[Federal Register Volume 77, Number 199 (Monday, October 15, 2012)]
[Pages 62601-62602]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-25275]



Surface Transportation Board

[Docket Nos. NOR 38302S and NOR 38376S]

United States Department of Energy and United States Department 
of Defense v. Baltimore & Ohio Railroad Company, et al. and Aberdeen & 
Rockfish Railroad Company, et al.

AGENCY: Surface Transportation Board, DOT.

ACTION: Notice of Proposed Settlement Agreement, Issuance of Procedural 


SUMMARY: On September 4, 2012, United States Department of Energy and 
the United States Department of Defense (the Government) and BNSF 
Railway Company (BNSF) (collectively Movants), filed a motion 
requesting approval of an agreement that would settle these rate 
reasonableness disputes as between them only. The Board is adopting a 
procedural schedule for filing comments and replies addressing their 
proposed settlement agreement. (As detailed below, these proceedings 
involve disputes among a number of different entities, including other 
railroad carriers besides BNSF. This settlement applies only to the 
parties submitting the instant agreement and does not resolve these 
proceedings in their entirety.)

DATES: Comments are due by November 29, 2012. Reply comments are due by 
December 31, 2012.

ADDRESSES: Comments and replies may be submitted either via the Board's 
e-filing format or in the traditional paper format. Any person using e-
filing should attach a document and otherwise comply with the 
instructions at the E-FILING link on the Board's Web site, at http://www.stb.dot.gov. Any person submitting a filing in the traditional 
paper format should send an original and 10 copies to: Surface 
Transportation Board, Attn: Docket No. NOR 38302S, et al., 395 E Street 
SW., Washington, DC 20423-0001. Copies of written comments and replies 
will be available for viewing and self-copying at the Board's Public 
Docket Room, Room 131, and will be posted to the Board's Web site. In 
addition, send one copy of comments to each of the following: (1) 
Stephen C. Skubel, Room 6H087, U.S. Department of Energy, 1000 
Independence Ave. SW., Washington, DC 20585; (2) Terrance A. Spann, 
U.S. Department of Defense, 9275 Gunston Road, Suite 1300, Fort 
Belvoir, VA 22060; and (3) Jill K. Mulligan, BNSF Railway Company, 2500 
Lou Menk Drive, AOB-3, Fort Worth, TX 76131.

FOR FURTHER INFORMATION CONTACT: Marc Lerner, (202) 245-0390. 
[Assistance for the hearing impaired is available through the Federal 
Information Relay Service (FIRS) at: 1-800-877-8339.]

SUPPLEMENTARY INFORMATION: In March 1981, the Government filed these 
complaints against 21 major railroads (the Railroad Defendants) under 
section 229 of the Staggers Rail Act of 1980, Public Law 96-448, 94 
Stat. 1895. The Government sought reparations and a rate prescription 
relating to the nationwide movement of spent nuclear fuel, other high 
level radioactive wastes, and the empty containers (casks) and buffer 
and escort cars used for their movement (radioactive materials). In 
1986, the Board's predecessor, the Interstate Commerce Commission 
(ICC), found that the Railroad Defendants were engaging in an 
unreasonable practice, imposing substantial and unwarranted cost 
additives--above and beyond the regular train service rates--in an 
effort to avoid transporting these radioactive materials. The ICC 
canceled the existing rates and cost additives, prescribed new rates, 
and awarded reparations. See Commonwealth Edison Co. v.  Aberdeen & 
Rockfish R.R., 2 I.C.C.2d 642 (1986). The United States Court of 
Appeals for the D.C. Circuit set aside and remanded the decision. See 
Union Pacific R.R. v.  ICC, 867 F.2d 646 (D.C. Cir. 1989). On remand, 
the ICC ruled that the movement of these radioactive materials for 
reprocessing was subject to the rate cap on recyclables set out in 
former 49 U.S.C. 10731(e) and directed the parties to file revenue-to-
variable cost (R/VC) evidence to resolve the remaining reparations and 
rate prescription issues. See United States Department of Energy v. 
Baltimore & Ohio R.R., 10 I.C.C.2d 112 (1994). While judicial review 
was pending, Congress enacted the ICC Termination Act of 1995, Public 
Law 104-88, 109 Stat. 803, which repealed Sec.  10731 in its entirety 
and directed that all proceedings pending under the repealed section be 
    The Railroad Defendants petitioned the Board to dismiss the 
complaints in 1996, and, in 1997, they invited the Government to 
explore the possibility of settling the complaints. Discussions 
commenced on a nationwide settlement covering all of the Railroad 
Defendants that might carry radioactive materials. The Government 
subsequently chose to negotiate only with Union Pacific Railroad 
Company (UP), the destination carrier for most of the movements of 
radioactive materials that were to be covered by the nationwide 
settlement, after the parties concluded that there were potential 
antitrust problems in negotiating with the Railroad Defendants as a 
group. On September 15, 2004, the Government and UP filed a motion 
seeking approval under 49 U.S.C. 10704 of a settlement agreement (the 
UP Agreement) they had negotiated to resolve these complaints as 
between them only. The Board, in a decision served in these proceedings 
on August 2, 2005: (1) Approved the UP Agreement; (2) dismissed UP as a 
party to these proceedings; (3) relieved UP of any obligation to 
participate in these or related proceedings involving claims against 
connecting railroad defendants

[[Page 62602]]

(except that UP remained obligated to respond to the Board's subpoena 
authority); (4) continued to hold these proceedings in abeyance; and 
(5) directed the Government to file quarterly reports on the progress 
of future settlement negotiations with the remaining Railroad 
    Movants jointly request that the Board approve the proposed 
agreement they have negotiated (the BNSF Agreement) to settle these 
rate reasonableness complaints as between them only and that the 
requested approval be without prejudice to the Governments' complaints 
and other actions insofar as they apply to the remaining Railroad 
Defendants involved in these proceedings. The UP Agreement, according 
to Movants, served as a model for their Agreement.
    The BNSF Agreement, which Movants describe as flexible, 
comprehensive, long-term, and system-wide:
    (1) Provides for a term of 25 years commencing on the effective 
date of the Board's approval of the BNSF Agreement and continues in 
effect for additional 5-year periods, subject to a 1-year termination 
notice requirement;
    (2) Applies broadly to the nationwide movement on BNSF's rail lines 
of irradiated spent fuel, parts, and constituents; spent fuel moving 
from foreign countries to the United States for disposal; empty casks; 
radioactive wastes; and buffer and escort cars. Excluded from the BNSF 
Agreement are local movements originating and terminating in the East, 
which are covered by the rate basis prescribed in Trainload Rates on 
Radioactive Materials, E. Railroads, 362 I.C.C. 756 (1980) and 364 
I.C.C. 981 (1981) (Eastern Prescription); \1\

    \1\ Maximum R/VC ratios were prescribed on a commodity-by-
commodity basis at various minimum weights as local and proportional 
rate factors. The prescription was applicable within the East, but 
primarily was to be used for through movements destined beyond the 
lines of the rail carriers covered by the prescription. The ICC's 
1980 decision, 362 I.C.C. 756, was affirmed in Consolidated Rail 
Corp. v. ICC, 646 F.2d 642 (D.C. Cir. 1981), cert. denied, 454 U.S. 
1047 (1981).

    (3) Establishes that the movement of these commodities constitutes 
common carrier service; addresses the elements of service required of 
BNSF; adopts guidelines for safe handling and security; obligates BNSF 
to provide, as needed, ``extra services'' as described in the BNSF 
Agreement, at the rates agreed upon;
    (4) Adopts a rate methodology to:
    (a) apply to all future movements of these radioactive materials in 
common carrier service. The methodology adopts maximum R/VC markups 
(not to exceed to 1.80, 2.50, or 3.51 times the shipment cost, 
depending on commodity type) of BNSF's most current system-average 
variable unit costs computed under the Board's Uniform Rail Costing 
System. Movants state that the proposed rate methodology is consistent 
with, but broadens, the rate prescription adopted in Eastern 
Prescription; and
    (b) compensate BNSF for ``extra services'' and dedicated train 
service, when requested by the Government, and procedures to calculate 
``equitable compensation'' for emergency related costs that BNSF may 
    (5) Adopts a procedure to update rates and ``extra services'' 
annually to reflect changes in BNSF's system-average unit costs;
    (6) Extinguishes BNSF's liability (and that of its predecessors and 
subsidiaries) for reparations in all matters arising out of these 
proceedings; and
    (7) Adopts Alternative Dispute Resolution procedures with final 
recourse to the Board and mechanisms to renegotiate portions of the 
BNSF Agreement in a limited number of circumstances or if changed 
circumstances make further adherence to the terms of the BNSF Agreement 
``grossly inequitable'' to either party.
    Movants request that the Board: (1) Prescribe the rate methodology 
and maximum R/VC ratios that have been agreed to for the radioactive 
materials and rail services that are the subject of the BNSF Agreement; 
(2) dismiss BNSF as a defendant in these proceedings, preserve the 
liability of connecting carriers for reparations as to their portion of 
the charges assessed on through routes that include(d) BNSF, and not 
require BNSF to participate in rate proceedings initiated by the 
Government against remaining Railroad Defendants (except that BNSF will 
remain obligated to respond to the Board's subpoena authority); (3) 
retain jurisdiction over these proceedings and continue to hold them in 
abeyance pending further settlement negotiations; and (4) publish 
notice of their motion and the proposed BNSF Agreement in the Federal 
Register and adopt a procedural schedule for the filing of comments and 
    The Board is granting Movants' request in part. Notice of their 
motion and the proposed BNSF Agreement is being published in the 
Federal Register and a procedural schedule is being adopted for the 
filing of comments and replies responsive to Movant's remaining 

    Decided: October 10, 2012.

    By the Board, Rachel D. Campbell, Director, Office of 
Jeffrey Herzig,
Clearance Clerk.
[FR Doc. 2012-25275 Filed 10-12-12; 8:45 am]