80 FR 77311 - Offers of Financial Assistance

DEPARTMENT OF TRANSPORTATION
Surface Transportation Board

Federal Register Volume 80, Issue 239 (December 14, 2015)

The Surface Transportation Board seeks comment on whether and how it should update its rules pertaining to offers of financial assistance in order to improve that process and protect it against abuse.

[Federal Register Volume 80, Number 239 (Monday, December 14, 2015)]
[Proposed Rules]
[Pages 77311-77312]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-31347]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

49 CFR Chapter X

[Docket No. EP 729]


Offers of Financial Assistance

AGENCY: Surface Transportation Board, DOT.

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: The Surface Transportation Board seeks comment on whether and 
how it should update its rules pertaining to offers of financial 
assistance in order to improve that process and protect it against 
abuse.

DATES: Comments are due by February 12, 2016. Reply comments are due by 
March 14, 2016.

ADDRESSES: Comments and replies may be submitted either via the Board's 
e-filing format or in paper format. Any person using e-filing should 
attach a document and otherwise comply with the instructions found on 
the Board's Web site at ``www.stb.dot.gov'' at the ``E-FILING'' link. 
Any person submitting a filing in paper format should send an original 
and 10 paper copies of the filing (and also an electronic version) to: 
Surface Transportation Board, 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.

FOR FURTHER INFORMATION CONTACT: Jonathon Binet, (202) 245-0368. 
[Assistance for the hearing impaired is available through the Federal 
Information Relay Service (FIRS) at 1-800-877-8339.]

SUPPLEMENTARY INFORMATION: In the ICC Termination Act of 1995, Public 
Law 104-88, 109 Stat. 803 (1995) (ICCTA), Congress revised the process 
for filing offers of financial assistance (OFAs) for continued rail 
service, codified at 49 U.S.C. 10904. Under the OFA process, as further 
implemented in the Board's regulations at 49 CFR 1152.27, financially 
responsible parties may offer to temporarily subsidize continued rail 
service over a line on which a carrier seeks to abandon or discontinue 
service, or offer to purchase a line and provide continued rail service 
on a line that a carrier seeks to abandon.
    Upon request, the abandoning or discontinuing carrier must provide 
certain information required under 49 U.S.C. 10904(b) and 49 CFR 
1152.27(a) to a party that is considering making an OFA. A party that 
decides to make an OFA (the offeror) must submit the OFA to the Board, 
including the information specified in 49 CFR 1152.27(c)(1)(ii). If the 
Board determines that the OFA is made by a financially responsible 
offeror, the abandonment or discontinuance authority is postponed to 
allow the parties to negotiate a sale or subsidy arrangement. 49 U.S.C. 
10904(d)(2); 49 CFR 1152.27(e). If the parties cannot agree to the 
terms of a sale or subsidy, they may request that the Board set binding 
terms under 49 U.S.C. 10904(f)(1). After the Board has set the terms, 
the offeror can accept the terms or withdraw the OFA. When the 
operation of a line is subsidized to prevent abandonment or 
discontinuance of service, it may only be subsidized for up to one 
year, unless the parties mutually agree otherwise. 49 U.S.C. 
10904(f)(4)(b). When a line is purchased pursuant to an OFA, the buyer 
must provide common carrier service over the line for a minimum of two 
years and may not resell the line for five years after the purchase. 49 
U.S.C. 10904(f)(4)(A); 49 CFR 1152.27(i)(2).
    Since the changes to the OFA process in ICCTA were enacted, the 
Board's experiences have shown that there are areas where 
clarifications and revisions could enhance the OFA process and protect 
it against abuse. Therefore, the Board seeks public comments on whether 
and how to improve any aspect of the OFA process, including enhancing 
its transparency and ensuring that it is invoked only to further its 
statutory purpose of preserving lines for rail service. Although we 
invite public comment on ways to improve any aspect of the OFA process, 
we also specifically seek comments on the following possible changes to 
the Board's OFA regulations.

Financial Responsibility

    The Board's regulations require that a potential offeror 
demonstrate that it is ``financially responsible,'' but those 
regulations do not fully define this concept or what facts or evidence 
a party must provide to demonstrate financial responsibility. The Board 
has made various rulings on this question in specific proceedings, but 
those rulings are not codified in our regulations, which has led to 
disputes in some proceedings. See, e.g., Consol. Rail Corp--Aban. 
Exemption--in Phila. Pa., AB 55 (Sub-No. 710X) et al., slip op. at 4 
(STB served Oct. 26, 2012) (``[T]he Offerors assert that they were and 
are still unsure exactly what documents they were required to produce 
to be considered financially responsible. . .''). See also Ind. Sw. 
Ry.--Aban. Exemption--in Posey & Vanderburgh Ctys., Ind., AB 1065X, 
slip op. at 4-5 (STB served April 8, 2011) (detailing information 
required from an offeror to establish financial responsibility, in 
detail beyond that contained in 49 CFR 1152.27(c)(1)(ii)(B)). 
Accordingly, we ask parties to comment on how the Board should modify 
its regulations so that the definition of financial responsibility is 
more transparent and understandable. We also ask parties to comment on 
methods of ensuring that an offeror is in fact financially responsible, 
including the following:
     What documentation should a potential offeror be required 
to submit to show financial responsibility?
     Should the Board require that potential offerors file 
notices of intent to file an OFA in abandonment and

[[Page 77312]]

discontinuance proceedings by a date certain?
     Should the Board require potential offerors to make a 
financial responsibility showing before requiring carriers to provide 
financial information to those offerors?
     Should the definition of financial responsibility include 
the ability, based on the price reflected in an offer of financial 
assistance, to purchase and operate for at least two years a line being 
abandoned or to subsidize for one year service being abandoned or 
discontinued?
     Should the Board alter the process for carriers to provide 
required financial information to potential offerors, and if so, how?
     Should the Board require potential offerors to make an 
``earnest money'' payment or escrow payment, or to obtain a bond? Key 
considerations include: Whether the payment or bond amount would be a 
fixed figure or established on a case by case basis; what method would 
be used in calculating or fixing the amount; when in the process an 
offeror would need to make a payment or obtain a bond; and whether (and 
under what circumstances) a waiver of such a requirement would be 
appropriate.
     Should the Board prohibit OFA filings by individuals or 
entities that have abused the Board's processes or engaged in other 
deceitful or abusive behavior before the Board, and if so, what 
standards should the Board establish in making a prohibition 
determination?

Continuation of Rail Service

    The Board has also adjudicated cases in which there has been 
controversy as to whether a party seeking to subsidize or acquire a 
line through the OFA process is doing so based on a genuine interest in 
and ability to preserve the line for rail service. See, e.g., Consol. 
Rail Corp.--Aban. Exemption--in Hudson Cty., N.J., AB 167 (Sub-No. 
1190X), slip op. at 5 (STB served May 17, 2010) (exempting line from 
OFA process despite OFA filing because offerors failed to show cause 
that there was a continued need for rail service outweighing other 
concerns); Roaring Fork R.R. Holding Auth.--Aban. Exemption--in 
Garfield, Eagle, & Pitkin Ctys., Colo., AB 547X (STB served May 21, 
1999) (dismissing OFA because the record did not provide ``some 
assurance that shippers are likely to make use of the line if continued 
service is made available, and that there is sufficient traffic to 
enable the operator to fulfill its commitment to provide that 
service''). The Board's regulations do not currently address these 
situations; therefore, we ask parties for ideas on how the regulations 
could be modified to do so. In particular, we ask parties to comment on 
the following:
     Should the Board require that an offeror address whether 
there is a commercial need for rail service as demonstrated by support 
from shippers or receivers on the line or through other evidence of 
immediate and significant commercial need; whether there is community 
support for rail service; and whether rail service is operationally 
feasible?
     Should the Board establish criteria and deadlines for 
carriers that want to file requests for exemptions from the OFA 
process?

Identity of the Offeror

    Another issue the Board has encountered in OFA proceedings is 
confusion over the identity of the potential offeror. See CSX Transp. 
Inc.--Aban. Exemption--in Allegany Cty., Md., AB 55 (Sub-No. 659X), 
slip op. at 1 n.2 (STB served April 24, 2008) (describing confusion 
over proper name and existence of entity that filed OFA in 2005 but may 
not have been a legal entity until 2007 or the correct legal entity to 
receive deed for rail line). In order to avoid such confusion in future 
proceedings, we ask the parties to comment on the following:
     Should the Board require multiple parties intending to 
submit a joint OFA to do so through a single legal entity, such as a 
corporation or partnership, to facilitate the financial responsibility 
determination and to clarify the party acquiring the common carrier 
obligation?
     Should the Board require an individual filing an OFA to 
provide his or her personal address?
     Should the Board require a private legal entity filing an 
OFA to provide the offeror's exact legal name, the state under whose 
laws it is organized, and the address of its principal place of 
business?
    Because this is an Advanced Notice of Proposed Rulemaking, the 
Board may not act on each item listed above, but we seek the public's 
comment on these ideas, including how they could best be implemented, 
if appropriate. Parties are encouraged to be specific in commenting on 
these possible changes and in presenting ideas for other possible 
changes to the OFA process.
    The requirements of section 603 of the Regulatory Flexibility Act 
of 1980, 5 U.S.C. 601-612, (RFA) do not apply to this action because, 
at this stage, it is an ANPRM and not a ``rule'' as defined in section 
601 of the RFA. Under the RFA, however, the Board must consider whether 
a proposed rule would have a significant economic impact on a 
substantial number of small entities. ``Small entities'' include small 
businesses, not-for-profit organizations that are independently owned 
and operated and are not dominant in their fields, and governmental 
jurisdictions with populations under 50,000. If adoption of any rule 
likely to result from this ANPRM could have a significant economic 
impact on a small entity within the meaning of the RFA, commenters 
should submit as part of their comments an explanation of how the 
business or organization falls within the definition of a small entity, 
and how and to what extent the commenter's business or organization 
could be affected. Following review of the comments received in 
response to this ANPRM, if the Board promulgates a notice of proposed 
rulemaking regarding this matter, it will conduct the requisite 
analysis under the RFA.
    It is ordered:
    1. Initial comments are due by February 12, 2016.
    2. Reply comments are due by March 14, 2016.
    3. This decision is effective on its date of service.

    By the Board, Chairman Elliott, Vice Chairman Begeman, and 
Commissioner Miller.
Kenyatta Clay,
Clearance Clerk.
[FR Doc. 2015-31347 Filed 12-11-15; 8:45 am]
 BILLING CODE 4915-01-P