[Federal Register Volume 63, Number 186 (Friday, September 25, 1998)]
[Pages 51398-51399]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-25751]



Surface Transportation Board
[STB Docket No. S5R 100]

Association of American Railroads and American Short Line and 
Regional Railroad Association--Agreement--Application Under 49 U.S.C. 

AGENCY: Surface Transportation Board.

ACTION: Notice of interim approval.


SUMMARY: The Association of American Railroads (AAR) and the American 
Short Line and Regional Railroad Association (ASLRRA) have filed an 
application under 49 U.S.C. 10706 for approval of the rate-related 
provisions of an AAR-ASLRRA Agreement (the Agreement) that addresses 
issues raised in Review of Rail Access and Competition Issues, Ex Parte 
No. 575 (STB served Apr. 17, 1998) (Review). The Agreement, to which 
rail carriers may subscribe on an individual basis, is intended to 
provide a framework for improving the ability of smaller (Class II or 
III) railroads and Class I railroads to work together to fulfill their 
shared goal of serving the shipping public in the most efficient 
possible manner. The rate-related principles outlined in the Agreement 
constitute a series of bilateral commitments by each subscribing Class 
I carrier to each subscribing smaller railroad with which it connects 
with respect to switch charges and interline rates between those two 
carriers. These principles relate to rates within the meaning of 49 
U.S.C. 10706(a)(2)(A). The Board is approving the application on an 
interim basis, subject to comments. If opposing comments are timely 
filed, the Board will consider the comments, and any reply, and issue a 
further decision on the application. Absent opposing comments, this 
notice will constitute final approval of the application and will be 
the final Board action.

DATES: Comments must be filed by October 26, 1998. Applicants may file 
a reply by November 10, 1998. If no comments are filed by October 26, 
1998, this interim approval will be final as of that date.

ADDRESSES: Send an original and 10 copies of any comments referring to 
STB Docket No. S5R 100 to: Surface Transportation Board, Office of the 
Secretary, Case Control Unit, 1925 K Street, NW, Washington, DC 20423-
0001. In addition, send one copy of comments to applicants' 
representatives: Arvid E. Roach II, Covington & Burling, 1201 
Pennsylvania Avenue, NW, P.O. Box 7566, Washington, DC 20044-7566, for 
AAR; and Alice C. Saylor, American Short Line and Regional Railroad 
Association, 1120 G Street, NW, Suite 520, Washington, DC 20005.

FOR FURTHER INFORMATION CONTACT: Beryl Gordon, (202) 565-1600. (TDD for 
the hearing impaired: (202) 565-1695.)

SUPPLEMENTARY INFORMATION: In Review, slip op. at 8, we discussed 
impediments to the ability of smaller railroads to reach their full 
potential in providing service to the shipping public. Noting our 
preference for private-sector over government-mandated solutions, we 
urged the railroads to address and resolve these issues expeditiously. 
We committed to take administrative action as necessary and appropriate 

[[Page 51399]]

facilitate any constructive privately-reached agreement. We appreciate 
the substantial efforts of AAR and ASLRRA and their members in working 
cooperatively to reach agreement on these difficult and important 
issues. We now address the instant application seeking approval of 
certain aspects of the agreement.
    Our jurisdiction to approve rate agreements under 49 U.S.C. 10706 
extends to agreements of at least two rail carriers that relate to 
rates (including charges between rail carriers and compensation paid or 
received for the use of facilities and equipment), classifications, 
divisions, or rules related to them, or procedures for joint 
consideration, initiation, publication, or establishment of the 
same.1 In order to approve an agreement under 49 U.S.C. 
10706(a)(2)(A), we must find that the making and carrying out of the 
agreement will further the rail transportation policy (RTP) of 49 
U.S.C. 10101. If we approve the agreement, which may require compliance 
with conditions necessary to make the agreement further the RTP, it may 
be carried out under its terms and under the required conditions, and 
the antitrust laws (enumerated in that subsection) do not apply to 
parties and other persons with respect to the making or carrying out of 
the agreement. We may not approve or continue approval of an agreement 
if the required conditions are not met or if we do not receive a 
verified statement specifying for each rail carrier that is a party to 
the agreement certain information concerning its identity and that of 
any affiliates. See 49 U.S.C. 10706(a)(2)(B) and the regulations at 49 
CFR 1331.1. The regulations also require that certain exhibits be filed 
with the application (49 CFR 1331.2) and that new parties to an 
agreement comply with the requirements of 49 CFR 1331.1(b) (49 CFR 

    \1\ Applicants note that the Agreement contains other provisions 
that are unrelated to rates, classifications, divisions or traffic 
rules. These provisions are aimed at better meeting the car supply 
needs of customers served by short line and regional railroads, 
improving the quality of interline service provided jointly by 
smaller railroads and Class I carriers, and giving Class III 
carriers access to new routes and haulage arrangements in certain 
circumstances in order to develop new business. The Application 
provides for arbitration as a means of dispute resolution.

    Applicants submit verified statements identifying each of the AAR 
and ASLRRA members that either has subscribed or is eligible to 
subscribe to the Agreement.2 Applicants seek an exemption 
under 49 U.S.C. 10502 for further detailed information about the 
railroads that will subscribe to the Agreement and request that we also 
approve the Agreement with respect to possible future participation by 
railroads that have not been identified in their attached verified 
statements. Applicants contend that we can make the findings necessary 
to approve the Agreement without having the precise information 
concerning the identities of all of the railroads that will ultimately 
become subscribers. Applicants submit that they will maintain a record 
of the railroads that subscribe in the future and make that list 
available to the Board and any interested party upon request.

    \2\ Applicants do not provide the detailed information required 
by 49 U.S.C. 10706(a)(2)(B)(iii), which calls for identifying every 
affiliate, officer, director, and affiliate of an officer or 
director, of each subscriber to an agreement, because the Agreement 
does not entail any collective ratemaking or ongoing bureau process. 
To the extent that such information is required by 49 U.S.C. 10706, 
applicants request that we exempt them from ``unnecessary and 
burdensome procedural requirements.''

    We agree with applicants that we have enough information with 
regard to the carriers listed in their verified statements to make the 
necessary findings under 49 U.S.C. 10706(a)(2)(A).3 
Accordingly, under 49 U.S.C. 10706(a)(2)(A), we find that the rate-
related provisions of the Agreement further the RTP. The Agreement 
memorializes certain principles that would apply in specified 
circumstances when a subscribing Class I carrier provides switching 
services to, or makes interline rates with, a subscribing smaller 
railroad. It does not involve collective rate-setting; rather, it 
embodies principles to be applied by independent railroads acting 
independently. Application of these principles will assist smaller 
railroads in reaching their potential and playing a more significant 
role in providing reasonably priced high-quality and efficient service 
to the shipping public, thereby enhancing the overall strength, 
efficiency, and responsiveness of the Nation's rail network. By 
encouraging a more rational, efficient and cooperative relationship 
between Class I carriers and smaller railroads, we find that the rate-
related provisions of the Agreement promote a safe and efficient rail 
transportation system [49 U.S.C. 10101(3)]; ensure the development and 
continuation of a sound rail transportation system with effective 
competition among rail carriers [49 U.S.C. 10101(4)]; foster sound 
economic conditions in transportation and ensure effective competition 
and coordination between rail carriers [49 U.S.C. 10101(5)]; and 
encourage honest and efficient management of railroads [49 U.S.C. 

    \3\ More detailed information with regard to their affiliates is 
not necessary to carry out the RTP. Accordingly, we exempt 
applicants from this requirement under 49 U.S.C. 10502. As to the 
identities of possible future participating railroads, 49 CFR 1331.4 
provides a mechanism for adding new parties to an agreement, and 
applicants have committed to maintaining a record of all future 
railroad subscribers and making that list available to the Board and 
other interested persons.

    Applicants submit, and we agree, that the rate-related provisions 
of the Agreement do not have any anticompetitive effects and preserve 
rather than override market forces. They further submit that the 
Agreement's rate-related provisions offer participating Class I 
carriers and smaller railroads the unique opportunity to address issues 
without the need for new regulatory requirements that supplant, rather 
than harness, market forces. We find that this aspect of the Agreement 
furthers the twin RTP goals of minimizing the need for Federal 
regulatory control over the rail transportation system [49 U.S.C. 
10101(2)] and providing for the resolution of proceedings permitted to 
be brought under the statute [49 U.S.C. 10101(15)].
    This notice is available on our website at ``WWW.STB.DOT.GOV.''
    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.
    It is ordered:
    1. This application is approved, on an interim basis, subject to 
    2. Comments must be filed by October 26, 1998. Applicants may file 
a reply by November 10, 1998. If no comments are filed by October 26, 
1998, this interim approval will be final as of that date.
    3. This decision is effective on September 22, 1998.
    4. A copy of this notice will be served on: (1) The Federal Trade 
Commission, Bureau of Competition, 6th Street & Pennsylvania Avenue, 
NW, Washington, DC 20580; and The Department of Justice, Antitrust 
Division, 10th Street & Pennsylvania Avenue, NW, Washington, DC 20530.

    Decided: September 21, 1998.

    By the Board, Chairman Morgan and Vice Chairman Owen.
Vernon A. Williams,
[FR Doc. 98-25751 Filed 9-24-98; 8:45 am]