81 FR 90229 - Rules Relating to Board-Initiated Investigations
SURFACE TRANSPORTATION BOARD Federal Register Volume 81, Issue 240 (December 14, 2016)
Federal Register Volume 81, Issue 240 (December 14, 2016)
| Page Range | 90229-90240 | |
| FR Document | 2016-29902 |
[Federal Register Volume 81, Number 240 (Wednesday, December 14, 2016)] [Rules and Regulations] [Pages 90229-90240] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-29902] ======================================================================= ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD 49 CFR Part 1122 [Docket No. EP 731] Rules Relating to Board-Initiated Investigations AGENCY: Surface Transportation Board. ACTION: Final rules. ----------------------------------------------------------------------- SUMMARY: The Surface Transportation Board (Board or STB) is adopting final rules for investigations conducted on the Board's own initiative pursuant to Section 12 of the Surface Transportation Board Reauthorization Act of 2015. DATES: These rules are effective on January 13, 2017. ADDRESSES: Information or questions regarding these final rules should reference Docket No. EP 731 and be in writing addressed to Chief, Section of Administration, Office of Proceedings, Surface Transportation Board, 395 E Street SW., Washington, DC 20423-0001. FOR FURTHER INFORMATION CONTACT: Scott M. Zimmerman at (202) 245-0386. [Assistance for the hearing impaired is available through the Federal Information Relay Service (FIRS) at 1-800-877-8339.] SUPPLEMENTARY INFORMATION: Section 12 of the Surface Transportation Board Reauthorization Act of 2015, Public Law 114-110, 129 Stat. 2228 (2015) (STB Reauthorization Act or Act) (see 49 U.S.C. 11701) authorizes the Board to investigate, on its own initiative, issues that are ``of national or regional significance'' and are subject to the Board's jurisdiction under 49 U.S.C. Subtitle IV, Part A. Under Section 12, the Board must issue rules implementing this investigative authority not later than one year after the date of enactment of the STB Reauthorization Act (by December 18, 2016). By decision served on May 16, 2016, the Board issued a Notice of Proposed Rulemaking (NPRM) in which the Board proposed rules for investigations conducted on the Board's own initiative pursuant to Section 12 of the STB Reauthorization Act. The proposed rules were published in the Federal Register, 81 FR 30,510 (May 17, 2016), and comments were submitted in response to the NPRM.\1\ --------------------------------------------------------------------------- \1\ The Board received comments and replies from the following: Association of American Railroads (AAR); City of Jersey City, Rails to Trails Conservancy (Jersey City) (comments only); National Grain and Feed Association (NGFA); The National Industrial Transportation League (NITL) (comments only); Norfolk Southern Railway Company (NSR); and SMART/Transportation Division, New York State Legislative Board (SMART/TD-NY). --------------------------------------------------------------------------- After consideration of parties' comments, the Board is adopting final rules, to be set forth at 49 CFR part 1122, that establish the procedures for Board investigations conducted pursuant to Section 12 of the STB Reauthorization Act. These final rules do not apply to other types of investigations that the Board may conduct. Introduction The STB Reauthorization Act provides a basic framework for conducting investigations on the Board's own initiative, as follows: Within 30 days after initiating an investigation, the Board must provide notice to parties under investigation stating the basis for such investigation. The Board may only investigate issues that are of national or regional significance. Parties under investigation have a right to file a written statement describing all or any facts and circumstances concerning a matter under investigation. The Board should separate the investigative and decisionmaking functions of Board staff to the extent practicable. Investigations must be dismissed if they are not concluded with administrative finality within one year after commencement.\2\ In any such investigation, Board staff must make available to the parties under investigation and the Board Members any recommendations made as a result of the investigation and a summary of the findings that support such recommendations. Within 90 days of receiving the recommendations and summary of findings, the Board must either dismiss the investigation if no further action is warranted, or initiate a proceeding to determine whether a provision of 49 U.S.C. Subtitle IV, Part A has been violated. Any remedy that the Board may order as a result of such a proceeding may only be applied prospectively. --------------------------------------------------------------------------- \2\ The one-year deadline for investigations conducted on the Board's own initiative does not include any Board proceeding conducted subsequent to the investigation. S. Rep. No. 114-52, at 13 (2015). --------------------------------------------------------------------------- The STB Reauthorization Act further requires that the rules issued under Section 12 comply with the requirements of 49 U.S.C. 11701(d) (as amended by the STB Reauthorization Act), satisfy due process requirements, and take into account ex parte constraints. Discussion of Issues Raised in Response to the NPRM In the NPRM, the Board proposed a three-stage process, consisting of (1) Preliminary Fact-Finding, (2) Board-Initiated Investigations, and (3) Formal Board Proceedings. Having considered the comments, the Board will adopt this three-stage process in the final rules, subject to certain modifications from what was proposed in the NPRM. Below we address the comments received in response to the NPRM pertaining to each stage, as well as other related issues, and the Board's responses, including modifications from the NPRM. The final rules are below. A. Preliminary Fact-Finding As proposed in the NPRM, Preliminary Fact-Finding refers to the process in which Board staff would conduct, at their discretion, an initial, informal, nonpublic inquiry regarding an issue. The purpose of the Preliminary Fact-Finding would be to determine if there is enough information to warrant [[Page 90230]] a request for authorization to open a Board-Initiated Investigation into whether there may be a potential violation of 49 U.S.C. Subtitle IV, Part A, of national or regional significance. In this section, we address parties' comments on (1) whether the Board should adopt a time limit for Preliminary Fact-Finding, (2) whether Preliminary Fact- Finding should be confidential, (3) how the Board should decide to commence Preliminary Fact-Finding, and (4) fact-gathering. Time Limit for Preliminary Fact-Finding. In the NPRM, the Board did not impose a time limit on Preliminary Fact-Finding. Because Board staff would be solely determining whether a matter merits seeking authorization to pursue a Board-Initiated Investigation, and would not be able to issue subpoenas to compel testimony or the production of information or documents, the Board does not consider this stage to be part of the one-year period for an investigation. Some commenters, however, contend that the statutorily-mandated one-year time limit for investigations should include Preliminary Fact-Finding. Other commenters disagree with including Preliminary Fact-Finding in the statutorily-mandated one-year time limit for investigations, arguing that the Board should instead impose a ``reasonable time limit'' on Preliminary Fact-Finding. In particular, AAR asserts that the one-year time limit for investigations should apply to Preliminary Fact-Finding because an ``open-ended, limitless Preliminary Fact-Finding phase'' would undermine the ``purpose of the statutory scheme'' and would force parties to ``endure the burdens and uncertainty of an open-ended inquiry that could last for years.'' \3\ (AAR Comment 4.) --------------------------------------------------------------------------- \3\ AAR, however, supports the Board's proposal to have a Preliminary Fact-Finding phase preceding Board-Initiated Investigations, stating that ``providing for a Preliminary Fact- Finding phase makes practical sense and should be maintained in the final rules.'' (AAR Comment 5.) --------------------------------------------------------------------------- NSR asserts two arguments in support of including Preliminary Fact- Finding in the one-year time limit. First, NSR states that the plain language of the statute ``expressly provides that the Board has one year to conclude any `investigation' with administrative finality.'' Therefore, the Board's proposed ``Preliminary Fact-Finding phase is a blatant attempt to buy itself more time to conduct an investigation than afforded'' by Section 12 of the STB Reauthorization Act. (NSR Comment 5.) Second, NSR argues that Preliminary Fact-Finding should be included in the statutorily-mandated one-year time limit so that the Board's proposed investigatory process is subject to ``durational restraints'' in accordance with other agencies' best practices. According to NSR, ``other administrative agencies do not permit indefinite `pre-investigation' phases'' and the Securities Exchange Commission requires that its ``pre-investigation'' phase, called ``Matters Under Inquiry,'' be completed within 60 days. (NSR Comment 5- 6.) NGFA and NITL disagree with including Preliminary Fact-Finding in the statutorily-mandated one-year time limit for investigations, but argue that the Board should instead impose a reasonable time limit on Preliminary Fact-Finding. NGFA supports the Board imposing a time limit of 60 days. (NGFA Reply 5.) NITL supports a 45-day deadline for Preliminary Fact-Finding. (NITL Comment 2.) SMART-TD argues that ``there is always `preliminary' work'' before an ``official'' agency action and, therefore, the Board should delete the provision for Preliminary Fact-Finding from the final rules. (SMART-TD Comment 11.) Although 49 U.S.C. 11701 requires that the Board dismiss any investigation that is not concluded with administrative finality within one year, Preliminary Fact-Finding does not constitute part of an investigation; rather, it is the Board's informal process of determining whether an investigation should be commenced. The Board must have a mechanism to gather information on a preliminary basis to determine whether an investigation is warranted. The Preliminary Fact- Finding period is intended to allow the Board to dismiss unfounded complaints without unnecessarily expending limited Board or party resources. This approach is in the best interest of our stakeholders, as the Board would be able to more effectively allocate its resources to only investigate potential violations of sufficient gravity to warrant Board action. This approach would also alleviate the burden on parties potentially subject to Board-Initiated Investigations by limiting such investigations only to situations where, in the Board's discretion, investigation into a matter of national or regional significance is warranted. Although SMART-TD argues that the Board should delete the concept of Preliminary Fact-Finding from the rules and merely conduct any such preliminary work without making it an official part of the process, the Board finds that it is in the public interest that our regulations notify stakeholders of the existence of this stage. Accordingly, in the interest of transparency, the Board will not delete this provision from the regulations. Although there is no limitation in the statute as to how long Preliminary Fact-Finding should occur, the Board understands the concern from the parties that the Board not allow the Preliminary Fact- Finding phase to continue ``indefinitely.'' The final rules, accordingly, require that Preliminary Fact-Finding be concluded within a reasonable period of time. As a matter of policy, we determine ``a reasonable period of time'' to be approximately 60 days from the date the Board notifies the party subject to Preliminary Fact-Finding that Preliminary-Fact Finding has commenced. See 49 CFR 1122.5(a). Confidentiality. The NPRM proposed that Preliminary Fact-Finding generally would be nonpublic and confidential, subject to certain exceptions. Several commenters oppose this proposal and request that all of, or certain parts of, Preliminary Fact-Finding be made public. Jersey City requests that the Board publish notice of commencement of Preliminary Fact-Finding in the Federal Register, make information submitted by parties during Preliminary Fact-Finding publicly available, and publish Board staff's findings from Preliminary Fact- Finding so that third parties may comment on such information. (Jersey City Comment 13.) NITL asks that the Board publish notice of commencement of Preliminary Fact-Finding--which should include a ``high level summary'' of the issue being investigated--as well as Board staff's conclusions from Preliminary Fact-Finding. (NITL Comment 2.) Similarly, NGFA asks that the Board publish on its Web site, or in the Federal Register, a description of any issues subject to Preliminary Fact-Finding, and the outcomes of such inquiries, with any sensitive information such as party names redacted. (NGFA Comment 6; NGFA Reply 3.) AAR opposes making Preliminary Fact-Finding public, stating that to do so would make parties ``reluctant to volunteer information'' and subject to ``unwarranted reputational damage or other harm.'' (See AAR Reply 1-2, 4.) Moreover, AAR states that a publicly available description of an issue subject to Preliminary Fact-Finding, even one in which sensitive information is redacted, would be insufficient to protect a railroad's identity given the nature of the industry. (AAR Reply 4-5.) AAR further notes that shippers' justifications for making Preliminary Fact-Finding public--namely, transparency and public participation--could be satisfied [[Page 90231]] during a Formal Board Proceeding, if one were opened. (AAR Reply 2.) The Board will adopt the proposal in the NPRM to keep the Preliminary Fact-Finding confidential, subject to certain limited exceptions (discussed below). Having considered the parties' arguments, we are not convinced the potential benefits of making Preliminary Fact- Finding public outweigh the risks. During Preliminary Fact-Finding, Board staff would only be ascertaining whether a matter warrants an investigation by the Board. Preliminary Fact-Finding would not be a formal, evidence-gathering process, and, if the Board were to make Preliminary Fact-Finding public, parties subject to Preliminary Fact- Finding could possibly be subject to unwarranted reputational damage or other harm. NGFA suggests that concerns about confidentiality could be avoided by redacting the parties' names, but even a general description of the issues subject to Preliminary Fact-Finding might effectively disclose the identity of involved parties, regardless of whether the name(s) of the parties were redacted. Therefore, the final rules presume that Preliminary Fact-Finding would be nonpublic and confidential, unless the Board otherwise finds it necessary to make certain information related to, or the fact of, Preliminary Fact- Finding public. As previously proposed in the NPRM, the final rules would continue to allow the Board to make aspects of Preliminary Fact-Finding public. See section 1122.6(a)(1). In instances where the Board chooses to exercise this discretion, the Board would weigh, on a case-by-case basis, potential harm to innocent parties, markets, or the integrity of the inquiry and subsequent investigation. However, because of the risks associated with making Preliminary Fact-Finding public, we will not adopt a mechanism through which a party may request that Preliminary Fact-Finding be made public pursuant to section 1122.6(a)(1). The same reasoning applies to confidentiality of Board-Initiated Investigations, as discussed later. Commencement. The NPRM proposed that Board staff would commence Preliminary Fact-Finding, at its discretion, to determine if an alleged violation could be of national or regional significance and subject to the Board's jurisdiction under 49 U.S.C. Subtitle IV, Part A, and warrant a Board-Initiated Investigation. AAR proposes three modifications to the Board's regulations. We discuss each in turn. First, AAR asserts that the Board or the Director of the Office of Proceedings, as opposed to Board staff, should approve commencement of Preliminary Fact-Finding, ``given the potentially significant consequences on regulated parties'' from Preliminary Fact-Finding, or from a Board-Initiated Investigation or Formal Board Proceeding opened as a result of Preliminary Fact-Finding. (AAR Comment 6.) We decline to incorporate the suggestion that the Board or the Director of the Office of Proceedings should approve commencement of Preliminary Fact-Finding. The Board must gather information concerning potentially qualifying violations to determine whether it should commence a Board-Initiated Investigation. For the reasons discussed earlier,\4\ such activities are informal and preliminary, and, thus, we find that the initiation of Preliminary Fact-Finding does not merit a formal Board action or finding, although the Board would be aware of the commencement of Preliminary Fact-Finding. --------------------------------------------------------------------------- \4\ See supra Part A: Time Limit for Preliminary Fact-Finding. --------------------------------------------------------------------------- Second, AAR suggests that the Board should notify parties subject to Preliminary Fact-Finding that Preliminary Fact-Finding has commenced. AAR argues that, without such notice, railroads may not be willing to coordinate and share information with the Board's Office of Public Assistance, Governmental Affairs, and Compliance (OPAGAC) out of concern that such information could be used by Board staff in Preliminary Fact-Finding against them. (AAR Comment 7-8.) To address AAR's concerns regarding OPAGAC, we are modifying section 1122.3 to include a requirement that Board staff notify parties subject to Preliminary Fact-Finding that Preliminary Fact-Finding has commenced. See section 1122.3 (stating that ``Board staff shall inform the subject of Preliminary Fact-Finding that Preliminary Fact-Finding has commenced''). The Board finds that it is necessary to maintain railroad confidence in OPAGAC, as OPAGAC's Rail Customer and Public Assistance Program (RCPA) provides a valuable informal venue for the private- sector resolution of shipper-railroad disputes, and, without railroad participation, RCPA would be less effective at facilitating communication among the various segments of the rail-transportation industry and encouraging the resolution of rail-shipper operational or service issues. Thus, the final rules incorporate AAR's request that the Board provide notice to parties subject to Preliminary Fact-Finding that Preliminary Fact-Finding has commenced. Third, AAR argues that section 1122.3 should use the terminology ``warranted'' or ``not warranted'' (instead of ``appropriate'' or ``not appropriate''), as both the NPRM's preamble and the statute use the word ``warranted.'' (AAR Comment 9 n.3.) The final rules incorporate this suggestion, adopting the terminology of ``warranted'' or ``not warranted,'' instead of ``appropriate'' or ``not appropriate.'' See 49 CFR 1122.3. Fact Gathering. The NPRM proposed that, during Preliminary Fact- Finding, Board staff could request that parties voluntarily provide testimony, information, or documents to assist in Board staff's informal inquiry, but could not issue subpoenas to compel the submission of evidence. In response to this proposal, AAR, NITL, and NGFA suggest that certain clarifications are needed regarding the collection of information during Preliminary Fact-Finding. We address these comments below. AAR seeks clarification that (1) the production of documents during Preliminary Fact-Finding is voluntary, (2) the requirement to certify a production of documents applies to Preliminary Fact-Finding, (3) the Board retains its right to demand to inspect and copy any record of a rail carrier pursuant to 49 U.S.C. 11144(b) during Preliminary Fact- Finding, and (4) the information submitted during Preliminary Fact- Finding will be ``subject to disclosure in any subsequent Board- Initiated Investigation on the same terms as other materials gathered during Board-Initiated Investigations.'' (AAR Comment 5, 7-8.) In response to AAR's comments, the Board provides the following clarifications. First, the production of documents during Preliminary Fact-Finding would be voluntary. See section 1122.9 (granting Investigating Officer(s) the right to compel the submission of evidence only in Board-Initiated Investigations). Second, parties that choose to voluntarily produce documents during Preliminary Fact-Finding would not be required to certify such productions. Whereas the NPRM proposed to require a producing party to submit a statement certifying that such person made a diligent search for responsive documents ``[w]hen producing documents under this part,'' the final rules at section 1122.12(a) now limit that to ``[w]hen producing documents under section 1122.4,'' the regulation governing Board-Initiated Investigations only. Third, as a matter of policy, the Board would not demand to inspect and copy any record--relating to [[Page 90232]] the subject of Preliminary Fact-Finding--of a rail carrier pursuant to 49 U.S.C. 11144(b) during Preliminary Fact-Finding by Board staff. Finally, information submitted during Preliminary Fact-Finding would be subject to disclosure in any subsequent Board-Initiated Investigation on the same terms as materials gathered during Board-Initiated Investigations. This is provided for in the final rules at section 1122.6, which states that all information and documents obtained under section 1122.3 (referring to Preliminary Fact-Finding) or section 1122.4 (referring to Board-Initiated Investigations) whether or not obtained pursuant to a Board request or subpoena, shall be treated as nonpublic by the Board and its staff, subject to the exceptions described in section 1122.6(a)-(c). NITL and NGFA state that the Board should provide staff the ``appropriate tools'' to obtain information needed during Preliminary Fact-Finding. (NITL Comment 2; NGFA Reply 5-6.) NGFA also suggests that the Board should adopt deadlines for a party subject to Preliminary Fact-Finding to submit evidence to the Board. (NGFA Reply 6.) The Board declines to give Board staff additional authority to obtain information during Preliminary Fact-Finding. As previously noted, Preliminary Fact-Finding is an initial, informal inquiry to determine whether a Board-Initiated Investigation is warranted. The Board, thus, has intentionally limited Board staff's authority to collect evidence in order to prevent undue burden on anyone. However, during Preliminary Fact-Finding, Board staff would be able to request that parties produce information and documents on a voluntary basis and request that any evidence submitted be provided by a certain deadline. Although Board staff would not be able to issue subpoenas to compel the production of evidence during Preliminary Fact-Finding, parties would have an incentive to provide information or documents to show that a Board-Initiated Investigation is not warranted. For these reasons, the Board declines to grant Board staff any further authority to obtain information during Preliminary Fact-Finding. B. Board-Initiated Investigation As proposed in the NPRM, Board-Initiated Investigation refers to an investigation, conducted in accordance with Section 12 of the STB Reauthorization Act, to decide whether to recommend to the Board that it open a proceeding to determine if a violation of 49 U.S.C. Subtitle IV, Part A occurred. The NPRM stated that a Board-Initiated Investigation would begin with the Board issuing an Order of Investigation and providing a copy of the order to the parties under investigation within 30 days of issuance. The NPRM also provided that Board-Initiated Investigations would be nonpublic and confidential, subject to certain exceptions, to protect both the integrity of the process and the parties under investigation from any unwarranted reputational damage or other harm. Finally, the NPRM stated that parties who are not the subject of the investigation would not be able to intervene or participate as a matter of right in Board-Initiated Investigations. In this section, we address parties' comments on (1) the standard for opening a Board-Initiated Investigation, (2) the definition of ``national or regional significance,'' (3) timing of providing the Order of Investigation to parties under investigation, (4) confidentiality of Board-Initiated Investigations, (5) parties' requests for the right to intervene in Board-Initiated Investigations, (6) railroads' request for access to exculpatory evidence, (7) parties' comments relating to the collection of information and documentation, and (8) the process for providing Board staff's recommendations and summary of findings to a party under investigation.\5\ --------------------------------------------------------------------------- \5\ Jersey City requests the Board also address the ``institutional structure, staffing, and resources'' it has related to investigations conducted pursuant to Section 12 of the STB Reauthorization Act. As this issue is not pertinent to the regulations, we decline to comment on internal Board staffing issues. (Jersey City Comment 7.) --------------------------------------------------------------------------- Standard for Opening a Board-Initiated Investigation. The NPRM stated that the Board could commence a Board-Initiated Investigation of any matter of national or regional significance that is subject to the jurisdiction of the Board under 49 U.S.C. Subtitle IV, Part A when it appears that the statute may have been violated. The NPRM further stated that, in instances where Preliminary Fact-Finding had been conducted,\6\ in order to seek authorization to commence a Board- Initiated Investigation, Board staff would have to determine that (1) a violation of 49 U.S.C. Subtitle IV, Part A subject to the Board's jurisdiction may have occurred and (2) that the potential violation may be of national or regional significance warranting the opening of an investigation. --------------------------------------------------------------------------- \6\ NGFA asks the Board to change Sec. 1122.4 to clarify that Preliminary Fact-Finding is not required in order to commence a Board-Initiated Investigation. (NGFA Comment 7.) However, there was no requirement in the regulations that Preliminary Fact-Finding must precede a Board-Initiated Investigation, and the NPRM's preamble was clear that Preliminary Fact-Finding was not required in order to commence a Board-Initiated Investigation. We, therefore, decline to make this change to the final rules. --------------------------------------------------------------------------- In comments, AAR asks the Board to clarify the standard for commencing a Board-Initiated Investigation and require that (1) ``the issue [be] of national or regional significance'' and (2) ``there [be] reasonable cause to believe that there may be a violation of 49 U.S.C. Subtitle IV, Part A.'' (AAR Comment 9-11.) (emphasis added.) Under 49 U.S.C. 11701, however, the Board may begin an investigation of alleged violations of 49 U.S.C. Subtitle IV, Part A as long as the issue is of national or regional significance. As a result, AAR's proposal would require a higher standard for commencing a Board-Initiated Investigation than imposed by the statute--i.e., by requiring ``reasonable cause to believe'' that a violation under 49 U.S.C. Subtitle IV, Part A occurred. Accordingly, we decline to adopt AAR's proposed standard and will maintain in the final rules the statutory standard, which provides that the Board may, in its discretion, commence a Board-Initiated Investigation of any matter of national or regional significance that is subject to the jurisdiction of the Board under 49 U.S.C. Subtitle IV, Part A. See section 1122.4. AAR further asks that the Board require that any Order of Investigation issued state that ``the matter at issue `is' of national or regional significance'' (instead of ``may be'' of national or regional significance). (AAR Comment 9.) Relatedly, NSR asks that the Board clarify that any issue subject to a Board-Initiated Investigation must ``remain of national or regional significance throughout the Board-Initiated Investigation and related Formal Board Proceeding.'' (NSR Comment 3.) The final rules will continue to require that an alleged violation subject to a Board-Initiated Investigation be of national or regional significance. See section 1122.4. Section 12 of the STB Reauthorization Act permits the Board to investigate issues that ``are of national or regional significance.'' We interpret this language to mean that an alleged violation of 49 U.S.C. Subtitle IV, Part A that is of national or regional significance upon commencement of the investigation may continue to be subject to Board-Initiated Investigation even if the conduct that created the alleged violation ceases. Similarly, conduct underlying an alleged violation does not have to be of ongoing national or regional significance so long as the Board determines that the alleged violation created an issue of national or regional significance at the time the [[Page 90233]] investigation was initiated. Otherwise, conduct that is capable of repetition could create future crises without redress. The final rules thus will adopt the language proposed in the NPRM. See section 1122.4. Definition of ``National or Regional Significance.'' In the NPRM, the Board did not define the phrase ``of national or regional significance.'' As a result, some commenters request that the Board define this phrase or provide examples of issues that would be considered of national or regional significance. In particular, AAR states that the Board should define ``national or regional significance'' as ``widespread and significant effects on transportation service or markets in a region or across the nation.'' AAR also asks that the Board clarify that issues of national or regional significance do not include individual rate disputes or disputes involving a single shipper. (AAR Comment 10.) Similarly, Jersey City states that the Board should define ``national or regional significance'' in order to avoid litigation on jurisdictional issues stemming from this phrase. (Jersey City Comment 11-12.) We decline to adopt a definition of ``national or regional significance.'' The Board finds that AAR's proposed definition does not provide significantly more insight than the phrase itself as to what constitutes a matter ``of national or regional significance.'' In addition, there is no need to expressly exclude rate disputes in these rules--such disputes are not subject to Board-Initiated Investigation under the statute (whether or not they are of national or regional significance). Section 11701(a) of Title 49 of the United States Code states that the Board may begin an investigation on its own initiative, ``[e]xcept as otherwise provided in this part.'' Rate disputes are governed by 49 U.S.C. 10704, which specifically states that rate disputes may only be commenced ``on complaint.'' 49 U.S.C. 10704(b). Therefore, rate disputes fall outside the purview of the investigatory authority conferred to the Board under Section 12 of the STB Reauthorization Act. As to disputes involving a single shipper, the Board declines to adopt a blanket approach as to whether such issues are of national or regional significance. Such a determination would be fact-dependent and require the Board to make a determination based on the specific situation and various factors (such as the dispute's impact on national or regional rail traffic), which are discussed further below. NSR and NGFA also ask that the Board provide clarification related to the definition of ``national or regional significance.'' Specifically, NSR asks the Board to explain how it ``intends to apply the jurisdictional standard of `national or regional significance.' '' (NSR Comment 3.) NGFA requests that the Board ``provide a discussion of the types of rail practices or issues the Board would consider to be of national or regional significance.'' (NGFA Comment 3-4; NGFA Reply 6.) Under the final rules, the Board would apply the jurisdictional standard of national or regional significance on a case-by-case basis, considering, for instance, the extent of the impacts of the potential violation on national or regional rail traffic, customers, or third parties, or the geographic scope of the alleged violation. Examples of recent matters that the Board might consider to be of national or regional significance include (but are not limited to): Fertilizer shipment delays; rail car supply issues that impact grain shipments; or extensive congestion at strategic interchange points such as Chicago, Ill. Confidentiality. As with Preliminary Fact-Finding, the NPRM proposed that Board-Initiated Investigations generally would be nonpublic and confidential, subject to certain exceptions,\7\ in order to protect the integrity of the process and to protect parties under investigation from possibly unwarranted reputational damage or other harm. --------------------------------------------------------------------------- \7\ See Sec. 1122.6(a)-(c). See also infra note 10. --------------------------------------------------------------------------- In comments, NGFA asks that the Board publish Orders of Investigation in the Federal Register or on the Board's Web site, so that third parties may request access to documents produced during a Board-Initiated Investigation, and NGFA and Jersey City ask the Board to inform the public as to the outcome of a Board-Initiated Investigation.\8\ (NGFA Comment 6-7.) Similarly, NITL asks that the Board make the Order of Investigation available to the public, and SMART-TD asks the Board to delete the ``automatic `nonpublic' process.'' (NITL Comment 3; SMART-TD Comment 11.) On reply, AAR opposes making Board-Initiated Investigations public for the same reasons it opposes making Preliminary Fact-Finding public.\9\ (AAR Reply 4-5.) For instance, AAR states that public disclosure of the subject of a Board- Initiated Investigation could cause ``unwarranted reputational damage or other harm'' and that ``the threat of public disclosure w[ould] create the incentive to be less cooperative in the discovery process.'' (AAR Reply 4.) --------------------------------------------------------------------------- \8\ NGFA and Jersey City make the same request with respect to Preliminary Fact-Finding. (NGFA Comment 6-7; Jersey City Comment 14.) NGFA further asks that the Order of Investigation identify a point of contact for Preliminary Fact-Finding and the Board- Initiated Investigation and request from third parties information related to the issue being investigated. (NGFA Comment 6; NGFA Reply 3.) NGFA states that Board could redact information identifying the party subject to the investigation. For the reasons provided above, the final rules maintain that Preliminary Fact-Finding and Board- Initiated Investigations generally would be nonpublic and confidential, subject to the exceptions described in Sec. 1122.6(a)-(c). \9\ See supra Part A: Confidentiality. --------------------------------------------------------------------------- We find that the risks of making Board-Initiated Investigations public outweigh the potential benefits, absent extraordinary circumstances.\10\ If, after conducting a Board-Initiated Investigation, the Board believes that a Formal Board Proceeding should be commenced to determine if a qualifying violation occurred, the Board would open such a proceeding. At that time, any Formal Board Proceeding would be public, subject to the Board's existing rules protecting confidential information. See 49 CFR 1104.14. However, if the Board determines that no further action is warranted and therefore dismisses the Board-Initiated Investigation with no further action, the Board generally would seek to maintain the confidentiality of the party subject to the Board-Initiated Investigation, in order to prevent the party from being subject to any stigma that may be associated with having been investigated. For these reasons, the final rules maintain that Board-Initiated Investigations are presumptively nonpublic and confidential. --------------------------------------------------------------------------- \10\ The Board recognizes that there may be instances where it is necessary to make a Board-Initiated Investigation, or aspects of a Board-Initiated Investigation, public, in which case the Board would rely on Sec. 1122.6(a)(1) to release such information. --------------------------------------------------------------------------- With respect to confidentiality, AAR asks that the Board clarify that it is ``not claiming unbounded discretion to make confidential information and documents public'' and that it revise the NPRM's confidentiality provision to include the protections provided by 49 CFR 1001.4, which governs predisclosure notification procedures for confidential commercial information. (AAR Comment 17-18.) NSR also asks that the Board ``create a reasonable opportunity for the person claiming confidentiality to respond to the Board's denial of a request for confidential treatment prior to any public disclosure of the purportedly confidential information.'' (NSR Comment 4, 28-29.) The Board will grant these requests to clarify that parties will be given notice and the ability to respond to the potential disclosure of confidential commercial information prior to its release. Specifically, the final rules at [[Page 90234]] section 1122.6(a)(1) now expressly incorporate 49 CFR 1001.4(c), (d) and (e), which require that the Board notify the person claiming confidential treatment prior to publicly disclosing any purportedly confidential commercial information and provide such persons an opportunity to object to the disclosure. The Board's final rules at section 1122.7 also continue to require that, if a Freedom of Information Act (FOIA) request seeks information that a party has claimed constitutes trade secrets and commercial or financial information within the exception in 5 U.S.C. 552(b)(4), the Board shall give the party an opportunity to respond pursuant to 49 CFR 1001.4. Order of Investigation. As proposed in the NPRM, the Board would issue an Order of Investigation in order to commence a Board-Initiated Investigation. The Board then would provide a copy of the Order of Investigation to the party under investigation within 30 days of issuance. In its comments, AAR asks that the Board instead provide a copy of the Order of Investigation to the parties under investigation within 10 days of its issuance. (AAR Comment 12.) Similarly, NGFA asks that the Board provide a copy of the Order of Investigation to the public within 10 or 15 days of its issuance. (NGFA Reply 7.) Under 49 U.S.C. 11701(d)(1), the Board is required to provide written notice to the parties under investigation by not later than 30 days after initiating the investigation. Although in practice the Board intends to provide copies of the Order of Investigation to parties within a shorter timeframe as requested by AAR and NGFA, the Board declines to adopt regulations that are stricter than the requirements of Section 12 of the STB Reauthorization Act. The final rules therefore maintain the statutory requirement of providing notice to parties under investigation within 30 days. Intervention. The NPRM provided that third parties, who are not the subject of a Board-Initiated Investigation, may not intervene or participate as a matter of right in any Board-Initiated Investigation. Commenters, mostly shippers, ask that the Board either permit third parties to intervene in Board-Initiated Investigations or comment on an ongoing investigation. These commenters assert, among other arguments, that third parties have a statutory right to intervene and that intervention would promote transparency and assist Board staff in compiling a more complete record. (NITL Comment 3; NGFA Comment 5-7; NGFA Reply 4, 8; Jersey City Comment 15; SMART-TD 11.) AAR opposes allowing third parties to intervene in Board-Initiated Investigations. (AAR Reply 2, 9.) We decline to permit third parties to intervene or participate as a matter of right in Board-Initiated Investigations. Although NGFA and Jersey City argue that interventions could increase transparency and assist Investigative Officers in developing a more complete record and determining whether a qualifying violation occurred, a final, binding determination in that regard is not made during a Board-Initiated Investigation. (See NGFA Comment 7; Jersey City Comment 15.) Rather, that decision would be made during the Formal Board Proceeding, where, as AAR notes, third parties could move to intervene and participate in a proceeding. Therefore, shippers' objectives in intervening in Board- Initiated Investigations would be satisfied during a Formal Board Proceeding. In addition, there is a statutory one-year time limitation on Board-Initiated Investigations. Allowing third parties to intervene as of right could make it difficult for the Board to complete its investigation in the required time frame.\11\ --------------------------------------------------------------------------- \11\ Shippers also request that third parties be allowed to intervene in Preliminary Fact-Finding. We reject this request for the same reasons we reject the request that third parties be allowed to intervene in the Board-Initiated Investigations. --------------------------------------------------------------------------- Finally, we disagree with Jersey City's argument that 28 U.S.C. 2323 grants interested ``[c]ommunities, associations, firms, and individuals'' a right to intervene in any Board-Initiated Investigation. As AAR points out, section 2323 applies only to federal court proceedings arising from challenges to Board rulemakings or attempts to enforce Board orders. (AAR Reply 9.) For these reasons, the final rules continue to prohibit intervention or participation by third parties in any Board-Initiated Investigation. Information and Documentation Collection. Parties raise several concerns with respect to the production of documents and testimony under the proposed rules. In the NPRM, the Board proposed that, if any transcripts were taken of investigative testimony, they would be recorded by an official reporter or other authorized means. In comments, AAR asks that parties under investigation be given full access to transcripts of their testimony, while NSR asks that subpoenaed witnesses be able to obtain copies of their evidence and transcripts of their testimony. (AAR Comment 14; NSR Comment 22.) AAR also asks that the Board revise the proposed regulation governing transcripts to always require a transcript of investigative testimony. (AAR Comment 14.) AAR further requests that Investigating Officers be limited in the amount of information and documents that they can request of parties and also limited to requesting ``documents that are likely to be directly relevant to the investigation.'' (AAR Comment 15.) NSR asks that the Board ``ensure that subpoenas are issued only where they are likely to lead to admissible evidence regarding the investigated issue . . . and are otherwise limited in scope, specific in directive, and in good faith.'' (NSR Comment 4.) In response to AAR and NSR's comments pertaining to transcripts, the Board declines to always require a transcript of investigative testimony, but will require that witnesses be given access to any transcript of their investigative testimony--either by receiving a copy of the transcript or by inspecting the transcript. Specifically, the final rules now provide that ``[a] witness who has given testimony pursuant to [part 1122 of the regulations] shall be entitled, upon written request, to procure a transcript of the witness' own testimony or, upon proper identification, shall have the right to inspect the official transcript of the witness' own testimony.'' See section 1122.10. As to Investigating Officers' right to request documents, we will adopt AAR's suggestion that Investigating Officers be limited to request documents that are likely to be directly relevant to the investigation. (AAR Comment 15.) Thus, we have modified the language of section 1122.9 to state that Investigating Officer(s) may interview or depose witnesses, inspect property and facilities, and request and require the production of any information, documents, books, papers, correspondence, memoranda, agreements, or other records, in any form or media, ``that are likely to be directly relevant to the issues of the Board-Initiated Investigation.'' This change also sufficiently addresses NSR's concern that Investigating Officers' requests for evidence be ``limited in scope, specific in directive, and in good faith.'' (NSR Comment 4.) The Board declines to otherwise limit the Investigating Officers' right to request evidence. AAR and NSR also ask that the Board provide parties under investigation the right to seek discovery.\12\ (See AAR [[Page 90235]] Comment 14; NSR Comment 4, 35-37.) On reply, NGFA opposes the railroads' request that parties under investigation be provided the right to seek discovery, stating that the ``final rules should not impose complex requirements and associated legal and other costs on rail customers.'' (NGFA Reply 3.) NGFA adds that, if the Board were to allow railroads to conduct discovery in Board-Initiated Investigations, such discovery ``should be limited to entities that elect to become parties by formally intervening in the proceeding.'' (NGFA Reply 3, 8.) We agree with NGFA that permitting parties under investigation to seek discovery could impose unnecessary legal and other costs on parties that are not subject to investigation, and we find that permitting such discovery, even of materials gathered by the Board, also could unnecessarily obstruct and delay a Board-Initiated Investigation, which must be concluded within a specific timeline. We therefore decline to permit parties under investigation the right to seek discovery. In the event a party under investigation believes that a third party has information likely to be directly relevant to the investigation, the party under investigation should convey that to the Investigating Officer(s), who may then request that information from the relevant third parties. --------------------------------------------------------------------------- \12\ AAR also asks for the right to obtain discovery during a Formal Board Proceeding, which we decline to provide for in the final rules, but which may be considered on a case-by-case basis during Formal Board Proceedings. --------------------------------------------------------------------------- Finally, AAR and NSR request that the Board eliminate or add certain other provisions related to the Board's collection of information and documentation during a Board-Initiated Investigation. First, AAR asks that the Board entirely eliminate the proposed regulation (proposed in the NPRM as 49 CFR 1122.11) titled ``Certifications and false statements,'' including subparagraph (b), which requires a party from whom documents are sought to submit a list of all documents withheld due to privilege, and subparagraph (c), which sets forth the criminal penalty for perjury. (AAR Comment 16-17.) Alternatively, AAR asks the Board to revise the ``Certifications and false statements'' provision to ``require the person [producing documents] to confirm that it produced all responsive, non-privileged documents located after reasonable search and subject to any agreed- upon protocols regarding reduction of duplicative documents.'' (AAR Comment 16.) AAR claims its language would allow a party to only have to produce one copy of a document, even if duplicative digital versions exist. Its language would also require a party to perform a ``reasonable'' search, rather than a ``diligent'' search, as proposed in the NPRM. Additionally, AAR asks that the Board adopt a ``witness rights'' provision in accordance with other agencies' practices. (AAR Comment 17.) NGFA opposes AAR's request to remove the ``Certifications and false statements'' provision. (NGFA Reply 8.) We decline to eliminate the ``Certifications and false statements'' provision in its entirety, or its subparagraph (b) relating to the privilege log requirements. Subparagraphs (a) and (b) are necessary, as they would be the Investigating Officers' primary means of ensuring that parties under investigation have conducted their due diligence and provided the Board with the information requested. However, we will grant AAR's request regarding agreed-upon protocols for duplicative documents. Accordingly, the final rules now expressly subject the ``Certifications and false statements'' provision to any search protocols that the Investigating Officer(s) and producing parties may agree upon. See section 1122.12. We also will change the description of the search from ``diligent'' to ``reasonable.'' In addition, at AAR's suggestion (AAR Comment 16-17), we will remove the criminal penalty for perjury provision, as it is redundant in light of already-applicable federal law, see 18 U.S.C. 1001, 1621, and add a witness rights provision, which is included in the final rules at section 1122.11, in order to clarify the rights and responsibilities of witnesses. See also section 1122.10 (addressing the right of a witness to review his or her transcript). Second, AAR and NSR request that the Board remove the attorney disqualification provision, proposed in the NPRM as section 1122.9(b), in which the Board would have the authority to exclude a particular attorney from further participation in any Board-Initiated Investigation in which the attorney is obstructing the Board-Initiated Investigation. (AAR Comment 18; NSR Comment 26-27.) After considering the comments, we will remove the attorney disqualification provision from the final rules, as the Board's current rules governing attorney conduct sufficiently protect the integrity of any investigation. See e.g., 49 CFR 1103.12. Exculpatory Evidence. AAR and NSR ask that the Board adopt in its final rules a mandatory disclosure provision, modeled after Brady v. Maryland, 373 U.S. 83, 88 (1963), to provide a party subject to investigation exculpatory and potentially exculpatory evidence. (AAR Comment 13; NSR Comment 4, 32-35.) In Brady, the United States Supreme Court, in criminal proceedings, held that the Due Process clause of the Fifth Amendment requires the prosecutor to disclose exculpatory evidence material to guilt or punishment, known to the government but not known to the defendant. Currently, no statute or case law mandates the application of the Brady Rule to administrative agencies,\13\ though some agencies such as the Securities and Exchange Commission and the Commodities Futures Trading Commission have adopted varying versions of the Brady Rule. --------------------------------------------------------------------------- \13\ Mister Discount Stockbrokers v. SEC, 768 F.2d 875, 878 (7th Cir. 1985); Zandford v. NASD, 30 F. Supp. 2d 1, 22 n.12 (D.C. Cir. 1998), NLRB v. Nueva Eng'g, Inc., 761 F.2d 961, 969 (4th Cir. 1985). --------------------------------------------------------------------------- The Board recognizes the merits of the Brady Rule and expects to employ the practice of disclosing exculpatory evidence if the Board were to open a Formal Board Proceeding following the conclusion of a Board-Initiated Investigation involving any criminal provisions of 49 U.S.C. Subtitle IV, Part A. However, because (1) most Board-Initiated Investigations will not likely involve any such criminal provisions, (2) Board-Initiated Investigations only determine if the Board should open a Formal Board Proceeding, and (3) any remedy that may result from an investigation must be prospective only, the Brady Rule does not appear directly applicable, and the Board will not codify it in the final rules adopted here. Recommendations and Summary of Findings. As proposed in the NPRM, Investigating Officer(s) would be required to conclude the Board- Initiated Investigation no later than 275 days after issuance of the Order of Investigation and, at that time, submit to the Board and parties under investigation any recommendations made as a result of the Board-Initiated Investigation and a summary of findings that support such recommendations. The NPRM also provided an optional process whereby Investigating Officer(s), in their discretion and time permitting, could present (orally or in writing) their recommendations and/or summary of findings to parties under investigation prior to submitting this information to the Board Members. The NPRM stated that, in such cases, the Investigating Officer(s) would be required to permit the parties under investigation to submit a written response to the recommendations and/ or summary of findings. The Investigating Officer(s) would then submit their recommendations and summary of [[Page 90236]] findings, as well as any response from the parties under investigation, to the Board members and parties under investigation. In response, AAR and NSR request that the Board make this optional process mandatory.\14\ (AAR Comment 19; NSR Comment 4, 23-25.) Alternatively, AAR asks that if the Board does not make this process mandatory, the Board require Investigating Officer(s) to provide their recommendations and summary of findings to parties at the same time they are submitted to Board Members. --------------------------------------------------------------------------- \14\ NSR cites to 5 U.S.C. 557(c) as requiring this process to be mandatory. However, 5 U.S.C. 557 applies to hearings in rulemakings or adjudications. See 5 U.S.C. 553, 554, 556, & 557(a). Because the recommendations and findings at issue here address only whether to open a proceeding in which the Board would make a decision, 5 U.S.C. 557(c) is not applicable. --------------------------------------------------------------------------- The Board intends that Investigating Officer(s), when possible, will utilize the optional process of presenting their recommendations and summary of findings to parties under investigation prior to submitting them to the Board Members. However, given the one-year deadline for concluding Board-Initiated Investigations, the Board will not make this process mandatory, as there may be circumstances in which Investigating Officer(s) cannot complete their recommendations and summary of findings sufficiently in advance of the one-year deadline to allow them to be presented to the party under investigation prior to submission to the Board. In such cases, the Investigating Officer(s) will provide their recommendations and summary of findings to parties at the same time they are submitted to the Board Members. This is provided for in the final rules at section 1122.5(c), which states that the Investigating Officer(s) must submit their recommendations and summary of findings to the Board and parties under investigation within 275 days. With respect to parties' responses to Investigating Officers' recommendations and summary of findings, AAR also requests that the Board clarify that parties have the right to submit arguments in their response to Board staff's recommendations and summary of findings. AAR also argues that the Board should increase the 15-page limit for parties' responses to Board staff's recommendations and summary of findings, but if not, then clarify that the party's supporting data, evidence, and verified statements would not count towards the 15-page limit. We will grant AAR's requests, as they would provide the Board with more information in determining whether further action is warranted following a Board-Initiated Investigation. The final rules now provide that: parties have the right to submit arguments in their response to Board staff's recommendations and summary of findings; supporting data, evidence, and verified statements do not count towards the page limit of such responses; and parties may submit written statements responding to the Investigating Officers' recommendations and summary of findings of up to 20 pages. See App. A to Pt. 1122 (stating ``parties under investigation may submit a written statement . . . [that] shall be no more than 20 pages, not including any supporting data, evidence, and verified statements that may be attached . . . setting forth the views of the parties under investigation of factual or legal matters or other arguments relevant to the commencement of a Formal Board Proceeding''). C. Formal Board Proceeding As proposed in the NPRM, the Formal Board Proceeding refers to a public proceeding that may be instituted by the Board pursuant to an Order to Show Cause after a Board-Initiated Investigation has been conducted. With respect to the Formal Board Proceeding phase, commenters express concerns relating to (1) the duration of the Formal Board Proceeding, (2) the standard for commencing a Formal Board Proceeding, and (3) the Order to Show Cause. Duration of the Formal Board Proceeding. As proposed in the NPRM, there are no time limits for the Formal Board Proceeding. However, NSR argues that the Formal Board Proceeding should be included in the statutorily-mandated one-year time limit on investigations, based on the plain language of Section 12 of the STB Reauthorization Act, federal court precedent interpreting administrative finality, and other provisions in the Board's governing statute. (NSR Comment 6-8.) We address each of NSR's arguments in turn. According to NSR, because 49 U.S.C. 11701(d)(6) states that the Board must ``dismiss any investigation that is not concluded by the Board with administrative finality within 1 year after the date on which it was commenced,'' the Board must either dismiss the Board- Initiated Investigation or decide on the merits of the Formal Board Proceeding within one year of opening the Board-Initiated Investigation. (NSR Comment 6-7.) However, such an interpretation directly contradicts the Senate Report for the STB Reauthorization Act, which clearly excludes the Formal Board Proceeding from the statute's one-year deadline on Board-Initiated Investigations, stating: The requirement to dismiss any investigation that is not concluded within 1 year after the date on which it was commenced would only include the time period needed to generate recommendations and summary of findings. The time period needed to complete a proceeding, after receipt of the recommendations and summary of findings, would not be included in the 1 year timeline for investigations. S. Rep. No. 114-52, at 13 (2015). NSR nonetheless states that the Senate Report ``is trumped by the unambiguous new section 11701(d)(6),'' arguing that ``administrative finality'' is ``a known term of art with a specific definition, thus precluding any need to rely on legislative history.'' As support, NSR, among other cases, compares the Board's proposed investigation process to Newport Galleria Group v. Deland, 618 F. Supp. 1179 (D.C. Cir. 1985), in which the court found that the Environmental Protection Agency's commencement of an investigation did not constitute final agency action. (NSR Comment 6-7.) \15\ In Newport Galleria Group, however, the question was whether judicial review of the initiation of an investigation was proper. Newport Galleria Group, 618 F. Supp. at 1185. Here, under 49 U.S.C. 11701(d)(6), the question is whether the Board's conclusion of an investigation and opening of a Formal Board Proceeding--as opposed to the initiation of an investigation-- constitutes administratively final action for purposes of Section 12 of the STB Reauthorization Act. --------------------------------------------------------------------------- \15\ NSR also cites Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591 (1944) (determining that findings from an investigation are preliminary), Reliable Automatic Sprinkler Co. v. Consumer Prod. Safety Commission, 324 F.3d 726 (D.C. Cir. 2003) (finding that the Consumer Product Safety Commission's (1) investigation of a manufacturer's product, (2) statement of ``intention to make a preliminary determination that the [product] present[ed] a substantial hazard'' and (3) ``request for voluntary corrective action'' did not constitute final agency action under the Administrative Procedure Act), and Tenneco, Inc. v. FERC, 688 F.2d 1018 (5th Cir. 1982) (finding the Federal Energy Regulatory Commission's decision terminating an adjudicatory proceeding and instituting an investigation of the matter to be a non-final order for purposes of judicial review). These cases are not controlling as to the definition of ``administrative finality'' for Board-Initiated Investigations for the same reasons as discussed below with respect to Newport Galleria Group involving 49 U.S.C. 11701(d)(6) & (7). --------------------------------------------------------------------------- Moreover, under 49 U.S.C. 11701(d)(7), which immediately follows the requirement that the Board conclude a Board-Initiated Investigation with administrative finality within one year, the Board's options for concluding the Board-Initiated Investigation, and thus [[Page 90237]] satisfying the requirement in section 11701(d)(6), are to ``dismiss the investigation if no further action is warranted'' or ``initiate a proceeding to determine if a provision under this part has been violated.'' We read section 11701(d)(6), in conjunction with section 11701(d)(7), as stating that the Board must dismiss investigations that have not been concluded within a year (i.e., concluded either by dismissal because no further action is warranted, or by the opening of a Formal Board Proceeding). While the meaning of ``administrative finality'' within section 10701(d)(6) may need to be defined in the future, the language of the statute and the Senate Report support not including the Formal Board Proceeding in the one-year deadline for concluding the Board-Initiated Investigation pursuant to Section 12(b) of the STB Reauthorization Act. Additionally, NSR states that ``other provisions of the Board's governing statute reinforce that administrative finality occurs only with [a] Board decision.'' (NSR Comment 8.) Specifically, NSR cites 49 U.S.C. 11701(e)(7), which ``permits judicial review upon conclusion of the Formal Board Proceeding,'' and 49 U.S.C. 722(d),\16\ which states that ``an action of the Board under this section is final on the date on which it is served,'' for the proposition that ``administrative finality occurs only with the Board decision'' issued upon conclusion of the Formal Board Proceeding. (NSR Comment 8.) However, the relevant governing statutory provisions for concluding a Board-Initiated Investigation--which are more specific to the process at issue than those cited by NSR--are 49 U.S.C. 11701(d)(6) & (7), which, as previously explained, provide that the Board conclude an investigation with administrative finality within one year by either ``dismiss[ing] the investigation if no further action is warranted'' or ``initiat[ing] a proceeding to determine if a provision under this part has been violated.'' The final rules, therefore, continue to impose no time limit on Formal Board Proceedings. See sections 1122.1(b) & 1122.5(e). --------------------------------------------------------------------------- \16\ The STB Reauthorization Act redesignated 49 U.S.C. 722(d) as 49 U.S.C. 1322(d). --------------------------------------------------------------------------- Standard for Opening a Formal Board Proceeding. AAR asks the Board to clarify the standard for commencing a Formal Board Proceeding, specifically requesting that the Board require that there be ``reasonable cause'' to believe that a violation of 49 U.S.C. Subtitle IV, Part A occurred.\17\ (AAR Comment 20-21.) As discussed above,\18\ the Board declines to adopt this ``reasonable cause'' standard for initiating a Board-Initiated Investigations because it would require a higher standard than imposed by the statute. For that same reason, the Board declines to adopt this standard for opening a Formal Board Proceeding. The final rules therefore maintain, in accordance with Section 12 of the STB Reauthorization Act, that the Board shall dismiss a Board-Initiated Investigation if no further action is warranted, or shall initiate a Formal Board Proceeding to determine whether any provision of 49 U.S.C. Subtitle IV, Part A has been violated. --------------------------------------------------------------------------- \17\ AAR also requests that the Board include in the standard for opening a Formal Board Proceeding that the Board base its decision on the results of the Board-Initiated Investigation. (AAR Comment 20-21.) The Board declines to expressly include such a requirement in the final rules, as the final rules mirror the statutory standard for opening a Formal Board Proceeding. \18\ See supra Part B: Standard for Opening a Board-Initiated Investigation. --------------------------------------------------------------------------- Order to Show Cause. With respect to the Order to Show Cause, AAR asks that the Board clarify that the burden of proof remains on the agency to prove that a violation of 49 U.S.C. Subtitle IV, Part A occurred. (AAR Comment 20-21.) We affirm that the Order to Show Cause does not change the burden of proof from the requirements of Section 12 of the STB Reauthorization Act for proving that a violation of 49 U.S.C. Subtitle IV, Part A occurred. Additionally, NSR asks that the Board require that the Order to Show Cause state the issues to be considered in the Formal Board Proceeding. (NSR Comment 4, 30-32.) We find this request to be reasonable, as a party subject to a Formal Board Proceeding should have notice as to the issues that will be publicly considered by the Board. Based on NSR's comment, the final rules include a requirement that the Order to Show Cause state the issues to be considered during the Formal Board Proceeding. See section 1122.5(e) (stating ``[t]he Order to Show Cause shall state the basis for, and the issues to be considered during, the Formal Board Proceeding and set forth a procedural schedule''). D. Other Related Issues Separation of Investigative and Decisionmaking Functions. In the NPRM, the Board proposed to separate the investigative and decisionmaking functions of Board staff to the extent practicable, in accordance with the requirements of Section 12 of the STB Reauthorization Act. Although NGFA supports the Board's proposal, AAR requests that the ``rules expressly state that the Board will separate investigative and decisionmaking functions of staff'' and NSR requests that the Board remove from the final rules the phrase ``to the extent practicable.'' (AAR Comment 11-12; NSR Comments 13, 20.) The NPRM's proposed language expressly tracked 49 U.S.C. 11701(d)(5), which states that in any investigation commenced on the Board's own initiative, the Board must ``to the extent practicable, separate the investigative and decisionmaking functions of staff.'' Although AAR argues that this is insufficient, as it is merely a ``ritualistic incantation of [the] statutory language,'' the NPRM also proposed that the Order of Investigation would identify the Investigating Officer(s) and provided that parties subject to investigation could submit written materials to the Board Members at any time. As a result, parties that feel that the investigative and decisionmaking functions of staff are not properly separated may express their concerns in writing directly to the Board during the course of a Board-Initiated Investigation or Formal Board Proceeding. See section 1122.13. Moreover, the Board declines to remove the phrase ``to the extent practicable'' from the final rules because doing so would not be in full compliance with the statutory language of Section 12 of the STB Reauthorization Act. AAR further asks that the Board explain ``any instances where it may not be practicable to separate these functions.'' AAR also requests that the Board include in the final rules provisions ensuring the separation of investigatory and decisionmaking functions, such as requirements that the Board ``[i]dentify all staff who work in an investigation, not just the Investigating Officers'' and ``[n]otify Board Members, decisional staff within the Board, and parties subject to investigation who has been designated investigation staff for any particular Board-Initiated Investigation.'' (AAR Comment 11-12.) The Board declines to describe instances where it may not be practicable to separate these functions. Based on AAR's comment, however, we clarify that our intent is that any Board staff substantively working on a Board-Initiated Investigation would be identified as an Investigating Officer. To better reflect this intent, the final rules now require that the Order of Investigation ``identify all Board staff who are authorized to conduct the investigation as Investigating Officer(s).'' See section 1122.4. Additionally, Board Members would be notified regarding who has been designated as investigative staff for any [[Page 90238]] particular Board-Initiated Investigation because Board Members would have to issue an Order of Investigation, which, according to the final rules at section 1122.4, would include the names of the Investigating Officers. Ex Parte Communications. Section 12(c)(3) of the STB Reauthorization Act requires the Board, in issuing rules implementing its investigatory authority, to take into account ex parte constraints. Consistent with analogous ex parte constraints in other proceedings at the Board, the NPRM proposed that, as a matter of policy, the Board Members would not engage in off-the-record verbal communications concerning the matters under investigation with parties subject to Board-Initiated Investigations. However, the NPRM provided that parties under investigation would have the right to submit written statements to the Board at any time. Jersey City and NSR ask the Board to revise the NPRM's approach to ex parte communications. First, Jersey City asks that the Board remove the NPRM's provision allowing any party subject to a Board-Initiated Investigation to submit to the Board written statements at any time during the Board-Initiated Investigation. (Jersey City Comment 16.) Second, NSR requests that the Board restrict ex parte communications between Investigating Officers and Board staff conducting Preliminary- Fact Finding and other Board staff, as well as Board Members involved in the Formal Board Proceeding. Finally, NSR states that, should such communications occur, Section 5 and Section 12 of the STB Reauthorization Act should apply. (NSR Comment 3, 20-21.) The Board declines to adopt Jersey City's and NSR's proposals regarding ex parte communications. As explained above, the final rules require the Board to identify in the Order of Investigation (which would be voted on by the Board Members) all Board staff conducting a Board-Initiated Investigation. Therefore, Board Members and their staffs would know with whom to restrict their communications to avoid ex parte issues. Additionally, the final rules continue to provide parties under investigation with the ability to notify the Board in writing of any facts or circumstances relating to the investigation, including potentially prohibited ex parte communications. See 49 CFR 1122.13. As such, the Board would address any ex parte issues that may arise on a case-by-case basis as raised by the parties subject to investigation. Settlement. The NPRM proposed that, during Board-Initiated Investigations, the Investigating Officer(s) would be able to engage in settlement negotiations with parties under investigation and that, if at any time during the investigation, the Investigating Officer(s) and parties under investigation were to reach a tentative settlement agreement, the Investigating Officer(s) would submit the settlement agreement as part of their proposed recommendations to the Board Members for approval or disapproval, along with the summary of findings supporting the proposed agreement. As proposed in the NPRM, the Board would then decide whether to approve the agreement and/or dismiss the investigation or open a Formal Board Proceeding in accordance with the NPRM's proposed procedural rules. In response to this proposal, NGFA comments that the settlement process is too ``nontransparent.'' However, for the reasons provided above with respect to confidentiality,\19\ the Board declines to require that the settlement process be public or to permit third-party involvement in the process. Therefore, as a matter of policy, the Board maintains the settlement process as proposed in the NPRM. --------------------------------------------------------------------------- \19\ See supra Part B: Confidentiality. --------------------------------------------------------------------------- Regulatory Flexibility Act The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, generally requires a description and analysis of new rules that would have a significant economic impact on a substantial number of small entities. In drafting a rule, an agency is required to: (1) Assess the effect that its regulation will have on small entities; (2) analyze effective alternatives that may minimize a regulation's impact; and (3) make the analysis available for public comment. 5 U.S.C. 601-604. Under section 605(b), an agency is not required to perform an initial or final regulatory flexibility analysis if it certifies that the proposed or final rules will not have a ``significant impact on a substantial number of small entities.'' Because the goal of the RFA is to reduce the cost to small entities of complying with federal regulations, the RFA requires an agency to perform a regulatory flexibility analysis of small entity impacts only when a rule directly regulates those entities. In other words, the impact must be a direct impact on small entities ``whose conduct is circumscribed or mandate'' by the proposed rule. White Eagle Coop. Ass'n v. Conner, 553 F.3d 467, 478, 480 (7th Cir. 2009). An agency has no obligation to conduct a small entity impact analysis of effects on entities that it does not regulate. United Distrib. Cos. v. FERC, 88 F.3d 1105, 1170 (D.C. Cir. 1996). In the NPRM, the Board certified under 5 U.S.C. 605(b) that the proposed rule would not have a significant economic impact on a substantial number of small entities within the meaning of the RFA. The Board explained that the proposed rule would not place any additional burden on small entities, but rather clarify an existing obligation. The Board further explained that, even assuming for the sake of argument that the proposed regulation were to create an impact on small entities, which it would not, the number of small entities so affected would not be substantial. No parties submitted comments on this issue. A copy of the NPRM was served on the U.S. Small Business Administration (SBA). The final rule adopted here revises the rules proposed in the NPRM. However, the same basis for the Board's certification of the proposed rule applies to the final rules adopted here. The final rules would not create a significant impact on a substantial number of small entities, as the regulations would only specify procedures related to investigations of matters of regional or national significance conducted on the Board's own initiative and do not mandate or circumscribe the conduct of small entities. Therefore, the Board certifies under 5 U.S.C. 605(b) that the final rules will not have a significant economic impact on a substantial number of small entities within the meaning of the RFA. A copy of this decision will be served upon the Chief Counsel for Advocacy, Office of Advocacy, U.S. Small Business Administration, Washington, DC 20416. List of Subjects in 49 CFR Part 1122 Investigations. It is ordered: 1. The final rules set forth below are adopted and will be effective on January 13, 2017. 2. A copy of this decision will be served upon the Chief Counsel for Advocacy, Office of Advocacy, U.S. Small Business Administration. 3. This decision is effective on January 13, 2017. Decided: December 7, 2016. By the Board, Chairman Elliott, Vice Chairman Miller, and Commissioner Begeman. Jeffrey Herzig, Clearance Clerk. 0 For the reasons set forth in the preamble, the Surface Transportation Board amends title 49, chapter X, subchapter B, of the Code of Federal [[Page 90239]] Regulations by adding part 1122 to read as follows: PART 1122--BOARD-INITIATED INVESTIGATIONS Sec. 1122.1 Definitions. 1122.2 Scope and applicability of this part. 1122.3 Preliminary Fact-Finding. 1122.4 Board-Initiated Investigations. 1122.5 Procedural rules. 1122.6 Confidentiality. 1122.7 Request for confidential treatment. 1122.8 Limitation on participation. 1122.9 Power of persons conducting Board-Initiated Investigations. 1122.10 Transcripts. 1122.11 Rights of witnesses. 1122.12 Certifications and false statements. 1122.13 Right to submit statements. Appendix A to Part 1122--Informal Procedure Relating to Recommendations and Summary of Findings from the Board-Initiated Investigation Authority: 49 U.S.C. 1321, 11144, 11701. Sec. 1122.1 Definitions. (a) Board-Initiated Investigation means an investigation instituted by the Board pursuant to an Order of Investigation and conducted in accordance with Section 12 of the Surface Transportation Board Reauthorization Act of 2015, now incorporated and codified at 49 U.S.C. 11701. (b) Formal Board Proceeding means a public proceeding instituted by the Board pursuant to an Order to Show Cause after a Board-Initiated Investigation has been conducted. (c) Investigating officer(s) means the individual(s) designated by the Board in an Order of Investigation to conduct a Board-Initiated Investigation. (d) Preliminary Fact-Finding means an informal fact-gathering inquiry conducted by Board staff prior to the opening of a Board- Initiated Investigation. Sec. 1122.2 Scope and applicability of this part. This part applies only to matters subject to Section 12 of the Surface Transportation Board Reauthorization Act of 2015, 49 U.S.C. 11701. Sec. 1122.3 Preliminary Fact-Finding. The Board staff may, in its discretion, conduct nonpublic Preliminary Fact-Finding, subject to the provisions of Sec. 1122.6, to determine if a matter presents an alleged violation that could be of national or regional significance and subject to the Board's jurisdiction under 49 U.S.C. Subtitle IV, Part A, and warrants a Board- Initiated Investigation. Board staff shall inform the subject of Preliminary Fact-Finding that Preliminary Fact-Finding has commenced. Where it appears from Preliminary Fact-Finding that a Board-Initiated Investigation is warranted, staff shall so recommend to the Board. Where it appears from the Preliminary Fact-Finding that a Board- Initiated Investigation is not warranted, staff shall conclude its Preliminary Fact-Finding and notify any parties involved that the process has been terminated. Sec. 1122.4 Board-Initiated Investigations. The Board may, in its discretion, commence a nonpublic Board- Initiated Investigation of any matter of national or regional significance that is subject to the jurisdiction of the Board under 49 U.S.C. Subtitle IV, Part A, subject to the provisions of Sec. 1122.6, by issuing an Order of Investigation. Orders of Investigation shall state the basis for the Board-Initiated Investigation and identify all Board staff who are authorized to conduct the investigation as Investigating Officer(s). The Board may add or remove Investigating Officer(s) during the course of a Board-Initiated Investigation. To the extent practicable, an Investigating Officer shall not participate in any decisionmaking functions in any Formal Board Proceeding(s) opened as a result of any Board-Initiated Investigation(s) that he or she conducted. Sec. 1122.5 Procedural rules. (a) After notifying the party subject to Preliminary Fact-Finding that Preliminary Fact-Finding has commenced, the Board staff shall, within a reasonable period of time, either: (1) Conclude Preliminary Fact-Finding and notify any parties involved that the process has been terminated; or (2) Recommend to the Board that a Board-Initiated Investigation is warranted. (b) Not later than 30 days after commencing a Board-Initiated Investigation, the Investigating Officer(s) shall provide the parties under investigation a copy of the Order of Investigation. If the Board adds or removes Investigating Officer(s) during the course of the Board-Initiated Investigation, it shall provide written notification to the parties under investigation. (c) Not later than 275 days after issuance of the Order of Investigation, the Investigating Officer(s) shall submit to the Board and the parties under investigation: (1) Any recommendations made as a result of the Board-Initiated Investigation; and (2) A summary of the findings that support such recommendations. (d) Not later than 90 days after receiving the recommendations and summary of findings, the Board shall decide whether to dismiss the Board-Initiated Investigation if no further action is warranted or initiate a Formal Board Proceeding to determine whether any provision of 49 U.S.C. Subtitle IV, Part A, has been violated in accordance with section 12 of the Surface Transportation Board Reauthorization Act of 2015. The Board shall dismiss any Board-Initiated Investigation that is not concluded with administrative finality within one year after the date on which it was commenced. (e) A Formal Board Proceeding commences upon issuance of a public Order to Show Cause. The Order to Show Cause shall state the basis for, and the issues to be considered during, the Formal Board Proceeding and set forth a procedural schedule. Sec. 1122.6 Confidentiality. (a) All information and documents obtained under Sec. 1122.3 or Sec. 1122.4, whether or not obtained pursuant to a Board request or subpoena, and all activities conducted by the Board under this part prior to the opening of a Formal Board Proceeding, shall be treated as nonpublic by the Board and its staff except to the extent that: (1) The Board, in accordance with 49 CFR 1001.4(c), (d), and (e), directs or authorizes the public disclosure of activities conducted under this part prior to the opening of a Formal Board Proceeding. If any of the activities being publicly disclosed implicate records claimed to be confidential commercial information, the Board shall notify the submitter prior to disclosure in accordance with 49 CFR 1001.4(b) and provide an opportunity to object to disclosure in accordance with 49 CFR 1001.4(d); (2) The information or documents are made a matter of public record during the course of an administrative proceeding; or (3) Disclosure is required by the Freedom of Information Act, 5 U.S.C. 552 or other relevant provision of law. (b) Procedures by which persons submitting information to the Board pursuant to this part of title 49, chapter X, subchapter B, of the Code of Federal Regulations may specifically seek confidential treatment of information for purposes of the Freedom of Information Act disclosure are set forth in Sec. 1122.7. A request for confidential treatment of information for purposes of Freedom of Information Act disclosure shall not, however, prevent disclosure for law [[Page 90240]] enforcement purposes or when disclosure is otherwise found appropriate in the public interest and permitted by law. Sec. 1122.7 Request for confidential treatment. Any person that produces documents to the Board pursuant to Sec. 1122.3 or Sec. 1122.4 may claim that some or all of the information contained in a particular document or documents is exempt from the mandatory public disclosure requirements of the Freedom of Information Act (FOIA), 5 U.S.C. 552, is information referred to in 18 U.S.C. 1905, or is otherwise exempt by law from public disclosure. In such case, the person making such a claim shall, at the time the person produces the document to the Board, indicate on the document that a request for confidential treatment is being made for some or all of the information in the document. In such case, the person making such a claim also shall file a brief statement specifying the specific statutory justification for non-disclosure of the information in the document for which confidential treatment is claimed. If the person states that the information comes within the exception in 5 U.S.C. 552(b)(4) for trade secrets and commercial or financial information, and the information is responsive to a subsequent FOIA request to the Board, 49 CFR 1001.4 shall apply. Sec. 1122.8 Limitation on participation. No party who is not the subject of a Board-Initiated Investigation may intervene or participate as a matter of right in any such Board- Initiated Investigation under this part. Sec. 1122.9 Power of persons conducting Board-Initiated Investigations. The Investigating Officer(s), in connection with any Board- Initiated Investigation, may interview or depose witnesses, inspect property and facilities, and request and require the production of any information, documents, books, papers, correspondence, memoranda, agreements, or other records, in any form or media, that are likely to be directly relevant to the issues of the Board-Initiated Investigation. The Investigating Officer(s), in connection with a Board-Initiated Investigation, also may issue subpoenas, in accordance with 49 U.S.C. 1321, to compel the attendance of witnesses, the production of any of the records and other documentary evidence listed above, and access to property and facilities. Sec. 1122.10 Transcripts. Transcripts, if any, of investigative testimony shall be recorded solely by the official reporter or other person or by means authorized by the Board or by the Investigating Officer(s). A witness who has given testimony pursuant to this part shall be entitled, upon written request, to procure a transcript of the witness' own testimony or, upon proper identification, shall have the right to inspect the official transcript of the witness' own testimony. Sec. 1122.11 Rights of witnesses. (a) Any person who is compelled or requested to furnish documentary evidence or testimony in a Board-Initiated Investigation shall, upon request, be shown the Order of Investigation. Copies of Orders of Investigation shall not be furnished, for their retention, to such persons requesting the same except with the express approval of the Chairman. (b) Any person compelled to appear, or who appears in person at a Board-Initiated Investigation by request or permission of the Investigating Officer may be accompanied, represented, and advised by counsel, as provided by the Board's regulations. (c) The right to be accompanied, represented, and advised by counsel shall mean the right of a person testifying to have an attorney present with him during any aspect of a Board-Initiated Investigation and to have this attorney advise his client before, during and after the conclusion of such examination. Sec. 1122.12 Certifications and false statements. (a) When producing documents under Sec. 1122.4, the producing party shall submit a statement certifying that such person has made a reasonable search for the responsive documents and is producing all the documents called for by the Investigating Officer(s), subject to any search protocols agreed to by the Investigating Officer(s) and producing parties. If any responsive document(s) are not produced for any reason, the producing party shall state the reason therefor. (b) If any responsive documents are withheld because of a claim of the attorney-client privilege, work product privilege, or other applicable privilege, the producing party shall submit a list of such documents which shall, for each document, identify the attorney involved, the client involved, the date of the document, the person(s) shown on the document to have prepared and/or sent the document, and the person(s) shown on the document to have received copies of the document. Sec. 1122.13 Right to submit statements. Any party subject to a Board-Initiated Investigation may, at any time during the course of a Board-Initiated Investigation, submit to the Board written statements of facts or circumstances, with any relevant supporting evidence, concerning the subject of that investigation. Appendix A to Part 1122--Informal Procedure Relating to Recommendations and Summary of Findings From the Board-Initiated Investigation (a) After conducting sufficient investigation and prior to submitting recommendations and a summary of findings to the Board, the Investigating Officer, in his or her discretion, may inform the parties under investigation (orally or in writing) of the proposed recommendations and summary of findings that may be submitted to the Board. If the Investigating Officer so chooses, he or she shall also advise the parties under investigation that they may submit a written statement, as explained below, to the Investigating Officer prior to the consideration by the Board of the recommendations and summary of findings. This optional process is in addition to, and does not limit in any way, the rights of parties under investigation otherwise provided for in this part. (b) Unless otherwise provided for by the Investigating Officer, parties under investigation may submit a written statement, as described above, within 14 days after of being informed by the Investigating Officer of the proposed recommendation(s) and summary of findings. Such statements shall be no more than 20 pages, not including any supporting data, evidence, and verified statements that may be attached to the written statement, double spaced on 8\1/ 2\ by 11 inch paper, setting forth the views of the parties under investigation of factual or legal matters or other arguments relevant to the commencement of a Formal Board Proceeding. Any statement of fact included in the submission must be sworn to by a person with personal knowledge of such fact. (c) Such written statements, if the parties under investigation choose to submit, shall be submitted to the Investigating Officer. The Investigating Officer shall provide any written statement(s) from the parties under investigation to the Board at the same time that he or she submits his or her recommendations and summary of findings to the Board. [FR Doc. 2016-29902 Filed 12-13-16; 8:45 am] BILLING CODE 4915-01-P
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large businesses because the rule does Street SW., Washington, DC 20423– have a right to file a written statement
not impose any additional burden and 0001. describing all or any facts and
will have a positive benefit in the way FOR FURTHER INFORMATION CONTACT: circumstances concerning a matter
of fewer voucher rejections, rework, and Scott M. Zimmerman at (202) 245–0386. under investigation. The Board should
payment delays. [Assistance for the hearing impaired is separate the investigative and
There are no new reporting available through the Federal decisionmaking functions of Board staff
requirements or recordkeeping Information Relay Service (FIRS) at 1– to the extent practicable.
requirements associated with this rule. Investigations must be dismissed if
800–877–8339.]
Further, there are no significant they are not concluded with
SUPPLEMENTARY INFORMATION: Section 12
alternatives that could further minimize administrative finality within one year
of the Surface Transportation Board after commencement.2 In any such
the already minimal impact on Reauthorization Act of 2015, Public Law
businesses, small or large. investigation, Board staff must make
114–110, 129 Stat. 2228 (2015) (STB available to the parties under
V. Paperwork Reduction Act Reauthorization Act or Act) (see 49 investigation and the Board Members
U.S.C. 11701) authorizes the Board to any recommendations made as a result
The rule contains information
investigate, on its own initiative, issues of the investigation and a summary of
collection requirements that require the
that are ‘‘of national or regional the findings that support such
approval of the Office of Management
significance’’ and are subject to the recommendations. Within 90 days of
and Budget under the Paperwork
Board’s jurisdiction under 49 U.S.C. receiving the recommendations and
Reduction Act (44 U.S.C. chapter 35);
Subtitle IV, Part A. Under Section 12, summary of findings, the Board must
however, these changes to the NFS do
the Board must issue rules either dismiss the investigation if no
not impose additional information
implementing this investigative further action is warranted, or initiate a
collection requirements to the
authority not later than one year after proceeding to determine whether a
paperwork burden previously approved
the date of enactment of the STB provision of 49 U.S.C. Subtitle IV, Part
under OMB Control Number 9000–0070,
Reauthorization Act (by December 18, A has been violated. Any remedy that
entitled Payments—FAR Sections
2016). the Board may order as a result of such
Affected: 52.232–1 thru 52.232–4 and
By decision served on May 16, 2016, a proceeding may only be applied
52.232–6 thru 52.232–11.
the Board issued a Notice of Proposed prospectively.
List of Subjects in 48 CFR Parts 1816, Rulemaking (NPRM) in which the Board The STB Reauthorization Act further
1832, 1842, and 1852 proposed rules for investigations requires that the rules issued under
Government procurement. conducted on the Board’s own initiative Section 12 comply with the
pursuant to Section 12 of the STB requirements of 49 U.S.C. 11701(d) (as
Manuel Quinones, Reauthorization Act. The proposed amended by the STB Reauthorization
NASA FAR Supplement Manager. rules were published in the Federal Act), satisfy due process requirements,
■ Accordingly, the interim rule Register, 81 FR 30,510 (May 17, 2016), and take into account ex parte
amending 48 CFR parts 1816, 1832, and comments were submitted in constraints.
1842, and 1852, which was published at response to the NPRM.1
After consideration of parties’ Discussion of Issues Raised in Response
81 FR 63143 on September 14, 2016, is to the NPRM
adopted as a final rule without change. comments, the Board is adopting final
rules, to be set forth at 49 CFR part In the NPRM, the Board proposed a
[FR Doc. 2016–29951 Filed 12–13–16; 8:45 am]
1122, that establish the procedures for three-stage process, consisting of (1)
BILLING CODE 7510–13–P Board investigations conducted Preliminary Fact-Finding, (2) Board-
pursuant to Section 12 of the STB Initiated Investigations, and (3) Formal
Reauthorization Act. These final rules Board Proceedings. Having considered
SURFACE TRANSPORTATION BOARD do not apply to other types of the comments, the Board will adopt this
investigations that the Board may three-stage process in the final rules,
49 CFR Part 1122 conduct. subject to certain modifications from
[Docket No. EP 731] what was proposed in the NPRM. Below
Introduction
we address the comments received in
Rules Relating to Board-Initiated The STB Reauthorization Act response to the NPRM pertaining to
Investigations provides a basic framework for each stage, as well as other related
conducting investigations on the issues, and the Board’s responses,
AGENCY: Surface Transportation Board. Board’s own initiative, as follows: including modifications from the
ACTION: Final rules. Within 30 days after initiating an NPRM. The final rules are below.
investigation, the Board must provide
SUMMARY: The Surface Transportation notice to parties under investigation A. Preliminary Fact-Finding
Board (Board or STB) is adopting final stating the basis for such investigation. As proposed in the NPRM,
rules for investigations conducted on The Board may only investigate issues Preliminary Fact-Finding refers to the
the Board’s own initiative pursuant to that are of national or regional process in which Board staff would
Section 12 of the Surface Transportation significance. Parties under investigation conduct, at their discretion, an initial,
Board Reauthorization Act of 2015. informal, nonpublic inquiry regarding
DATES: These rules are effective on 1 The Board received comments and replies from
an issue. The purpose of the Preliminary
January 13, 2017. the following: Association of American Railroads Fact-Finding would be to determine if
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(AAR); City of Jersey City, Rails to Trails
ADDRESSES: Information or questions Conservancy (Jersey City) (comments only); there is enough information to warrant
regarding these final rules should National Grain and Feed Association (NGFA); The
reference Docket No. EP 731 and be in National Industrial Transportation League (NITL) 2 The one-year deadline for investigations
(comments only); Norfolk Southern Railway conducted on the Board’s own initiative does not
writing addressed to Chief, Section of Company (NSR); and SMART/Transportation include any Board proceeding conducted
Administration, Office of Proceedings, Division, New York State Legislative Board subsequent to the investigation. S. Rep. No. 114–52,
Surface Transportation Board, 395 E (SMART/TD–NY). at 13 (2015).
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during a Formal Board Proceeding, if as opposed to Board staff, should Preliminary Fact-Finding has
one were opened. (AAR Reply 2.) approve commencement of Preliminary commenced.
The Board will adopt the proposal in Fact-Finding, ‘‘given the potentially Third, AAR argues that section 1122.3
the NPRM to keep the Preliminary Fact- significant consequences on regulated should use the terminology ‘‘warranted’’
Finding confidential, subject to certain parties’’ from Preliminary Fact-Finding, or ‘‘not warranted’’ (instead of
limited exceptions (discussed below). or from a Board-Initiated Investigation ‘‘appropriate’’ or ‘‘not appropriate’’), as
Having considered the parties’ or Formal Board Proceeding opened as both the NPRM’s preamble and the
arguments, we are not convinced the a result of Preliminary Fact-Finding. statute use the word ‘‘warranted.’’ (AAR
potential benefits of making Preliminary (AAR Comment 6.) We decline to Comment 9 n.3.) The final rules
Fact-Finding public outweigh the risks. incorporate the suggestion that the incorporate this suggestion, adopting
During Preliminary Fact-Finding, Board Board or the Director of the Office of the terminology of ‘‘warranted’’ or ‘‘not
staff would only be ascertaining Proceedings should approve warranted,’’ instead of ‘‘appropriate’’ or
whether a matter warrants an commencement of Preliminary Fact- ‘‘not appropriate.’’ See 49 CFR 1122.3.
investigation by the Board. Preliminary Finding. The Board must gather Fact Gathering. The NPRM proposed
Fact-Finding would not be a formal, information concerning potentially that, during Preliminary Fact-Finding,
evidence-gathering process, and, if the qualifying violations to determine Board staff could request that parties
Board were to make Preliminary Fact- whether it should commence a Board- voluntarily provide testimony,
Finding public, parties subject to Initiated Investigation. For the reasons information, or documents to assist in
Preliminary Fact-Finding could possibly discussed earlier,4 such activities are Board staff’s informal inquiry, but could
be subject to unwarranted reputational informal and preliminary, and, thus, we not issue subpoenas to compel the
damage or other harm. NGFA suggests find that the initiation of Preliminary submission of evidence. In response to
that concerns about confidentiality Fact-Finding does not merit a formal this proposal, AAR, NITL, and NGFA
could be avoided by redacting the Board action or finding, although the suggest that certain clarifications are
parties’ names, but even a general Board would be aware of the needed regarding the collection of
description of the issues subject to commencement of Preliminary Fact- information during Preliminary Fact-
Preliminary Fact-Finding might Finding. Finding. We address these comments
effectively disclose the identity of Second, AAR suggests that the Board below.
involved parties, regardless of whether should notify parties subject to AAR seeks clarification that (1) the
the name(s) of the parties were redacted. Preliminary Fact-Finding that production of documents during
Therefore, the final rules presume that Preliminary Fact-Finding has Preliminary Fact-Finding is voluntary,
Preliminary Fact-Finding would be commenced. AAR argues that, without (2) the requirement to certify a
nonpublic and confidential, unless the such notice, railroads may not be production of documents applies to
Board otherwise finds it necessary to willing to coordinate and share Preliminary Fact-Finding, (3) the Board
make certain information related to, or information with the Board’s Office of retains its right to demand to inspect
the fact of, Preliminary Fact-Finding Public Assistance, Governmental and copy any record of a rail carrier
public. Affairs, and Compliance (OPAGAC) out pursuant to 49 U.S.C. 11144(b) during
As previously proposed in the NPRM, of concern that such information could Preliminary Fact-Finding, and (4) the
the final rules would continue to allow be used by Board staff in Preliminary information submitted during
the Board to make aspects of Fact-Finding against them. (AAR Preliminary Fact-Finding will be
Preliminary Fact-Finding public. See Comment 7–8.) To address AAR’s ‘‘subject to disclosure in any subsequent
section 1122.6(a)(1). In instances where concerns regarding OPAGAC, we are Board-Initiated Investigation on the
the Board chooses to exercise this modifying section 1122.3 to include a same terms as other materials gathered
discretion, the Board would weigh, on requirement that Board staff notify during Board-Initiated Investigations.’’
a case-by-case basis, potential harm to parties subject to Preliminary Fact- (AAR Comment 5, 7–8.)
innocent parties, markets, or the Finding that Preliminary Fact-Finding In response to AAR’s comments, the
integrity of the inquiry and subsequent has commenced. See section 1122.3 Board provides the following
investigation. However, because of the (stating that ‘‘Board staff shall inform clarifications. First, the production of
risks associated with making the subject of Preliminary Fact-Finding documents during Preliminary Fact-
Preliminary Fact-Finding public, we that Preliminary Fact-Finding has Finding would be voluntary. See section
will not adopt a mechanism through commenced’’). The Board finds that it is 1122.9 (granting Investigating Officer(s)
which a party may request that necessary to maintain railroad the right to compel the submission of
Preliminary Fact-Finding be made confidence in OPAGAC, as OPAGAC’s evidence only in Board-Initiated
public pursuant to section 1122.6(a)(1). Rail Customer and Public Assistance Investigations). Second, parties that
The same reasoning applies to Program (RCPA) provides a valuable choose to voluntarily produce
confidentiality of Board-Initiated informal venue for the private-sector documents during Preliminary Fact-
Investigations, as discussed later. resolution of shipper-railroad disputes, Finding would not be required to certify
Commencement. The NPRM proposed and, without railroad participation, such productions. Whereas the NPRM
that Board staff would commence RCPA would be less effective at proposed to require a producing party to
Preliminary Fact-Finding, at its facilitating communication among the submit a statement certifying that such
discretion, to determine if an alleged various segments of the rail- person made a diligent search for
violation could be of national or transportation industry and encouraging responsive documents ‘‘[w]hen
regional significance and subject to the the resolution of rail-shipper producing documents under this part,’’
the final rules at section 1122.12(a) now
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Board’s jurisdiction under 49 U.S.C. operational or service issues. Thus, the
Subtitle IV, Part A, and warrant a Board- final rules incorporate AAR’s request limit that to ‘‘[w]hen producing
Initiated Investigation. AAR proposes that the Board provide notice to parties documents under section 1122.4,’’ the
three modifications to the Board’s subject to Preliminary Fact-Finding that regulation governing Board-Initiated
regulations. We discuss each in turn. Investigations only. Third, as a matter of
First, AAR asserts that the Board or 4 See supra Part A: Time Limit for Preliminary policy, the Board would not demand to
the Director of the Office of Proceedings, Fact-Finding. inspect and copy any record—relating to
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the subject of Preliminary Fact- Board-Initiated Investigation would potential violation may be of national or
Finding—of a rail carrier pursuant to 49 begin with the Board issuing an Order regional significance warranting the
U.S.C. 11144(b) during Preliminary of Investigation and providing a copy of opening of an investigation.
Fact-Finding by Board staff. Finally, the order to the parties under In comments, AAR asks the Board to
information submitted during investigation within 30 days of clarify the standard for commencing a
Preliminary Fact-Finding would be issuance. The NPRM also provided that Board-Initiated Investigation and
subject to disclosure in any subsequent Board-Initiated Investigations would be require that (1) ‘‘the issue [be] of
Board-Initiated Investigation on the nonpublic and confidential, subject to national or regional significance’’ and
same terms as materials gathered during certain exceptions, to protect both the (2) ‘‘there [be] reasonable cause to
Board-Initiated Investigations. This is integrity of the process and the parties believe that there may be a violation of
provided for in the final rules at section under investigation from any 49 U.S.C. Subtitle IV, Part A.’’ (AAR
1122.6, which states that all information unwarranted reputational damage or Comment 9–11.) (emphasis added.)
and documents obtained under section other harm. Finally, the NPRM stated Under 49 U.S.C. 11701, however, the
1122.3 (referring to Preliminary Fact- that parties who are not the subject of Board may begin an investigation of
Finding) or section 1122.4 (referring to the investigation would not be able to alleged violations of 49 U.S.C. Subtitle
Board-Initiated Investigations) whether intervene or participate as a matter of IV, Part A as long as the issue is of
or not obtained pursuant to a Board right in Board-Initiated Investigations. national or regional significance. As a
request or subpoena, shall be treated as In this section, we address parties’ result, AAR’s proposal would require a
nonpublic by the Board and its staff, comments on (1) the standard for higher standard for commencing a
subject to the exceptions described in opening a Board-Initiated Investigation, Board-Initiated Investigation than
section 1122.6(a)–(c). (2) the definition of ‘‘national or imposed by the statute—i.e., by
NITL and NGFA state that the Board regional significance,’’ (3) timing of requiring ‘‘reasonable cause to believe’’
should provide staff the ‘‘appropriate providing the Order of Investigation to that a violation under 49 U.S.C. Subtitle
tools’’ to obtain information needed parties under investigation, (4) IV, Part A occurred. Accordingly, we
during Preliminary Fact-Finding. (NITL confidentiality of Board-Initiated decline to adopt AAR’s proposed
Comment 2; NGFA Reply 5–6.) NGFA Investigations, (5) parties’ requests for standard and will maintain in the final
also suggests that the Board should the right to intervene in Board-Initiated rules the statutory standard, which
adopt deadlines for a party subject to Investigations, (6) railroads’ request for provides that the Board may, in its
Preliminary Fact-Finding to submit access to exculpatory evidence, (7) discretion, commence a Board-Initiated
evidence to the Board. (NGFA Reply 6.) parties’ comments relating to the Investigation of any matter of national
The Board declines to give Board staff collection of information and or regional significance that is subject to
additional authority to obtain documentation, and (8) the process for the jurisdiction of the Board under 49
information during Preliminary Fact- providing Board staff’s U.S.C. Subtitle IV, Part A. See section
Finding. As previously noted, recommendations and summary of 1122.4.
Preliminary Fact-Finding is an initial, findings to a party under investigation.5 AAR further asks that the Board
informal inquiry to determine whether a Standard for Opening a Board- require that any Order of Investigation
Board-Initiated Investigation is Initiated Investigation. The NPRM issued state that ‘‘the matter at issue ‘is’
warranted. The Board, thus, has stated that the Board could commence of national or regional significance’’
intentionally limited Board staff’s a Board-Initiated Investigation of any (instead of ‘‘may be’’ of national or
authority to collect evidence in order to matter of national or regional regional significance). (AAR Comment
prevent undue burden on anyone. significance that is subject to the 9.) Relatedly, NSR asks that the Board
However, during Preliminary Fact- jurisdiction of the Board under 49 clarify that any issue subject to a Board-
Finding, Board staff would be able to U.S.C. Subtitle IV, Part A when it Initiated Investigation must ‘‘remain of
request that parties produce information appears that the statute may have been national or regional significance
and documents on a voluntary basis and violated. The NPRM further stated that, throughout the Board-Initiated
request that any evidence submitted be in instances where Preliminary Fact- Investigation and related Formal Board
provided by a certain deadline. Finding had been conducted,6 in order Proceeding.’’ (NSR Comment 3.)
Although Board staff would not be able to seek authorization to commence a The final rules will continue to
to issue subpoenas to compel the Board-Initiated Investigation, Board staff require that an alleged violation subject
production of evidence during would have to determine that (1) a to a Board-Initiated Investigation be of
Preliminary Fact-Finding, parties would violation of 49 U.S.C. Subtitle IV, Part national or regional significance. See
have an incentive to provide A subject to the Board’s jurisdiction section 1122.4. Section 12 of the STB
information or documents to show that may have occurred and (2) that the Reauthorization Act permits the Board
a Board-Initiated Investigation is not to investigate issues that ‘‘are of national
warranted. For these reasons, the Board 5 Jersey City requests the Board also address the or regional significance.’’ We interpret
declines to grant Board staff any further ‘‘institutional structure, staffing, and resources’’ it this language to mean that an alleged
authority to obtain information during has related to investigations conducted pursuant to violation of 49 U.S.C. Subtitle IV, Part
Section 12 of the STB Reauthorization Act. As this A that is of national or regional
Preliminary Fact-Finding. issue is not pertinent to the regulations, we decline
to comment on internal Board staffing issues. significance upon commencement of the
B. Board-Initiated Investigation (Jersey City Comment 7.) investigation may continue to be subject
As proposed in the NPRM, Board- 6 NGFA asks the Board to change § 1122.4 to to Board-Initiated Investigation even if
Initiated Investigation refers to an clarify that Preliminary Fact-Finding is not required the conduct that created the alleged
in order to commence a Board-Initiated
investigation, conducted in accordance violation ceases. Similarly, conduct
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Investigation. (NGFA Comment 7.) However, there
with Section 12 of the STB was no requirement in the regulations that underlying an alleged violation does not
Reauthorization Act, to decide whether Preliminary Fact-Finding must precede a Board- have to be of ongoing national or
to recommend to the Board that it open Initiated Investigation, and the NPRM’s preamble regional significance so long as the
was clear that Preliminary Fact-Finding was not
a proceeding to determine if a violation required in order to commence a Board-Initiated
Board determines that the alleged
of 49 U.S.C. Subtitle IV, Part A Investigation. We, therefore, decline to make this violation created an issue of national or
occurred. The NPRM stated that a change to the final rules. regional significance at the time the
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![Federal Register / Vol. 81, No. 240 / Wednesday, December 14, 2016 / Rules and Regulations 90233
investigation was initiated. Otherwise, the definition of ‘‘national or regional reasons it opposes making Preliminary
conduct that is capable of repetition significance.’’ Specifically, NSR asks the Fact-Finding public.9 (AAR Reply 4–5.)
could create future crises without Board to explain how it ‘‘intends to For instance, AAR states that public
redress. The final rules thus will adopt apply the jurisdictional standard of disclosure of the subject of a Board-
the language proposed in the NPRM. ‘national or regional significance.’ ’’ Initiated Investigation could cause
See section 1122.4. (NSR Comment 3.) NGFA requests that ‘‘unwarranted reputational damage or
Definition of ‘‘National or Regional the Board ‘‘provide a discussion of the other harm’’ and that ‘‘the threat of
Significance.’’ In the NPRM, the Board types of rail practices or issues the public disclosure w[ould] create the
did not define the phrase ‘‘of national or Board would consider to be of national incentive to be less cooperative in the
regional significance.’’ As a result, some or regional significance.’’ (NGFA discovery process.’’ (AAR Reply 4.)
commenters request that the Board Comment 3–4; NGFA Reply 6.) We find that the risks of making
define this phrase or provide examples Under the final rules, the Board Board-Initiated Investigations public
of issues that would be considered of would apply the jurisdictional standard outweigh the potential benefits, absent
national or regional significance. of national or regional significance on a extraordinary circumstances.10 If, after
In particular, AAR states that the case-by-case basis, considering, for conducting a Board-Initiated
Board should define ‘‘national or instance, the extent of the impacts of the Investigation, the Board believes that a
regional significance’’ as ‘‘widespread potential violation on national or Formal Board Proceeding should be
and significant effects on transportation regional rail traffic, customers, or third commenced to determine if a qualifying
service or markets in a region or across parties, or the geographic scope of the violation occurred, the Board would
the nation.’’ AAR also asks that the alleged violation. Examples of recent open such a proceeding. At that time,
Board clarify that issues of national or matters that the Board might consider to any Formal Board Proceeding would be
regional significance do not include be of national or regional significance public, subject to the Board’s existing
individual rate disputes or disputes include (but are not limited to): rules protecting confidential
involving a single shipper. (AAR Fertilizer shipment delays; rail car information. See 49 CFR 1104.14.
Comment 10.) Similarly, Jersey City supply issues that impact grain However, if the Board determines that
states that the Board should define shipments; or extensive congestion at no further action is warranted and
‘‘national or regional significance’’ in strategic interchange points such as therefore dismisses the Board-Initiated
order to avoid litigation on Chicago, Ill. Investigation with no further action, the
jurisdictional issues stemming from this Confidentiality. As with Preliminary Board generally would seek to maintain
phrase. (Jersey City Comment 11–12.) Fact-Finding, the NPRM proposed that the confidentiality of the party subject
We decline to adopt a definition of Board-Initiated Investigations generally to the Board-Initiated Investigation, in
‘‘national or regional significance.’’ The would be nonpublic and confidential, order to prevent the party from being
Board finds that AAR’s proposed subject to certain exceptions,7 in order subject to any stigma that may be
definition does not provide significantly to protect the integrity of the process associated with having been
more insight than the phrase itself as to and to protect parties under investigated. For these reasons, the final
what constitutes a matter ‘‘of national or investigation from possibly unwarranted rules maintain that Board-Initiated
regional significance.’’ In addition, there reputational damage or other harm. Investigations are presumptively
is no need to expressly exclude rate In comments, NGFA asks that the nonpublic and confidential.
disputes in these rules—such disputes Board publish Orders of Investigation in With respect to confidentiality, AAR
are not subject to Board-Initiated the Federal Register or on the Board’s asks that the Board clarify that it is ‘‘not
Investigation under the statute (whether Web site, so that third parties may claiming unbounded discretion to make
or not they are of national or regional request access to documents produced confidential information and documents
significance). Section 11701(a) of Title during a Board-Initiated Investigation, public’’ and that it revise the NPRM’s
49 of the United States Code states that and NGFA and Jersey City ask the Board confidentiality provision to include the
the Board may begin an investigation on to inform the public as to the outcome protections provided by 49 CFR 1001.4,
its own initiative, ‘‘[e]xcept as otherwise of a Board-Initiated Investigation.8 which governs predisclosure
provided in this part.’’ Rate disputes are (NGFA Comment 6–7.) Similarly, NITL notification procedures for confidential
governed by 49 U.S.C. 10704, which asks that the Board make the Order of commercial information. (AAR
specifically states that rate disputes may Investigation available to the public, Comment 17–18.) NSR also asks that the
only be commenced ‘‘on complaint.’’ 49 and SMART–TD asks the Board to Board ‘‘create a reasonable opportunity
U.S.C. 10704(b). Therefore, rate disputes delete the ‘‘automatic ‘nonpublic’ for the person claiming confidentiality
fall outside the purview of the process.’’ (NITL Comment 3; SMART– to respond to the Board’s denial of a
investigatory authority conferred to the TD Comment 11.) On reply, AAR request for confidential treatment prior
Board under Section 12 of the STB opposes making Board-Initiated to any public disclosure of the
Reauthorization Act. Investigations public for the same purportedly confidential information.’’
As to disputes involving a single (NSR Comment 4, 28–29.)
shipper, the Board declines to adopt a 7 See § 1122.6(a)–(c). See also infra note 10. The Board will grant these requests to
8 NGFA and Jersey City make the same request
blanket approach as to whether such clarify that parties will be given notice
with respect to Preliminary Fact-Finding. (NGFA
issues are of national or regional Comment 6–7; Jersey City Comment 14.) NGFA and the ability to respond to the
significance. Such a determination further asks that the Order of Investigation identify potential disclosure of confidential
would be fact-dependent and require a point of contact for Preliminary Fact-Finding and commercial information prior to its
the Board to make a determination the Board-Initiated Investigation and request from release. Specifically, the final rules at
third parties information related to the issue being
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based on the specific situation and investigated. (NGFA Comment 6; NGFA Reply 3.)
various factors (such as the dispute’s NGFA states that Board could redact information 9 See supra Part A: Confidentiality.
impact on national or regional rail identifying the party subject to the investigation. 10 The Board recognizes that there may be
traffic), which are discussed further For the reasons provided above, the final rules instances where it is necessary to make a Board-
maintain that Preliminary Fact-Finding and Board- Initiated Investigation, or aspects of a Board-
below. Initiated Investigations generally would be Initiated Investigation, public, in which case the
NSR and NGFA also ask that the nonpublic and confidential, subject to the Board would rely on § 1122.6(a)(1) to release such
Board provide clarification related to exceptions described in § 1122.6(a)–(c). information.
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![90234 Federal Register / Vol. 81, No. 240 / Wednesday, December 14, 2016 / Rules and Regulations
section 1122.6(a)(1) now expressly (NITL Comment 3; NGFA Comment 5– also asks that the Board revise the
incorporate 49 CFR 1001.4(c), (d) and 7; NGFA Reply 4, 8; Jersey City proposed regulation governing
(e), which require that the Board notify Comment 15; SMART–TD 11.) AAR transcripts to always require a transcript
the person claiming confidential opposes allowing third parties to of investigative testimony. (AAR
treatment prior to publicly disclosing intervene in Board-Initiated Comment 14.) AAR further requests that
any purportedly confidential Investigations. (AAR Reply 2, 9.) Investigating Officers be limited in the
commercial information and provide We decline to permit third parties to amount of information and documents
such persons an opportunity to object to intervene or participate as a matter of that they can request of parties and also
the disclosure. The Board’s final rules at right in Board-Initiated Investigations. limited to requesting ‘‘documents that
section 1122.7 also continue to require Although NGFA and Jersey City argue are likely to be directly relevant to the
that, if a Freedom of Information Act that interventions could increase investigation.’’ (AAR Comment 15.) NSR
(FOIA) request seeks information that a transparency and assist Investigative asks that the Board ‘‘ensure that
party has claimed constitutes trade Officers in developing a more complete subpoenas are issued only where they
secrets and commercial or financial record and determining whether a are likely to lead to admissible evidence
information within the exception in 5 qualifying violation occurred, a final, regarding the investigated issue . . .
U.S.C. 552(b)(4), the Board shall give the binding determination in that regard is and are otherwise limited in scope,
party an opportunity to respond not made during a Board-Initiated specific in directive, and in good faith.’’
pursuant to 49 CFR 1001.4. Investigation. (See NGFA Comment 7; (NSR Comment 4.)
Order of Investigation. As proposed in Jersey City Comment 15.) Rather, that In response to AAR and NSR’s
the NPRM, the Board would issue an decision would be made during the comments pertaining to transcripts, the
Order of Investigation in order to Formal Board Proceeding, where, as Board declines to always require a
commence a Board-Initiated AAR notes, third parties could move to transcript of investigative testimony, but
Investigation. The Board then would intervene and participate in a will require that witnesses be given
provide a copy of the Order of proceeding. Therefore, shippers’ access to any transcript of their
Investigation to the party under objectives in intervening in Board- investigative testimony—either by
investigation within 30 days of Initiated Investigations would be receiving a copy of the transcript or by
issuance. satisfied during a Formal Board inspecting the transcript. Specifically,
In its comments, AAR asks that the Proceeding. In addition, there is a the final rules now provide that ‘‘[a]
Board instead provide a copy of the statutory one-year time limitation on witness who has given testimony
Order of Investigation to the parties Board-Initiated Investigations. Allowing pursuant to [part 1122 of the
under investigation within 10 days of its third parties to intervene as of right regulations] shall be entitled, upon
issuance. (AAR Comment 12.) Similarly, could make it difficult for the Board to written request, to procure a transcript
NGFA asks that the Board provide a complete its investigation in the of the witness’ own testimony or, upon
copy of the Order of Investigation to the required time frame.11 proper identification, shall have the
public within 10 or 15 days of its Finally, we disagree with Jersey City’s right to inspect the official transcript of
issuance. (NGFA Reply 7.) argument that 28 U.S.C. 2323 grants the witness’ own testimony.’’ See
Under 49 U.S.C. 11701(d)(1), the interested ‘‘[c]ommunities, associations, section 1122.10.
Board is required to provide written firms, and individuals’’ a right to As to Investigating Officers’ right to
notice to the parties under investigation intervene in any Board-Initiated request documents, we will adopt
by not later than 30 days after initiating Investigation. As AAR points out, AAR’s suggestion that Investigating
the investigation. Although in practice section 2323 applies only to federal Officers be limited to request documents
the Board intends to provide copies of court proceedings arising from that are likely to be directly relevant to
the Order of Investigation to parties challenges to Board rulemakings or the investigation. (AAR Comment 15.)
within a shorter timeframe as requested attempts to enforce Board orders. (AAR Thus, we have modified the language of
by AAR and NGFA, the Board declines Reply 9.) For these reasons, the final section 1122.9 to state that Investigating
to adopt regulations that are stricter rules continue to prohibit intervention Officer(s) may interview or depose
than the requirements of Section 12 of or participation by third parties in any witnesses, inspect property and
the STB Reauthorization Act. The final Board-Initiated Investigation. facilities, and request and require the
rules therefore maintain the statutory Information and Documentation production of any information,
requirement of providing notice to Collection. Parties raise several concerns documents, books, papers,
parties under investigation within 30 with respect to the production of correspondence, memoranda,
days. documents and testimony under the agreements, or other records, in any
Intervention. The NPRM provided proposed rules. In the NPRM, the Board form or media, ‘‘that are likely to be
that third parties, who are not the proposed that, if any transcripts were directly relevant to the issues of the
subject of a Board-Initiated taken of investigative testimony, they Board-Initiated Investigation.’’ This
Investigation, may not intervene or would be recorded by an official change also sufficiently addresses NSR’s
participate as a matter of right in any reporter or other authorized means. In concern that Investigating Officers’
Board-Initiated Investigation. comments, AAR asks that parties under requests for evidence be ‘‘limited in
Commenters, mostly shippers, ask that investigation be given full access to scope, specific in directive, and in good
the Board either permit third parties to transcripts of their testimony, while faith.’’ (NSR Comment 4.) The Board
intervene in Board-Initiated NSR asks that subpoenaed witnesses be declines to otherwise limit the
Investigations or comment on an able to obtain copies of their evidence Investigating Officers’ right to request
ongoing investigation. These and transcripts of their testimony. (AAR
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evidence.
commenters assert, among other Comment 14; NSR Comment 22.) AAR AAR and NSR also ask that the Board
arguments, that third parties have a provide parties under investigation the
statutory right to intervene and that 11 Shippers also request that third parties be
right to seek discovery.12 (See AAR
intervention would promote allowed to intervene in Preliminary Fact-Finding.
We reject this request for the same reasons we reject
transparency and assist Board staff in the request that third parties be allowed to 12 AAR also asks for the right to obtain discovery
compiling a more complete record. intervene in the Board-Initiated Investigations. during a Formal Board Proceeding, which we
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Comment 14; NSR Comment 4, 35–37.) require a party to perform a potentially exculpatory evidence. (AAR
On reply, NGFA opposes the railroads’ ‘‘reasonable’’ search, rather than a Comment 13; NSR Comment 4, 32–35.)
request that parties under investigation ‘‘diligent’’ search, as proposed in the In Brady, the United States Supreme
be provided the right to seek discovery, NPRM. Additionally, AAR asks that the Court, in criminal proceedings, held
stating that the ‘‘final rules should not Board adopt a ‘‘witness rights’’ that the Due Process clause of the Fifth
impose complex requirements and provision in accordance with other Amendment requires the prosecutor to
associated legal and other costs on rail agencies’ practices. (AAR Comment 17.) disclose exculpatory evidence material
customers.’’ (NGFA Reply 3.) NGFA NGFA opposes AAR’s request to remove to guilt or punishment, known to the
adds that, if the Board were to allow the ‘‘Certifications and false statements’’ government but not known to the
railroads to conduct discovery in Board- provision. (NGFA Reply 8.) defendant. Currently, no statute or case
Initiated Investigations, such discovery We decline to eliminate the law mandates the application of the
‘‘should be limited to entities that elect ‘‘Certifications and false statements’’ Brady Rule to administrative agencies,13
to become parties by formally provision in its entirety, or its though some agencies such as the
intervening in the proceeding.’’ (NGFA subparagraph (b) relating to the Securities and Exchange Commission
Reply 3, 8.) We agree with NGFA that privilege log requirements. and the Commodities Futures Trading
permitting parties under investigation to Subparagraphs (a) and (b) are necessary, Commission have adopted varying
seek discovery could impose as they would be the Investigating versions of the Brady Rule.
unnecessary legal and other costs on Officers’ primary means of ensuring that The Board recognizes the merits of the
parties that are not subject to parties under investigation have Brady Rule and expects to employ the
investigation, and we find that conducted their due diligence and practice of disclosing exculpatory
permitting such discovery, even of provided the Board with the evidence if the Board were to open a
materials gathered by the Board, also information requested. However, we Formal Board Proceeding following the
could unnecessarily obstruct and delay will grant AAR’s request regarding conclusion of a Board-Initiated
a Board-Initiated Investigation, which agreed-upon protocols for duplicative Investigation involving any criminal
must be concluded within a specific documents. Accordingly, the final rules provisions of 49 U.S.C. Subtitle IV, Part
timeline. We therefore decline to permit now expressly subject the A. However, because (1) most Board-
parties under investigation the right to ‘‘Certifications and false statements’’ Initiated Investigations will not likely
seek discovery. In the event a party provision to any search protocols that involve any such criminal provisions,
under investigation believes that a third the Investigating Officer(s) and (2) Board-Initiated Investigations only
party has information likely to be producing parties may agree upon. See determine if the Board should open a
directly relevant to the investigation, the section 1122.12. We also will change the Formal Board Proceeding, and (3) any
party under investigation should convey description of the search from remedy that may result from an
that to the Investigating Officer(s), who ‘‘diligent’’ to ‘‘reasonable.’’ In addition, investigation must be prospective only,
may then request that information from at AAR’s suggestion (AAR Comment 16– the Brady Rule does not appear directly
the relevant third parties. 17), we will remove the criminal applicable, and the Board will not
Finally, AAR and NSR request that penalty for perjury provision, as it is codify it in the final rules adopted here.
the Board eliminate or add certain other redundant in light of already-applicable Recommendations and Summary of
provisions related to the Board’s federal law, see 18 U.S.C. 1001, 1621, Findings. As proposed in the NPRM,
collection of information and and add a witness rights provision, Investigating Officer(s) would be
documentation during a Board-Initiated which is included in the final rules at required to conclude the Board-Initiated
Investigation. First, AAR asks that the section 1122.11, in order to clarify the Investigation no later than 275 days
Board entirely eliminate the proposed rights and responsibilities of witnesses. after issuance of the Order of
regulation (proposed in the NPRM as 49 See also section 1122.10 (addressing the Investigation and, at that time, submit to
CFR 1122.11) titled ‘‘Certifications and right of a witness to review his or her the Board and parties under
false statements,’’ including transcript). investigation any recommendations
subparagraph (b), which requires a party Second, AAR and NSR request that
made as a result of the Board-Initiated
from whom documents are sought to the Board remove the attorney
Investigation and a summary of findings
submit a list of all documents withheld disqualification provision, proposed in
that support such recommendations.
due to privilege, and subparagraph (c), the NPRM as section 1122.9(b), in
The NPRM also provided an optional
which sets forth the criminal penalty for which the Board would have the
process whereby Investigating Officer(s),
perjury. (AAR Comment 16–17.) authority to exclude a particular
in their discretion and time permitting,
Alternatively, AAR asks the Board to attorney from further participation in
could present (orally or in writing) their
revise the ‘‘Certifications and false any Board-Initiated Investigation in
recommendations and/or summary of
statements’’ provision to ‘‘require the which the attorney is obstructing the
findings to parties under investigation
person [producing documents] to Board-Initiated Investigation. (AAR
prior to submitting this information to
confirm that it produced all responsive, Comment 18; NSR Comment 26–27.)
After considering the comments, we the Board Members. The NPRM stated
non-privileged documents located after that, in such cases, the Investigating
reasonable search and subject to any will remove the attorney
disqualification provision from the final Officer(s) would be required to permit
agreed-upon protocols regarding the parties under investigation to submit
reduction of duplicative documents.’’ rules, as the Board’s current rules
governing attorney conduct sufficiently a written response to the
(AAR Comment 16.) AAR claims its recommendations and/or summary of
language would allow a party to only protect the integrity of any
findings. The Investigating Officer(s)
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have to produce one copy of a investigation. See e.g., 49 CFR 1103.12.
Exculpatory Evidence. AAR and NSR would then submit their
document, even if duplicative digital recommendations and summary of
ask that the Board adopt in its final
versions exist. Its language would also
rules a mandatory disclosure provision, 13 Mister Discount Stockbrokers v. SEC, 768 F.2d
decline to provide for in the final rules, but which
modeled after Brady v. Maryland, 373 875, 878 (7th Cir. 1985); Zandford v. NASD, 30 F.
may be considered on a case-by-case basis during U.S. 83, 88 (1963), to provide a party Supp. 2d 1, 22 n.12 (D.C. Cir. 1998), NLRB v. Nueva
Formal Board Proceedings. subject to investigation exculpatory and Eng’g, Inc., 761 F.2d 961, 969 (4th Cir. 1985).
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![90236 Federal Register / Vol. 81, No. 240 / Wednesday, December 14, 2016 / Rules and Regulations
findings, as well as any response from warranted following a Board-Initiated from the statute’s one-year deadline on
the parties under investigation, to the Investigation. The final rules now Board-Initiated Investigations, stating:
Board members and parties under provide that: parties have the right to The requirement to dismiss any
investigation. submit arguments in their response to investigation that is not concluded within 1
In response, AAR and NSR request Board staff’s recommendations and year after the date on which it was
that the Board make this optional summary of findings; supporting data, commenced would only include the time
process mandatory.14 (AAR Comment evidence, and verified statements do not period needed to generate recommendations
19; NSR Comment 4, 23–25.) count towards the page limit of such and summary of findings. The time period
Alternatively, AAR asks that if the responses; and parties may submit needed to complete a proceeding, after
Board does not make this process written statements responding to the receipt of the recommendations and
mandatory, the Board require Investigating Officers’ recommendations summary of findings, would not be included
in the 1 year timeline for investigations.
Investigating Officer(s) to provide their and summary of findings of up to 20
recommendations and summary of pages. See App. A to Pt. 1122 (stating S. Rep. No. 114–52, at 13 (2015).
findings to parties at the same time they ‘‘parties under investigation may submit NSR nonetheless states that the
are submitted to Board Members. a written statement . . . [that] shall be Senate Report ‘‘is trumped by the
The Board intends that Investigating no more than 20 pages, not including unambiguous new section 11701(d)(6),’’
Officer(s), when possible, will utilize any supporting data, evidence, and arguing that ‘‘administrative finality’’ is
the optional process of presenting their verified statements that may be attached ‘‘a known term of art with a specific
recommendations and summary of . . . setting forth the views of the definition, thus precluding any need to
findings to parties under investigation parties under investigation of factual or rely on legislative history.’’ As support,
prior to submitting them to the Board legal matters or other arguments NSR, among other cases, compares the
Members. However, given the one-year relevant to the commencement of a Board’s proposed investigation process
deadline for concluding Board-Initiated Formal Board Proceeding’’). to Newport Galleria Group v. Deland,
Investigations, the Board will not make 618 F. Supp. 1179 (D.C. Cir. 1985), in
C. Formal Board Proceeding which the court found that the
this process mandatory, as there may be
circumstances in which Investigating As proposed in the NPRM, the Formal Environmental Protection Agency’s
Officer(s) cannot complete their Board Proceeding refers to a public commencement of an investigation did
recommendations and summary of proceeding that may be instituted by the not constitute final agency action. (NSR
findings sufficiently in advance of the Board pursuant to an Order to Show Comment 6–7.) 15 In Newport Galleria
one-year deadline to allow them to be Cause after a Board-Initiated Group, however, the question was
presented to the party under Investigation has been conducted. With whether judicial review of the initiation
investigation prior to submission to the respect to the Formal Board Proceeding of an investigation was proper. Newport
Board. In such cases, the Investigating phase, commenters express concerns Galleria Group, 618 F. Supp. at 1185.
Officer(s) will provide their relating to (1) the duration of the Formal Here, under 49 U.S.C. 11701(d)(6), the
recommendations and summary of Board Proceeding, (2) the standard for question is whether the Board’s
findings to parties at the same time they commencing a Formal Board conclusion of an investigation and
are submitted to the Board Members. Proceeding, and (3) the Order to Show opening of a Formal Board Proceeding—
This is provided for in the final rules at Cause. as opposed to the initiation of an
section 1122.5(c), which states that the Duration of the Formal Board investigation—constitutes
Investigating Officer(s) must submit Proceeding. As proposed in the NPRM, administratively final action for
their recommendations and summary of there are no time limits for the Formal purposes of Section 12 of the STB
findings to the Board and parties under Board Proceeding. However, NSR argues Reauthorization Act.
investigation within 275 days. that the Formal Board Proceeding Moreover, under 49 U.S.C.
With respect to parties’ responses to should be included in the statutorily- 11701(d)(7), which immediately follows
Investigating Officers’ recommendations mandated one-year time limit on the requirement that the Board conclude
and summary of findings, AAR also investigations, based on the plain a Board-Initiated Investigation with
requests that the Board clarify that language of Section 12 of the STB administrative finality within one year,
parties have the right to submit Reauthorization Act, federal court the Board’s options for concluding the
arguments in their response to Board precedent interpreting administrative Board-Initiated Investigation, and thus
staff’s recommendations and summary finality, and other provisions in the
of findings. AAR also argues that the Board’s governing statute. (NSR 15 NSR also cites Federal Power Commission v.
Board should increase the 15-page limit Comment 6–8.) We address each of Hope Natural Gas Co., 320 U.S. 591 (1944)
for parties’ responses to Board staff’s NSR’s arguments in turn. (determining that findings from an investigation are
According to NSR, because 49 U.S.C. preliminary), Reliable Automatic Sprinkler Co. v.
recommendations and summary of Consumer Prod. Safety Commission, 324 F.3d 726
11701(d)(6) states that the Board must
findings, but if not, then clarify that the (D.C. Cir. 2003) (finding that the Consumer Product
‘‘dismiss any investigation that is not Safety Commission’s (1) investigation of a
party’s supporting data, evidence, and
concluded by the Board with manufacturer’s product, (2) statement of ‘‘intention
verified statements would not count to make a preliminary determination that the
administrative finality within 1 year
towards the 15-page limit. We will grant [product] present[ed] a substantial hazard’’ and (3)
after the date on which it was
AAR’s requests, as they would provide ‘‘request for voluntary corrective action’’ did not
commenced,’’ the Board must either constitute final agency action under the
the Board with more information in
dismiss the Board-Initiated Investigation Administrative Procedure Act), and Tenneco, Inc. v.
determining whether further action is FERC, 688 F.2d 1018 (5th Cir. 1982) (finding the
or decide on the merits of the Formal
Federal Energy Regulatory Commission’s decision
Board Proceeding within one year of
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14 NSR cites to 5 U.S.C. 557(c) as requiring this terminating an adjudicatory proceeding and
process to be mandatory. However, 5 U.S.C. 557 opening the Board-Initiated instituting an investigation of the matter to be a
applies to hearings in rulemakings or adjudications. Investigation. (NSR Comment 6–7.) non-final order for purposes of judicial review).
See 5 U.S.C. 553, 554, 556, & 557(a). Because the However, such an interpretation directly These cases are not controlling as to the definition
recommendations and findings at issue here of ‘‘administrative finality’’ for Board-Initiated
address only whether to open a proceeding in
contradicts the Senate Report for the Investigations for the same reasons as discussed
which the Board would make a decision, 5 U.S.C. STB Reauthorization Act, which clearly below with respect to Newport Galleria Group
557(c) is not applicable. excludes the Formal Board Proceeding involving 49 U.S.C. 11701(d)(6) & (7).
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![Federal Register / Vol. 81, No. 240 / Wednesday, December 14, 2016 / Rules and Regulations 90237
satisfying the requirement in section 21.) As discussed above,18 the Board investigative and decisionmaking
11701(d)(6), are to ‘‘dismiss the declines to adopt this ‘‘reasonable functions of staff’’ and NSR requests
investigation if no further action is cause’’ standard for initiating a Board- that the Board remove from the final
warranted’’ or ‘‘initiate a proceeding to Initiated Investigations because it would rules the phrase ‘‘to the extent
determine if a provision under this part require a higher standard than imposed practicable.’’ (AAR Comment 11–12;
has been violated.’’ We read section by the statute. For that same reason, the NSR Comments 13, 20.)
11701(d)(6), in conjunction with section Board declines to adopt this standard The NPRM’s proposed language
11701(d)(7), as stating that the Board for opening a Formal Board Proceeding. expressly tracked 49 U.S.C. 11701(d)(5),
must dismiss investigations that have The final rules therefore maintain, in which states that in any investigation
not been concluded within a year (i.e., accordance with Section 12 of the STB commenced on the Board’s own
concluded either by dismissal because Reauthorization Act, that the Board initiative, the Board must ‘‘to the extent
no further action is warranted, or by the shall dismiss a Board-Initiated practicable, separate the investigative
opening of a Formal Board Proceeding). Investigation if no further action is and decisionmaking functions of staff.’’
While the meaning of ‘‘administrative warranted, or shall initiate a Formal Although AAR argues that this is
finality’’ within section 10701(d)(6) may Board Proceeding to determine whether insufficient, as it is merely a ‘‘ritualistic
need to be defined in the future, the any provision of 49 U.S.C. Subtitle IV, incantation of [the] statutory language,’’
language of the statute and the Senate Part A has been violated. the NPRM also proposed that the Order
Report support not including the Formal Order to Show Cause. With respect to of Investigation would identify the
Board Proceeding in the one-year the Order to Show Cause, AAR asks that Investigating Officer(s) and provided
deadline for concluding the Board- the Board clarify that the burden of that parties subject to investigation
Initiated Investigation pursuant to proof remains on the agency to prove could submit written materials to the
Section 12(b) of the STB that a violation of 49 U.S.C. Subtitle IV, Board Members at any time. As a result,
Reauthorization Act. Part A occurred. (AAR Comment 20– parties that feel that the investigative
Additionally, NSR states that ‘‘other 21.) We affirm that the Order to Show and decisionmaking functions of staff
provisions of the Board’s governing Cause does not change the burden of are not properly separated may express
statute reinforce that administrative proof from the requirements of Section their concerns in writing directly to the
finality occurs only with [a] Board 12 of the STB Reauthorization Act for Board during the course of a Board-
decision.’’ (NSR Comment 8.) proving that a violation of 49 U.S.C. Initiated Investigation or Formal Board
Specifically, NSR cites 49 U.S.C. Subtitle IV, Part A occurred. Proceeding. See section 1122.13.
11701(e)(7), which ‘‘permits judicial Additionally, NSR asks that the Board Moreover, the Board declines to remove
review upon conclusion of the Formal require that the Order to Show Cause the phrase ‘‘to the extent practicable’’
Board Proceeding,’’ and 49 U.S.C. state the issues to be considered in the from the final rules because doing so
722(d),16 which states that ‘‘an action of Formal Board Proceeding. (NSR would not be in full compliance with
the Board under this section is final on Comment 4, 30–32.) We find this the statutory language of Section 12 of
the date on which it is served,’’ for the request to be reasonable, as a party the STB Reauthorization Act.
proposition that ‘‘administrative finality subject to a Formal Board Proceeding AAR further asks that the Board
occurs only with the Board decision’’ should have notice as to the issues that explain ‘‘any instances where it may not
issued upon conclusion of the Formal will be publicly considered by the be practicable to separate these
Board Proceeding. (NSR Comment 8.) Board. Based on NSR’s comment, the functions.’’ AAR also requests that the
However, the relevant governing final rules include a requirement that Board include in the final rules
statutory provisions for concluding a the Order to Show Cause state the issues provisions ensuring the separation of
Board-Initiated Investigation—which to be considered during the Formal investigatory and decisionmaking
are more specific to the process at issue Board Proceeding. See section 1122.5(e) functions, such as requirements that the
(stating ‘‘[t]he Order to Show Cause Board ‘‘[i]dentify all staff who work in
than those cited by NSR—are 49 U.S.C.
shall state the basis for, and the issues an investigation, not just the
11701(d)(6) & (7), which, as previously
to be considered during, the Formal Investigating Officers’’ and ‘‘[n]otify
explained, provide that the Board
Board Proceeding and set forth a Board Members, decisional staff within
conclude an investigation with
procedural schedule’’). the Board, and parties subject to
administrative finality within one year
investigation who has been designated
by either ‘‘dismiss[ing] the investigation D. Other Related Issues investigation staff for any particular
if no further action is warranted’’ or
Separation of Investigative and Board-Initiated Investigation.’’ (AAR
‘‘initiat[ing] a proceeding to determine if
Decisionmaking Functions. In the Comment 11–12.)
a provision under this part has been The Board declines to describe
violated.’’ The final rules, therefore, NPRM, the Board proposed to separate
the investigative and decisionmaking instances where it may not be
continue to impose no time limit on practicable to separate these functions.
Formal Board Proceedings. See sections functions of Board staff to the extent
practicable, in accordance with the Based on AAR’s comment, however, we
1122.1(b) & 1122.5(e). clarify that our intent is that any Board
Standard for Opening a Formal Board requirements of Section 12 of the STB
Reauthorization Act. Although NGFA staff substantively working on a Board-
Proceeding. AAR asks the Board to Initiated Investigation would be
clarify the standard for commencing a supports the Board’s proposal, AAR
requests that the ‘‘rules expressly state identified as an Investigating Officer. To
Formal Board Proceeding, specifically better reflect this intent, the final rules
requesting that the Board require that that the Board will separate
now require that the Order of
there be ‘‘reasonable cause’’ to believe Investigation ‘‘identify all Board staff
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that a violation of 49 U.S.C. Subtitle IV, that the Board base its decision on the results of the
Board-Initiated Investigation. (AAR Comment 20– who are authorized to conduct the
Part A occurred.17 (AAR Comment 20– 21.) The Board declines to expressly include such investigation as Investigating
a requirement in the final rules, as the final rules Officer(s).’’ See section 1122.4.
16 The STB Reauthorization Act redesignated 49 mirror the statutory standard for opening a Formal
U.S.C. 722(d) as 49 U.S.C. 1322(d). Board Proceeding. Additionally, Board Members would be
17 AAR also requests that the Board include in the 18 See supra Part B: Standard for Opening a notified regarding who has been
standard for opening a Formal Board Proceeding Board-Initiated Investigation. designated as investigative staff for any
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![90240 Federal Register / Vol. 81, No. 240 / Wednesday, December 14, 2016 / Rules and Regulations
enforcement purposes or when § 1122.10 Transcripts. shown on the document to have
disclosure is otherwise found Transcripts, if any, of investigative received copies of the document.
appropriate in the public interest and testimony shall be recorded solely by
permitted by law. § 1122.13 Right to submit statements.
the official reporter or other person or
§ 1122.7 Request for confidential
by means authorized by the Board or by Any party subject to a Board-Initiated
treatment. the Investigating Officer(s). A witness Investigation may, at any time during
who has given testimony pursuant to the course of a Board-Initiated
Any person that produces documents this part shall be entitled, upon written Investigation, submit to the Board
to the Board pursuant to § 1122.3 or request, to procure a transcript of the written statements of facts or
§ 1122.4 may claim that some or all of witness’ own testimony or, upon proper circumstances, with any relevant
the information contained in a identification, shall have the right to supporting evidence, concerning the
particular document or documents is inspect the official transcript of the subject of that investigation.
exempt from the mandatory public witness’ own testimony.
disclosure requirements of the Freedom Appendix A to Part 1122—Informal
of Information Act (FOIA), 5 U.S.C. 552, § 1122.11 Rights of witnesses. Procedure Relating to
is information referred to in 18 U.S.C. (a) Any person who is compelled or Recommendations and Summary of
1905, or is otherwise exempt by law requested to furnish documentary Findings From the Board-Initiated
from public disclosure. In such case, the evidence or testimony in a Board- Investigation
person making such a claim shall, at the Initiated Investigation shall, upon
time the person produces the document request, be shown the Order of (a) After conducting sufficient
to the Board, indicate on the document Investigation. Copies of Orders of investigation and prior to submitting
that a request for confidential treatment Investigation shall not be furnished, for recommendations and a summary of findings
is being made for some or all of the to the Board, the Investigating Officer, in his
their retention, to such persons
information in the document. In such or her discretion, may inform the parties
requesting the same except with the
case, the person making such a claim under investigation (orally or in writing) of
express approval of the Chairman.
the proposed recommendations and
also shall file a brief statement (b) Any person compelled to appear, summary of findings that may be submitted
specifying the specific statutory or who appears in person at a Board- to the Board. If the Investigating Officer so
justification for non-disclosure of the Initiated Investigation by request or chooses, he or she shall also advise the
information in the document for which permission of the Investigating Officer parties under investigation that they may
confidential treatment is claimed. If the may be accompanied, represented, and submit a written statement, as explained
person states that the information comes advised by counsel, as provided by the below, to the Investigating Officer prior to the
within the exception in 5 U.S.C. Board’s regulations. consideration by the Board of the
552(b)(4) for trade secrets and (c) The right to be accompanied, recommendations and summary of findings.
commercial or financial information, represented, and advised by counsel This optional process is in addition to, and
and the information is responsive to a shall mean the right of a person does not limit in any way, the rights of
subsequent FOIA request to the Board, testifying to have an attorney present parties under investigation otherwise
49 CFR 1001.4 shall apply. with him during any aspect of a Board- provided for in this part.
§ 1122.8 Limitation on participation. Initiated Investigation and to have this (b) Unless otherwise provided for by the
attorney advise his client before, during Investigating Officer, parties under
No party who is not the subject of a and after the conclusion of such investigation may submit a written statement,
Board-Initiated Investigation may examination. as described above, within 14 days after of
intervene or participate as a matter of being informed by the Investigating Officer of
right in any such Board-Initiated § 1122.12 Certifications and false the proposed recommendation(s) and
Investigation under this part. statements.
summary of findings. Such statements shall
(a) When producing documents under be no more than 20 pages, not including any
§ 1122.9 Power of persons conducting § 1122.4, the producing party shall supporting data, evidence, and verified
Board-Initiated Investigations.
submit a statement certifying that such statements that may be attached to the
The Investigating Officer(s), in person has made a reasonable search for written statement, double spaced on 81⁄2 by
connection with any Board-Initiated the responsive documents and is 11 inch paper, setting forth the views of the
Investigation, may interview or depose producing all the documents called for parties under investigation of factual or legal
witnesses, inspect property and by the Investigating Officer(s), subject to matters or other arguments relevant to the
facilities, and request and require the any search protocols agreed to by the commencement of a Formal Board
production of any information, Investigating Officer(s) and producing Proceeding. Any statement of fact included
documents, books, papers, parties. If any responsive document(s) in the submission must be sworn to by a
correspondence, memoranda, are not produced for any reason, the person with personal knowledge of such fact.
agreements, or other records, in any producing party shall state the reason (c) Such written statements, if the parties
form or media, that are likely to be therefor. under investigation choose to submit, shall
directly relevant to the issues of the (b) If any responsive documents are be submitted to the Investigating Officer. The
Board-Initiated Investigation. The withheld because of a claim of the Investigating Officer shall provide any
Investigating Officer(s), in connection attorney-client privilege, work product written statement(s) from the parties under
with a Board-Initiated Investigation, privilege, or other applicable privilege, investigation to the Board at the same time
also may issue subpoenas, in the producing party shall submit a list that he or she submits his or her
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accordance with 49 U.S.C. 1321, to of such documents which shall, for each recommendations and summary of findings
compel the attendance of witnesses, the document, identify the attorney to the Board.
production of any of the records and involved, the client involved, the date of [FR Doc. 2016–29902 Filed 12–13–16; 8:45 am]
other documentary evidence listed the document, the person(s) shown on BILLING CODE 4915–01–P
above, and access to property and the document to have prepared and/or
facilities. sent the document, and the person(s)
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Document Created: 2016-12-14 00:48:18
Document Modified: 2016-12-14 00:48:18
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final rules. | |
| Dates | These rules are effective on January 13, 2017. | |
| Contact | Scott M. Zimmerman at (202) 245-0386. [Assistance for the hearing impaired is available through the Federal Information Relay Service (FIRS) at 1-800-877-8339.] | |
| FR Citation | 81 FR 90229 |
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