82 FR 9478 - United States Department of Energy and United States Department of Defense v. Baltimore & Ohio Railroad Company, et al.; United States Department of Energy and United States Department of Defense v. Aberdeen & Rockfish Railroad Company, et al.

SURFACE TRANSPORTATION BOARD

Federal Register Volume 82, Issue 23 (February 6, 2017)

On October 20, 2016, the United States Department of Energy and the United States Department of Defense (the Government) and Norfolk Southern Railway Company (NSR) (collectively, Movants) filed a motion requesting approval of an agreement (NSR Settlement Agreement) that would settle these rate reasonableness disputes as between them only. The Board is adopting a procedural schedule for filing comments and replies addressing their proposed settlement agreement.

[Federal Register Volume 82, Number 23 (Monday, February 6, 2017)]
[Notices]
[Pages 9478-9479]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-02425]


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SURFACE TRANSPORTATION BOARD

[Docket No. NOR 38302S; Docket No. NOR 38376S]


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

AGENCY: Surface Transportation Board.

ACTION: Notice of proposed settlement agreement, issuance of procedural 
schedule.

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SUMMARY: On October 20, 2016, the United States Department of Energy 
and the United States Department of Defense (the Government) and 
Norfolk Southern Railway Company (NSR) (collectively, Movants) filed a 
motion requesting approval of an agreement (NSR Settlement Agreement) 
that would settle these rate reasonableness disputes as between them 
only. The Board is adopting a procedural schedule for filing comments 
and replies addressing their proposed settlement agreement.

DATES: Comments are due by March 20, 2017. Reply comments are due by 
April 19, 2017.

ADDRESSES: Comments and replies may be submitted either via the Board's 
e-filing format or in the traditional paper format. Any person using e-
filing should attach a document and otherwise comply with the 
instructions at the E-FILING link on the Board's Web site, at http://www.stb.gov. Any person submitting a filing in the traditional paper 
format should send an original and 10 copies to: Surface Transportation 
Board, Attn: Docket No. 38302S, et al., 395 E Street SW., Washington, 
DC 20423-0001. Copies of written comments and replies will be available 
for viewing and self-copying at the Board's Public Docket Room, Room 
131, and will be posted to the Board's Web site. In addition, send one 
copy of comments to each of the following: (1) Stephen C. Skubel, Room 
6H-087, U.S. Department of Energy, 1000 Independence Ave. SW., 
Washington, DC 20585; (2) Terrance A. Spann, U.S. Department of 
Defense, 9275 Gunston Road, Suite 1300, Fort Belvoir, VA 22060; and (3) 
Garret D. Urban, Norfolk Southern Railway Company, Three Commercial 
Place, Norfolk, VA 23510.

FOR FURTHER INFORMATION CONTACT: Nathaniel Bawcombe, (202) 245-0376. 
Assistance for the hearing impaired is available through the Federal 
Information Relay Service (FIRS) at: 1-800-877-8339.

SUPPLEMENTARY INFORMATION: In March 1981, the Government filed these 
complaints against 21 major railroads (the Railroad Defendants) under 
section 229 of the Staggers Rail Act of 1980, Public Law 96-448, 94 
Stat. 1895. The Government sought reparations and a rate prescription 
relating to the nationwide movement of spent nuclear fuel, other high-
level radioactive wastes, and the empty containers (casks) and buffer 
and escort cars used for their movement (together, radioactive 
materials). In 1986, the Board's predecessor, the Interstate Commerce 
Commission (ICC), found that the Railroad Defendants were engaging in 
an unreasonable practice by imposing substantial and unwarranted cost 
additives--above and beyond the regular train service rates--in an 
effort to avoid transporting these radioactive materials. The ICC 
directed the Railroad Defendants to cancel the existing rates and cost 
additives, prescribed new rates, and awarded reparations. See 
Commonwealth Edison Co. v. Aberdeen & Rockfish R.R., 2 I.C.C.2d 642 
(1986). The United States Court of Appeals for the District of Columbia 
Circuit set aside and remanded the decision. See Union Pac. R.R. v. 
ICC, 867 F.2d 646 (D.C. Cir. 1989). On remand, the ICC ruled that the 
movement of these radioactive materials for reprocessing was subject to 
the rate cap on recyclables set out in former 49 U.S.C. 10731(e) and 
directed the parties to file revenue-to-variable cost (R/VC) evidence 
to resolve the remaining reparations and rate prescription issues. See 
U.S. Dep't of Energy v. Balt. & Ohio R.R., 10 I.C.C.2d 112 (1994). 
While judicial review was pending, Congress enacted the ICC Termination 
Act of 1995, Public Law 104-88, 109 Stat. 803, which repealed Sec.  
10731 in its entirety and directed that all proceedings pending under 
the repealed statutory provision be terminated.
    The Railroad Defendants petitioned the Board to dismiss the 
complaints in 1996, and, in 1997, they invited the Government to 
explore the possibility of settling the complaints. Discussions 
commenced on a nationwide settlement covering all the Railroad 
Defendants that might carry radioactive materials. The Government 
subsequently chose to negotiate only with Union Pacific Railroad 
Company (UP), the destination carrier for most of the movements of 
radioactive materials that were to be covered by the nationwide 
settlement, after the parties concluded that there were potential 
antitrust problems in negotiating with the Railroad Defendants as a 
group. See id.
    In 2004, the Government and UP moved for approval under 49 U.S.C. 
10704 of a settlement agreement they had negotiated to resolve these 
complaints as between them only. The Board approved that settlement 
agreement in 2005 and directed the Government to file quarterly status 
reports on the progress of settlement negotiations with other 
railroads. See U.S. Dep't of Energy v. Aberdeen & Rockfish R.R., NOR 
38302S, et al. (STB served Aug. 2, 2005). In 2012, BNSF Railway Company 
(BNSF) and the Government similarly moved for approval of a settlement 
agreement, and the Board approved that agreement in a decision served 
the next year. See U.S. Dep't of Energy v. Aberdeen & Rockfish R.R., 
NOR 38302S, et al. (STB served Aug. 26, 2013) (BNSF Settlement 
Decision). The settlement agreements with UP and BNSF successfully 
resolved all rate-setting, shipping, and service determinations between 
those carriers and the Government.
    Movants now jointly request that the Board approve the proposed NSR 
Settlement Agreement and prescribe the rate methodology set forth in 
it. They assert that the agreement achieves a long-term, system-wide 
settlement, as between NSR and the Government, of all rate and service 
issues related to spent fuel and related traffic now moving or likely 
to move in the future. Movants note that the UP and BNSF settlements 
have served as a model for the NSR Settlement Agreement.
    In particular, the NSR Settlement Agreement:
    (1) Has an unlimited term. This differs from the BNSF settlement 
but follows the UP settlement;
    (2) applies broadly to the nationwide movement on NSR's rail lines 
of irradiated spent fuel, parts, and constituents; spent fuel moving 
from foreign countries to the United States for disposal; empty casks; 
radioactive wastes; and buffer and escort cars. With respect to those 
movements governed by the rate basis prescribed in Trainload Rates on 
Radioactive Materials, E. Railroads, 362 I.C.C. 756 (1980) and 364 
I.C.C. 981 (1981) (Eastern Case),\1\ this

[[Page 9479]]

agreement (unlike the prior ones) incorporates a method of determining 
rates for dedicated trains which grants NSR an increment over the 
Eastern rate basis to equalize the cost of shipments nationwide;
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    \1\ In that proceeding, maximum R/VC ratios were prescribed on a 
commodity-by-commodity basis at various minimum weights as local and 
proportional rate factors. The prescription was applicable within 
the East, but primarily was to be used for through movements 
destined beyond the lines of the rail carriers covered by the 
prescription. The ICC's 1980 decision was affirmed in Consolidated 
Rail Corp. v. ICC, 646 F.2d 642 (D.C. Cir. 1981), cert. denied, 454 
U.S. 1047 (1981).
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    (3) establishes that the movement of these radioactive materials 
constitutes common carrier service; addresses the elements of service 
required of NSR; adopts guidelines for safe handling and security; and 
obligates NSR to provide, as needed, ``extra services'' as described in 
the agreement, at the rates agreed upon;
    (4) adopts a rate methodology to:
    (a) Apply to all future movements of these radioactive materials in 
common carrier service. The methodology adopts maximum R/VC markups 
(not in excess of 1.80, 2.50, or 3.51 times the shipment cost, 
depending on commodity type, equipment being utilized, and services 
being performed) of NSR's most current system-average variable unit 
costs computed under the Board's Uniform Railroad Costing System. The 
Government agrees to limit the application of the Eastern rate basis 
established in the Eastern Case to the former lines of those railroads 
specifically listed in the Eastern Case; and
    (b) compensate NSR for ``extra services'' and dedicated train 
service, when requested by the Government, and procedures to calculate 
``Equitable compensation'' for emergency-related costs that NSR may 
incur;
    (5) adopts a procedure to update compensation for rates and ``extra 
services'' annually to reflect changes in NSR's system-average unit 
costs;
    (6) extinguishes NSR's liability (and that of its predecessors and 
subsidiaries) for reparations in all matters arising out of these 
proceedings; and
    (7) adopts alternative dispute resolution procedures with final 
recourse to the Board and mechanisms to renegotiate portions of the 
agreement in a limited number of circumstances or if changed 
circumstances make further adherence to the terms of the agreement 
``grossly inequitable'' to either party.
    Movants request that the Board: (1) Prescribe the rate methodology 
and maximum R/VC ratios that have been agreed to for the radioactive 
materials and rail services that are the subject of the agreement; (2) 
dismiss NSR as a defendant in these proceedings, extinguish NSR's 
liability for reparations in all matters arising out of these 
proceedings, and relieve NSR from any further requirement to 
participate in these proceedings (except in response to a properly 
issued subpoena under the Board's rules); (3) retain jurisdiction over 
these proceedings and continue to hold them in abeyance pending further 
settlement negotiations; and (4) publish notice of their motion and the 
proposed NSR Settlement Agreement in the Federal Register and adopt a 
procedural schedule for the filing of comments and replies.
    The Board will grant Movants' request in part at this time. Notice 
of the motion and proposed NSR Settlement Agreement will be published 
in the Federal Register. A procedural schedule will be adopted for the 
filing of comments on the proposed settlement agreement as well as to 
permit replies responsive to Movants' remaining requests. Comments are 
due by March 20, 2017. Reply comments are due by April 19, 2017. 
Comments should also address whether it is appropriate to close these 
dockets.\2\
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    \2\ In BNSF Settlement Decision, slip op. at 11-12, the Board 
(at CSX Transportation, Inc.'s request) held that ``future 
settlement agreements in these proceedings need not be submitted to 
the Board for formal approval to the extent the signatories do not 
request, and their agreements are not contingent on, rate 
prescriptions.'' Since then, the quarterly status reports filed by 
the Department of Energy refer only to negotiations with NSR. As 
such, it is not clear whether there are other remaining railroads 
with whom the Government is engaged in negotiations.
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    It is ordered:
    1. Movants' request that notice of their motion and proposed 
agreement be published in the Federal Register is granted.
    2. Movants and interested persons must comply with the procedural 
schedule and requirements outlined above.
    3. This decision is effective on its date of service.

    Decided: January 31, 2017.

    By the Board, Rachel D. Campbell, Director, Office of 
Proceedings.
Marline Simeon,
Clearance Clerk.
[FR Doc. 2017-02425 Filed 2-3-17; 8:45 am]
 BILLING CODE 4915-01-P