prepare an RFA

analysis.

Nevertheless, in light of the potential for a change in the

definition when FRA issues its final Policy Statement or in

transactions covered by this proposed rule, FRA invites comments in

this proceeding from any interested party on FRA's definition of

``small entity.''

Paperwork Reduction Act

FRA submits that the proposed rule does not contain information

collection requirements under the Paperwork Reduction Act of 1995, 44

U.S.C. 3501 et seq., and its implementing regulations, 5 CFR part 1320,

(collectively, PRA). Specifically, the agency has determined that the

rule does not involve a ``collection of information'' as defined by the

Office of Management and Budget under 49 CFR 1320.3(c) because the

information collection requirements will not impact ten or more persons

within any 12-month period. (For purposes of this rule, the definition

of ``person'' under the PRA is consistent with the definition as

enumerated in the regulatory text. See 49 CFR 1320.3(k).) Therefore,

the rule does not require FRA to conduct or sponsor a collection of

information within the meaning and application of the PRA, obviating

the need to prepare a paperwork package in this instance. See 49 CFR

1320.5(a). FRA invites public comment on the agency's estimate that the

information collection requirement will impact ten or less persons

within a 12-month period.

Environmental Impact

FRA has evaluated this proposed rule in accordance with its

procedures for ensuring full consideration of the potential

environmental impacts of FRA actions, as required by the National

Environmental Policy Act (42 U.S.C. 4321 et seq.), other environmental

statutes, Executive Orders, and related directives. This regulation

meets the criteria that establish this as a non-major action for

environmental purposes.

Federalism Implications

This action has been analyzed in accordance with the principles and

criteria contained in Executive Order 12612, and it has been determined

that the proposed rule does not have sufficient federalism implications

to warrant the preparation of a Federalism Assessment.

STB's Statement of Basis

As pointed out in the joint FRA/STB introduction, the Board is

responsible

[[Page 72236]]

for promoting a safe rail transportation system. By advance notice of

proposed rulemaking (ANPRM) published in the Federal Register on

December 4, 1997, at 62 FR 64193, the Board requested comments on the

extent to which railroads should be required to provide information

pertaining to the manner in which they intend to provide for the safe

implementation of authority granted by the Board. The Board explained

that, over the years, it and its predecessor agency, the Interstate

Commerce Commission (ICC), have considered the issue of safety along

with other relevant issues in individual cases. As particularly

pertinent here, in the Conrail Acquisition case,6 the Board

for the first time required applicants to provide detailed information

on how they proposed to provide for the safe integration of their

corporate cultures and operating systems, if the Board were to approve

the proposed transaction. (The Board has required the same type of

showing in the proposed merger between CN and IC, which is now pending

before the Board.) The Board did so at the suggestion of FRA and rail

labor interests, after FRA advised the Board, based on its experience

following the STB's approval of the UP/SP merger in August 1996, that

it believed that certain of the safety problems that arose in the

implementation of that merger might have been avoided with sufficient

advance planning.

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

\6\ Conrail Acquisition, STB Finance Docket No. 33388 (STB

Decision No. 52, served Nov. 3, 1997).

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

Specifically, the Board required applicants in Conrail Acquisition

to file detailed Safety Implementation Plans (SIPs) developed within

guidelines set by FRA. The railroads' submissions were made part of the

environmental record in that proceeding and dealt with in the ongoing

environmental review process in that case. The SIPs were included in

the Draft Environmental Impact Statement (Draft EIS) to allow review

and comment by FRA, other parties, and the public. The Board's

environmental staff (SEA) also independently reviewed the plans.

FRA and SEA (in its Final Environmental Impact Statement (Final

EIS)) concluded that applicants had satisfactorily addressed the safety

implementation concerns presented by the transaction to date. Moreover,

shortly before the Final EIS was issued, the Board entered into a MOU

with FRA, with DOT's concurrence, to establish an ongoing monitoring

process during implementation of the proposed Conrail Acquisition. The

MOU clarified the actions that FRA and the Board would take to ensure

the successful implementation of the SIPs. Under the terms of the MOU,

FRA will monitor, evaluate, and review the applicants' progress. The

MOU provides that FRA may request action by the Board, in the exercise

of the STB's oversight authority over the applicants, to correct

identified safety deficiencies resulting from the transaction. When

requesting Board action, FRA will provide recommendations for

correcting the deficiency. FRA will report periodically to the Board

regarding safety integration of the Conrail Acquisition, but not less

than biannually. FRA will also report significant integration issues to

the Board if and when they are identified. FRA's reporting will

continue until FRA advises the Board in writing that the proposed

integration has been safely completed.

The Board's ANPRM in this proceeding explained that, having

developed a vehicle by which to evaluate safety integration issues in

Conrail Acquisition, it was appropriate to consider the advisability of

promulgating rules to extend this process to other rail transactions

subject to the Board's jurisdiction. Accordingly, the Board sought

public comment from FRA and any other interested persons on how the

Board should proceed to assure the safe implementation of rail

transactions subject to its jurisdiction (i.e., whether the STB should

proceed broadly by general rule or exclusively on a case-by-case basis,

and whether procedures other than those adopted in Conrail Acquisition

might be preferable in Board-approved transactions outside the merger

area).7

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\7\ The administrative process permits the Board to proceed

either on a case-by-case basis or by rule, and to address some kinds

of transactions by rule and some by reliance on the development of

precedent.

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

As discussed in more detail in the Board's decision served July 27,

1998, announcing that the STB would institute a rulemaking, the

commenters that responded to our ANPRM varied widely in their

recommendations. DOT urged the Board to undertake a joint rulemaking

proceeding and announced that FRA on its own is developing procedures

that would be required for Board transactions. Other commenters

including the National Industrial Transportation League (NITL) stressed

the need for coordination with FRA. The railroad participants argued

that special procedures were not necessary and that we should proceed

only on a case-by-case basis. On the other hand, the labor participants

argued that the STB should adopt special procedures and that we do so

for all transactions, including ones involving small or start-up

railroads.

The parties representing shipper interests took positions in

between those of the railroad and labor participants. For example, NITL

urged that there be formal rules for major control and construction

transactions, but that for minor control transactions we require only

that safety be considered, with less advance documentation required.

The Chemical Manufacturers Association would require advance

documentation only for future rail mergers and acquisitions. The City

of Reno proposed that preparation of a SIP as in Conrail Acquisition be

required for all railroad mergers. Additionally, it suggested that the

STB require a FRA certification process for certain

transactions.8

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

\8\ The California Public Utilities Commission made a similar

request.

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

Based on the comments in response to the ANPRM and the Board's

experience with the SIP process in Conrail Acquisition, the Board

issued its decision served July 27, 1998, finding sufficient merit to

warrant further exploration of establishing regulations addressing the

safe implementation of Board approved transactions. The Board directed

STB staff to develop a joint notice of proposed rulemaking addressing

the issues that have arisen in this proceeding and that are of concern

to FRA, and to submit the proposed notice for its evaluation and

approval prior to going forward with publication.9

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\9\ This joint approach was predicated upon assurances by the

Department of Transportation that a joint process would not subject

the exercise by the Board of its rulemaking authority in this

proceeding to review by the Office of Management and Budget, in

contravention of this agency's Congressionally mandated

independence.

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Following the issuance of the Board's July 27, 1998 decision, Board

staff has met informally with FRA staff regarding the development of an

appropriate proposal that would accomplish the objectives of both

agencies, avoid gaps and inconsistencies in the two agencies'

regulatory requirements, and impose as little burden as possible on the

participating parties.

STB's Section-By-Section Analysis of Its Proposed Rule

Section 1106.1 Purpose.

The rules are designed to assure adequate and coordinated

consideration of safety integration issues by the Board and FRA in the

implementation of certain transactions subject to the Board's

jurisdiction.

[[Page 72237]]

Section 1106.2 Definitions.

This section sets forth definitions used in this part; these

definitions are self explanatory.

Section 1106.3 Actions for which Safety Integration Plan is Required.

This section explains which transactions require a railroad to file

a Safety Integration Plan with the Board. These transactions include a

Class I railroad, a railroad providing intercity passenger service, or

a railroad providing commuter service in a metropolitan or suburban

area proposing to consolidate with, merge with, or acquire control of

another Class I or Class II railroad, a railroad providing intercity

passenger service, or a railroad providing commuter service in a

metropolitan or suburban area; a Class II railroad proposing to

consolidate with, merge with, or acquire control of another Class II

railroad, with which it connects so as to involve the integration of

operations; or any railroad merging with, consolidating with, or

acquiring control of another railroad or railroads, except a

transaction involving a Class III freight only railroad, that would

result in operations generating revenue in excess of the Class I

railroad threshold. The regulation also requires a Class I or Class II

railroad requesting authority to acquire railroad property under 49

U.S.C. 10901 or 10902 that involves intercity passenger or commuter

operations to file a SIP. Generally, these regulated transactions

coincide with the transactions covered by FRA, except for start up

operations, which will promote consistency and efficiency in the

interplay between FRA and STB. In cases where the filing of a SIP is

required only by FRA's rules, the Board does not contemplate delaying

the processing of the Board proceeding to require compliance with FRA's

separate rules. Where the filing of a SIP is required by the Board's

rules, the Board will enforce the requirement with appropriate

sanctions, including suspending the processing of the application, or

in extreme cases, dismissal.

The proposed rule does not cover Class III freight railroads, i.e.,

those railroads that generate revenue, measured in 1991 dollars, of

less than $20 million per year. The Board had originally intended to

cover transactions involving Class III carriers where a Class I or

Class II carrier was involved, or the Class III carrier was acquiring a

line on which commuter or intercity passenger service is being

provided. However, based on FRA's representations that in its

experience such transactions do not create sufficient safety problems

to warrant imposing the burden of requiring preparation of a SIP, the

Board has initially decided to limit the scope of its proposal to

exclude those transactions as has FRA. The Board, like FRA,

specifically solicits comments, however, from interested parties as to

whether the final rule should cover these transactions. The comments

should articulate a detailed rationale for regulating these

transactions, the safety information that should be required, and

evidence of any consequences in leaving these transactions unregulated.

Section 1106.4 The Safety Integration Plan Process.

Proposed Sec. 1106.4 sets out the procedures for an applicant to

file a SIP, and the procedures by which the Board will consider a SIP

in connection with its approval or authorization of transactions for

which the Board has concluded such consideration is required. A

railroad seeking to carry out a covered transaction must file a SIP

prepared in accordance with FRA's regulations with the STB's SEA and

FRA no later than the date the application or exemption is filed with

the Board. The SIP will become part of the environmental documentation

in the Board proceeding and will be considered in the environmental

review process consistent with the Board's environmental rules at 49

CFR part 1105. Generally, covered transactions will be subject to

environmental review because the nature of the transaction involves

operational changes that exceed the regulatory thresholds established

under 49 CFR 1105.7(e)(4) or (5). See 49 CFR 1105.6(b)(4)(i). In the

event that a SIP should be required in a transaction that would not be

subject to environmental review, the Board intends to develop

appropriate case-specific SIP procedures. The Board specifically

requests comments on whether such transactions should be covered by

these rules, and if so, what procedures would be appropriate.

After FRA reviews the SIP, FRA will issue its findings and

conclusions on the adequacy of the plan to SEA at a date that is

sufficiently in advance of the Board's issuance of its Draft

Environmental Assessment or Draft EIS. As discussed earlier, FRA will

provide its analysis of the SIP within the time frame indicated,

whenever possible. Nevertheless, recognizing that the SIP is an ongoing

and fluid process, as in the Conrail Acquisition, FRA may comment on

the plan, and an applicant's status of progress in completing a SIP,

without endorsing the plan in full. The Board agrees with FRA that a

flexible response is necessary to enable an applicant to complete a

comprehensive plan.

Additionally, this approach will enable the Board to incorporate

FRA's comments in its draft environmental documentation, which, in

turn, will encourage the public to review and comment on the proposed

transaction. SEA will then independently review the SIP and respond to

comments received pursuant to the plan in its final environmental

documentation. Finally, the Board will consider the entire

environmental record, including information concerning the SIP, in

deciding whether to approve or reject the proposed transaction. Should

the Board approve the transaction, adopt the SIP, and require that the

applicant comply with the same, the railroad must coordinate with FRA

in carrying out the plan, including any amendments to the same, if

necessary. See FRA's section-by-section analysis discussing amendments

at Sec. 244.19 for a more complete discussion.

As explained in FRA's section-by-section analysis of

Sec. 244.17(f), FRA is proposing to advise the Board about FRA's

findings on the ongoing implementation process during any oversight

period established by the Board, in accordance with an agreement that

FRA and the Board will enter into and execute. Should FRA identify

shortcomings or deficiencies during integration, STB reserves

jurisdiction to reopen the proceedings and impose terms and conditions

on the transaction to ensure the transaction is safely implemented. FRA

also has undertaken to advise the Board when, in its view, the proposed

integration of applicants' operations has been safely completed.

Section 1106.5 Waiver.

The Board can waive or modify the requirements of this part where a

carrier shows that relief is warranted or appropriate.

Section 1106.6 Reservation of Jurisdiction

The Board reserves the right to require the filing of a SIP in

transactions other than those provided in this part, or to adopt

modified SIP requirements in individual cases, if it concludes doing so

is necessary to properly consider an application or other request for

authority.

Regulatory Flexibility Act

The Board preliminarily certifies that its proposal to require

safety integration plans under certain circumstances, if adopted, would

not have a significant effect on a substantial number of small

entities. The Board, however, seeks

[[Page 72238]]

comments on whether there would be effects on small entities that

should be considered.

Environmental Impact

This action will not significantly affect either the quality of the

human environment or the conservation of energy resources.

Federal Railroad Administration 49 CFR Chapter II

List of Subjects in 49 CFR PART 244

Administrative penalties, practice and procedure, Railroad safety,

Railroads, Safety Integration Plans.

In consideration of the foregoing, FRA propose to amend chapter II

of title 49, Code of Federal Regulations, to read as follows:

1. Part 244 is added to read as follows:

PART 244--REGULATIONS ON SAFETY INTEGRATION PLANS GOVERNING

RAILROAD CONSOLIDATIONS, MERGERS, ACQUISITIONS OF CONTROL, AND

START UP OPERATIONS

Subpart A--General

Sec.

244.1 Scope, application, and purpose.

244.3 Preemptive effect.

244.5 Penalties.

244.7 Waivers.

244.9 Definitions.

Subpart B--Safety Integration Plans

244.11 Contents of a Safety Integration Plan.

244.13 Subjects to be addressed in a Safety Integration Plan

involving an amalgamation of operations or start up operations.

244.15 Subjects to be addressed in a Safety Integration Plan not

involving an amalgamation of operations or start up operations.

244.17 Procedures.

244.19 Disposition.

244.21 Compliance and enforcement.

Appendix A to Part 244--Schedule of Civil Penalties (Reserved)

Authority: 49 U.S.C. 20103, 20107, 21301; 5 U.S.C. 553 and 559;

Sec. 31001(s)(1), Pub. L. No. 104-134, 110 Stat. 1321-373 (28 U.S.C.

2461 note); and 49 CFR 1.49.

Subpart A--General

Sec. 244.1 Scope, application, and purpose.

(a) This part prescribes requirements for filing a Safety

Integration Plan with FRA whenever:

(1) A Class I railroad, a railroad providing intercity passenger

service, or a railroad providing commuter service in a metropolitan or

suburban area proposes to consolidate with, merge with, or acquire

control of another Class I or Class II railroad, a railroad providing

intercity passenger service, or a railroad providing commuter service

in a metropolitan or suburban area;

(2) A railroad proposes to start up operations as a railroad as

defined under Sec. 244.9 of this part;

(3) A Class II railroad proposes to consolidate with, merge with,

or acquire control of another Class II railroad with which it would

connect so as to involve the integration of operations; or

(4) Any railroad merger, consolidation, or acquisition of control

would result in operations that generate revenue in excess of the Class

I railroad threshold, except for a transaction involving a Class III

freight only railroad.

(b) The purpose of this part is to achieve a reasonable level of

railroad safety during the implementation of transactions described in

paragraph (a) of this section. This part does not preclude a railroad

from filing more inclusive information not inconsistent with this part.

(c) The requirements prescribed under this part apply only to FRA's

disposition of a regulated transaction filed by an applicant. Certain

of the transactions covered by this part require separate filing with

and approval by the Surface Transportation Board. See 49 CFR part 1106.

Sec. 244.3 Preemptive effect.

Under 49 U.S.C. 20106, issuance of these regulations preempts any

State law, regulation, or order covering the same subject matter,

except an additional or more stringent law, regulation, or order that

is necessary to eliminate or reduce an essentially local safety hazard;

is not incompatible with a law, regulation, or order of the United

States Government; and does not unreasonably burden interstate

commerce.

Sec. 244.5 Penalties.

(a) Any person who violates any requirement of this part or causes

the violation of any such requirement is subject to a civil penalty of

at least $500, but not more than $11,000 per day, except that:

Penalties may be assessed against individuals only for willful

violations, and, where a grossly negligent violation or a pattern of

repeated violations has created an imminent hazard of death or injury

to persons, or has caused death or injury, a penalty not to exceed

$22,000 per violation may be assessed. Each day a violation continues

shall constitute a separate offense. Appendix A to this part contains a

schedule of civil penalty amounts used in connection with this part.

(b) As specified in Sec. 244.21 of this part, FRA may also exercise

any of its other enforcement remedies if a railroad fails to comply

with Sec. 244.21.

(c) Any person who knowingly and willfully makes a false entry in a

record or report required by this part shall be subject to criminal

penalties under 49 U.S.C. 21311.

Sec. 244.7 Waivers.

(a) A person subject to a requirement of this part may petition the

Administrator for a waiver of compliance with any requirement of this

part. The filing of such a petition does not affect that person's

responsibility for compliance with that requirement pending action on

such a petition.

(b) Each petition for a waiver under this section must be filed in

the manner and contain the information required by part 211 of this

chapter.

(c) If the Administrator finds that a waiver of compliance is in

the public interest and is consistent with railroad safety, the

Administrator may grant the waiver subject to any conditions the

Administrator deems necessary.

Sec. 244.9 Definitions.

As used in this part--

Administrator means the Administrator of the Federal Railroad

Administration or the Administrator's delegate.

Amalgamation of operations means the migration, combination, or

unification of one set of railroad operations with that of another set

of railroad operations, including, but not limited to, the allocation

of resources affecting railroad operations (e.g., changes in personnel,

track, bridges, or communication or signal systems; or use or

deployment of maintenance-of-way equipment, locomotives, or freight or

passenger cars).

Applicant means a Class I or Class II railroad, a railroad

providing intercity passenger service or a railroad providing commuter

service in a metropolitan or suburban area engaging in a transaction

subject to this part.

Best practices means the safest and most efficient rules or

instructions governing railroad operations that are reasonable and

practicable in accordance with railroad industry standards.

Class I or Class II railroad has the meaning assigned by

regulations of the Surface Transportation Board (49 CFR Part 1201;

General Instructions 1-1), as those regulations may be revised by the

Board (including modifications in class

[[Page 72239]]

thresholds based revenue deflator adjustments) from time to time.

Consolidation means the creation of a new Class I or Class II

railroad by combining existing railroads, or a railroad providing

intercity passenger service or a railroad providing commuter service in

a metropolitan or suburban area by taking over the assets or assuming

the liabilities, or both, of another Class I or Class II railroad, a

railroad providing intercity passenger service or a railroad providing

commuter service in a metropolitan or suburban area, such that the

resulting unified entity has the combined capital, powers, and

subsidiaries and affiliates, if applicable, of all of its constituents.

Control means actual control, legal control, or the power to

exercise control through common directors, officers, stockholders, a

voting trust, or a holding or investment company, or any other means.

See 49 U.S.C. 10102.

Corporate culture means the attitudes, commitments, directives, and

practices of railroad management with respect to safe railroad

operations.

Environmental documentation means either an Environmental Impact

Statement or Environmental Assessment prepared in accordance with the

Surface Transportation Board's environmental rules at 49 CFR part 1105.

Merger means the acquisition of one Class I or Class II railroad, a

railroad providing intercity passenger service, or a railroad providing

commuter service in a metropolitan or suburban area by another Class I

or Class II railroad, a railroad providing intercity passenger service,

or a railroad providing commuter service in a metropolitan or suburban

area, such that the acquiring railroad acquires the stock, assets,

liabilities, powers, subsidiaries and affiliates of the railroad

acquired.

Person means an entity of any type covered under 1 U.S.C. 1,

including but not limited to the following: a railroad; a manager,

supervisor, official, or other employee or agent of a railroad; any

owner, manufacturer, lessor, or lessee of railroad equipment, track, or

facilities; any independent contractor providing goods or services to a

railroad; and any employee of such owner, manufacturer, lessor, lessee,

or independent contractor.

Railroad means any form of non-highway ground transportation that

runs on rails or electromagnetic guideways, including:

(1) Commuter or other short-haul rail passenger service in a

metropolitan or suburban area; and

(2) High speed ground transportation systems that connect

metropolitan areas, without regard to whether those systems use new

technologies not associated with traditional railroads. The term does

not include rapid transit operations in an urban area that are not

connected to the general railroad system of transportation.

Safety Integration Plan means a comprehensive written plan

submitted to and approved by FRA in compliance with this part that

demonstrates in required detail how an applicant will provide for safe

railroad operations during and after any proposed transaction covered

by this part, and otherwise assure compliance with the Federal railroad

safety laws.

Section of Environmental Analysis or ``SEA'' means the Section that

prepares the Surface Transportation Board's environmental documents and

analyses.

Start up operation means to initiate railroad operations on a rail

line or lines in which the commencement of operations would either

involve intercity or commuter passenger service or produce revenue in

excess of the Class II railroad threshold.

Transaction means a consolidation, merger, acquisition of control,

or start up operation subject to the requirements of this part.

Subpart B--Safety Integration Plans

Sec. 244.11 Contents of a Safety Integration Plan.

Each Safety Integration Plan shall contain the following

information for each subject matter identified in Sec. 244.13 or

Sec. 244.15 of this part:

(a) A detailed description of:

(1) For transactions involving a start up operation, the physical

and operational characteristics of the start up operation and the best

practices to be adopted; or

(2) For all other transactions, how the applicant differs from each

railroad it proposes to acquire or with which the applicant proposes to

consolidate or merge, and the best practices of these railroads.

(b) A detailed description of the proposed manner and method of

operations of the resulting railroad or start up operation;

(c) The proposed specific measures, expressed step-by-step, for

each relevant subject matter that the applicant believes will result in

safe implementation of the proposed transaction consistent with the

requirements of this part;

(d) The allocation of resources, expressed as human and capital

resources within designated operating budgets, directed to complete

operations subject to the transaction;

(e) The measures to be taken to comply with the Federal railroad

safety laws, where applicable; and

(f) The timetable, stated in specific terms from commencement to

completion, for implementing paragraphs (c), (d) and (e) of this

section.

Sec. 244.13 Subjects to be addressed in a Safety Integration Plan

involving an amalgamation of operations or start up operations.

Each Safety Integration Plan involving an amalgamation of

operations or start up operations shall address the following subjects

for railroad operations conducted on property subject to the

transaction:

(a) Corporate culture. Each applicant shall:

(1) Identify and describe differences in corporate cultures for

each safety-related area;

(2) Describe how these cultures lead to different practices

governing rail operations; and

(3) Explain how the proposed integration of corporate cultures will

result in a system of ``best practices'' when the proposed transaction

is implemented.

(b) Training. Each applicant shall identify classroom and field

courses, lectures, tests, and other educational or instructional forums

designed to ensure the proficiency and qualification of the following

employees:

(1) Employees who perform train and engine service;

(2) Employees who inspect and maintain track and bridges;

(3) Employees who inspect, maintain and repair any type of on-track

equipment, including locomotives, passenger cars, and freight cars of

all types;

(4) Dispatchers or operators;

(5) Employees who inspect and maintain signal and train control

devices and systems;

(6) Hazardous materials personnel;

(7) Employees who maintain or upgrade communication systems

affecting rail operations; and

(8) Supervisors of employees enumerated in paragraphs (b)(1)

through (7) of this section.

(c) Operating practices--(1) Operating rules. Each applicant shall

identify the operating rules, timetables, and timetable special

instructions to govern railroad operations, including yard or terminal

operations.

(2) Accidents/incidents. Each applicant shall identify the

reporting procedures for any accident/incident subject to 49 CFR 225

and the policy on harassment and intimidation required

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by part 225, including a copy of the applicant's internal control plan

under 49 CFR 225.33.

(3) Alcohol and drug. Each applicant shall identify the post-

accident toxicological testing, reasonable cause testing, and random

alcohol and drug testing programs as required under 49 CFR 219.

(4) Qualification and certification of locomotive engineers. Each

applicant shall identify the program for qualifying and certifying

locomotive engineers under 49 CFR 240.

(5) Hours of service laws. Each applicant shall identify the

procedures for complying with the Federal hours of service laws and

related measures to minimize fatigue of employees covered by 49 U.S.C.

chapter 211.

(d) Motive power and equipment. Each applicant shall identify the

qualification standards for employees who inspect, maintain, or repair

railroad freight or passenger cars and locomotives, and designation of

facilities that will repair such equipment.

(e) Signal and train control. Each applicant shall identify the

signal and train control systems governing railroad operations and

maintenance, capital improvement, and research and development projects

for signal and train control operations.

(f) Track Safety Standards and bridge structures. Each applicant

shall identify the maintenance and inspection programs for track and

bridges.

(g) Hazardous Materials. Each applicant shall:

(1) Identify an inspection program covering the following areas:

(i) Field inspection practices;

(ii) Hazardous materials communication standards; and

(iii) Emergency response procedures.

(2) Develop and deploy computer software operating systems at

designated locations providing immediate retrieval of shipping papers

accompanying shipments of hazardous materials for inspection and

photocopying by representatives of FRA during normal business hours, if

applicable.

(h) Dispatching operations. Each applicant shall identify:

(1) The railroad dispatching system to be adopted;

(2) The migration of the existing dispatching systems to the

adopted system, if applicable;

(3) The criteria used to determine duties performed by operators or

dispatchers employed to execute operations; and

(4) The work load imposed on dispatchers or operators to carry out

duties assigned.

(i) Highway-rail grade crossing systems. Each applicant shall

identify a program, including its development and implementation,

covering the following:

(1) Highway-rail grade crossing signal system safety, in general;

(2) Emergency response actions;

(3) Public education forums on highway-rail grade crossing safety;

and

(4) Proposals to improve highway-rail grade crossing safety and

highway-rail grade crossing system warning devices.

(j) Personnel staffing. Each applicant shall identify the number of

employees by job category, currently and proposed, to perform each of

the following types of function:

(1) Train and engine service;

(2) Yard and terminal service;

(3) Dispatching operations;

(4) Roadway maintenance;

(5) Freight car and locomotive maintenance;

(6) Maintenance of signal and train control systems, devices, and

appliances;

(7) Hazardous materials operations; and

(8) Managers responsible for oversight of safety programs.

(k) Capital investment. Each applicant shall identify the capital

investment program, clearly displaying at least planned investments in

track and structures, signals and train control, and locomotives and

equipment. The program shall describe any differences from the program

currently in place on each of the railroads involved in the

transaction.

(l) Relationship between freight and passenger service. Each

applicant shall identify measures addressing passenger and freight

operations on lines subject to the transaction.

(m) Information systems compatibility. Each applicant shall

identify measures providing for a seamless interchange of information

relating to the following subject matters:

(1) Train consists;

(2) Movements and movement history of locomotives and railroad

freight cars;

(3) Dispatching operations;

(4) Accident/incident reporting and recordkeeping requirements; and

(5) Emergency termination of operations.

Sec. 244.15 Subjects to be addressed in a Safety Integration Plan not

involving an amalgamation of operations or start up operations.

Each Safety Integration Plan required by this part that does not

propose an amalgamation of operations or start up operations shall

address paragraphs (b), (j), and (k) of Sec. 244.13 of this part for

railroad operations conducted on property subject to the transaction.

Sec. 244.17 Procedures.

(a) Each applicant shall file one original of a proposed Safety

Integration Plan with the Associate Administrator for Safety, FRA, 1120

Vermont Avenue, N.W., Mailstop 5, Washington, DC, 20590. If applicable,

the applicant shall file the plan with FRA and the Surface

Transportation Board for proposed transactions within its jurisdiction

no later than the date it files its application or exemption with the

Surface Transportation Board.

(b) The applicant shall submit such additional information

necessary to support its proposed Safety Integration Plan as FRA may

require.

(c) The applicant shall coordinate with FRA to resolve FRA's

comments on the proposed Safety Integration Plan until such plan is

approved.

(d) For a transaction requiring Surface Transportation Board

approval, FRA will file its findings and conclusions on the proposed

Safety Integration Plan with the Board's Section of Environmental

Analysis at a date sufficiently in advance of the Board's issuance of

its draft environmental documentation in the case to permit

incorporation in the draft environmental document.

(e) Assuming FRA approves the proposed Safety Integration Plan and,

if applicable, the Surface Transportation Board approves the proposed

transaction, each applicant involved in the transaction shall

coordinate with FRA in implementing the approved Safety Integration

Plan.

(f) During implementation of an approved Safety Integration Plan,

FRA will inform the Surface Transportation Board about implementation

of the plan at times and in a manner designed to aid the Board's

exercise of its continuing jurisdiction over the approved transaction

in accordance with an agreement that FRA and the Board will enter into

and execute. Pursuant to such agreement, FRA will consult with the

Board at all appropriate stages of implementation, and will advise the

Board when the integration of operations subject to the transaction is

complete.

Sec. 244.19 Disposition.

(a) Standard of review.

(1) Each applicant shall:

(i) Write a thorough, complete, and clear Safety Integration Plan;

and

(ii) Describe in detail a logical and workable transition from

conditions existing before the proposed transaction to conditions

intended to exist after consummation of the transaction.

(2) FRA shall review an applicant's Safety Integration Plan to

determine

[[Page 72241]]

whether it provides a reasonable assurance of safety at every step of

the proposed transaction.

(b) Approval of the Safety Integration Plan. A Safety Integration

Plan that is satisfactory to the FRA Administrator shall receive a

notice of approval. The approval shall be conditioned on an applicant's

execution of all of the elements contained in the plan, including all

later developments subject to FRA approval that could not be completed

before approval of it.

(c) Amendment--(1) By the applicant. The applicant may amend its

Safety Integration Plan, as needed, from time to time. Any amendment is

subject to the approval of the FRA Administrator.

(2) By FRA. The FRA Administrator may require an applicant to amend

its approved Safety Integration Plan from time to time should

circumstances warrant.

Sec. 244.21 Compliance and Enforcement.

(a) A railroad shall have an FRA approved Safety Integration Plan

before changing its operations to implement a proposed transaction

subject to this part.

(b) FRA may exercise any or all of its enforcement remedies

authorized by the Federal railroad safety laws if a railroad fails to

comply with paragraph (a) of this section or to execute any measure

contained in an FRA approved Safety Integration Plan.

(c) Where the Surface Transportation Board has authorized a

transaction, FRA will consult with the Board at all appropriate stages

of implementation of the Safety Integration Plan.

Issued in Washington, D.C. on December 18, 1998.

Jolene M. Molitoris,

Federal Railroad Administrator.

Surface Transportation Board 49 CFR Chapter X

List of Subjects in 49 CFR Part 1106

Railroad Safety, Railroads, Safety Integration Plans.

For the reasons set forth in the preamble, a new title 49, subtitle

IV, part 1106 of the Code of Federal Regulations is proposed to be

added as follows:

PART 1106--SAFETY INTEGRATION PLAN PROCEDURES

Sec.

1106.1 Purpose.

1106.2 Definitions.

1106.3 Actions for which Safety Integration Plan is required.

1106.4 The Safety Integration Plan process.

1106.5 Waiver.

1106.6 Reservation of Jurisdiction.

Authority: 5 U.S.C. 553; 5 U.S.C. 559; 49 U.S.C. 721; 49 U.S.C.

10101; 49 U.S.C. 10901-10902; 49 U.S.C. 11323-11325; 42 U.S.C. 4332.

Sec. 1106.1 Purpose.

This part is designed to assure adequate and coordinated

consideration of safety integration issues, by both the Board and the

Federal Railroad Administration, the agency within the Department of

Transportation responsible for the enforcement of railroad safety, in

the implementation of rail transactions subject to the Board's

jurisdiction. It establishes the procedure by which the Board will

consider safety integration plans in connection with its approval or

authorization of transactions for which the Board has concluded such

consideration is required.

Sec. 1106.2 Definitions.

The following definitions apply to this part:

Act means the ICC Termination Act of 1995, Pub. L. No. 104-88, 109

Stat. 803 (1995).

Applicant means any Class I or Class II railroad, a railroad

providing intercity passenger service, or a railroad providing commuter

service in a metropolitan or suburban area engaging in a transaction

subject to this part.

Board means the Surface Transportation Board.

Class I or Class II railroad has the meaning assigned by

regulations of the Surface Transportation Board (49 CFR Part 1201;

General Instructions 1-1), as those regulations may be revised by the

Board (including modifications in class thresholds based revenue

deflator adjustments) from time to time.

Environmental documentation means either an Environmental Impact

Statement or an Environmental Assessment prepared in accordance with

the Board's environmental rules at 49 CFR part 1105.

Federal Railroad Administration (or FRA) means the agency within

the Department of Transportation responsible for railroad safety.

Safety Integration Plan or ``SIP'' means a comprehensive written

plan, prepared in accordance with FRA guidelines or regulations,

explaining the process by which Applicants intend to integrate the

operation of the properties involved in a manner that would maintain

safety at every step of the integration process, in the event the Board

approves the transaction that requires a SIP.

Section of Environmental Analysis or ``SEA'' means the Section that

prepares the Board's environmental documents and analyses.

Transaction means an application by a Class I railroad, a railroad

providing intercity passenger service, or a railroad providing commuter

service in a metropolitan or suburban area that proposes to consolidate

with, merge with, or acquire control under 49 U.S.C. 11323(a)(1) of

another Class I or Class II railroad, a railroad providing intercity

passenger service, or a railroad providing commuter service in a

metropolitan or suburban area; a Class II railroad proposing to

consolidate with, merge with, or acquire control under 49 U.S.C.

11323(a)(1) of another Class II railroad with which it would connect so

as to involve the integration of operations; or any consolidation,

merger, or acquisition of control under 49 U.S.C. 11323(a)(1) that

would result in operations generating revenue in excess of the Class I

railroad threshold, except for a transaction involving a Class III

freight only railroad. ``Transaction'' also includes a request for

authority by a Class I or Class II railroad to acquire railroad

property under 49 U.S.C. 10901 or 10902 that involves intercity

passenger or commuter railroad operations, and a proceeding other than

those specified above if the Board concludes that a SIP requirement is

necessary to its proper consideration of the application or other

request for authority.

Sec. 1106.3 Actions for which Safety Integration Plan is required.

A Safety Integration Plan shall be filed by any applicant

requesting authority to undertake a transaction as defined under

Sec. 1106.2 of this part.

Sec. 1106.4 The Safety Integration Plan process.

(a) Each applicant in a transaction subject to this part shall file

a SIP in accordance with the informational requirements prescribed at

49 CFR part 244, or other FRA guidelines or requirements regarding the

contents of a SIP, with SEA and FRA no later than the date the

application or exemption is filed with the Board.

(b) The SIP shall be made part of the environmental record in the

Board proceeding and dealt with in the ongoing environmental review

process under 49 CFR part 1105. The procedures governing the process

shall be as follows:

(1) In accordance with 49 CFR 244.17, FRA will provide its findings

and conclusions on the adequacy of the SIP (i.e., assess whether the

SIP establishes a process that provides a reasonable assurance of

safety in executing the proposed transaction) to SEA at a date

sufficiently in advance of the Board's

[[Page 72242]]

issuance of its draft environmental documentation in the case to permit

incorporation in the draft environmental document.

(2) The draft environmental documentation shall incorporate the

SIP, any revisions or modifications to it based on further

consultations with FRA, and FRA's written comments regarding the SIP.

The public may review and comment on the draft environmental

documentation within the time limits prescribed by SEA.

(3) SEA will independently review each SIP. In its final

environmental documentation, SEA will address written comments on the

SIP received during the time established for submitting comments on the

draft environmental documentation. The Board then will consider the

full environmental record, including the information concerning the

SIP, in arriving at its decision in the case.

(4) If the Board approves the transaction, adopts the SIP, and

requires compliance with the SIP, each applicant involved in the

transaction shall coordinate with FRA in implementing the approved

Safety Integration Plan, including any amendments thereto. FRA has

provided in its rules at 49 CFR part 244 for providing information to

the Board during implementation of an approved transaction that will

assist the Board in exercising its continuing jurisdiction over the

transaction. FRA also has undertaken to advise the Board when, in its

view, the integration of applicants' operations has been safely

completed.

(c) If a SIP is required in transactions that would not be subject

to environmental review under the Board's environmental rules at 49 CFR

part 1105, the Board will develop appropriate case specific SIP

procedures based on the facts and circumstances of the case.

Sec. 1106.5 Waiver.

The SIP requirements established by this part can be waived or

modified by the Board where a rail carrier shows that relief is

warranted or appropriate.

Sec. 1106.6 Reservation of jurisdiction.

The Board reserves the right to require a SIP in cases other than

those enumerated in this part, or to adopt modified SIP requirements in

individual cases, if it concludes doing so is necessary in its proper

consideration of the application or other request for authority.

Decided: December 18, 1998.

By the Board, Chairman Morgan and Vice Chairman Owen

Vernon A. Williams,

Secretary.

[FR Doc. 98-34563 Filed 12-30-98; 8:45 am]

BILLING CODE 4910-06-P