[Federal Register Volume 63, Number 99 (Friday, May 22, 1998)]
[Rules and Regulations]
[Pages 28287-28291]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-13592]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

49 CFR Parts 1152 and 1155

[STB Ex Parte No. 566]


Rail Service Continuation Subsidy Standards

AGENCY: Surface Transportation Board, DOT.

ACTION: Final rule.

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SUMMARY: The Surface Transportation Board (Board) is removing from the 
Code of Federal Regulations rules concerning standards for determining 
subsidies for the continuation of rail service on rail properties not 
transferred to Consolidated Rail Corporation (Conrail) under the Final 
System Plan pursuant to the Regional Rail Reorganization Act of 1973. 
It is also amending the regulations concerning offers of financial 
assistance to provide rules for the purchase or subsidization of rail 
lines that have been continuously subsidized since the inception of the 
Final System Plan.

EFFECTIVE DATE: June 21, 1998.

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

SUPPLEMENTARY INFORMATION: In a notice of proposed rulemaking (NPR) 
served and published in the Federal Register on August 8, 1997 (62 FR 
42734), the Board proposed to remove the regulations at 49 CFR part 
1155 that concern subsidy standards for certain rail lines of railroads 
in reorganization not included in the Final System Plan, described 
infra. The NPR noted that these regulations are based, at least 
partially, on statutes that are still in effect. 45 U.S.C. 744 (c) and 
(d). Under the ICC Termination Act of 1995, Public Law 104-88, 109 
Stat. 803 (ICCTA),\1\ however, the Rail Services Planning Office 
(RSPO), the statutory body that developed the regulations, has been 
abolished. See repealed 49 U.S.C. 10361-64. Moreover, the Board has in 
place analogous offer of financial assistance (OFA) regulations 
providing national subsidy standards. 49 CFR 1152.27. Finally, the NPR 
stated that the regional subsidy regime at 45 U.S.C. 744, which applies 
to ``rail service on rail properties of a railroad in reorganization,'' 
may be outdated and may apply only to a limited number of situations. 
Accordingly, we instituted this proceeding to determine whether these 
regulations may be eliminated in light of the national OFA standards, 
whether portions of the part 1155 regulations could be transferred to 
the national standards, or whether they have a continuing vitality and 
should be retained.
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    \1\ Effective January 1, 1996, the ICCTA abolished the 
Interstate Commerce Commission and established the Board within the 
Department of Transportation. Section 204(a) of the ICCTA provides 
that ``[t]he Board shall promptly rescind all regulations 
established by the [Interstate Commerce Commission] that are based 
on provisions of law repealed and not substantively reenacted by 
this Act.''
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    After considering the record, we will eliminate the part 1155 rules 
and modify the national OFA rules at 1152.27. Because the part 1155 
rules have only limited applicability, it is unnecessary to maintain 
these detailed regulations. However, to provide an opportunity for rail 
service continuation and to deal with abandonments of lines that are 
still being subsidized, we are modifying our national OFA regulations 
at 49 CFR 1152.27 to require that the line owner give notice of the 
abandonment or discontinuance to enable interested persons to purchase 
or subsidize the line.

Background

    Our NPR gave a detailed background for the part 1155 regulations 
and will be repeated only as necessary. The part 1155 rules were based 
on the Regional Rail Reorganization Act of 1973, Public Law 93-236, 87 
Stat. 985, 45 U.S.C. 701 et seq. (3R Act), as amended by the Railroad 
Revitalization and Regulatory Reform Act of 1976 (4R Act), Public Law 
94-210, 90 Stat. 127. In response to the bankruptcy of the Penn Central 
Transportation Company and seven other major railroads in the Northeast 
and Midwest,\2\ the 3R Act provided for the development and ultimate 
approval by Congress of a Final System Plan (Plan) for the redesign of 
rail services in

[[Page 28288]]

the region. Lines that could not be operated profitably and were not 
considered essential to the rail transportation system would not be 
included in the Plan. The 3R Act's Plan created Conrail as a for-profit 
corporation to reorganize the bankrupt rail services in the region.
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    \2\ The Lehigh Valley Railroad Company, the Central Railroad of 
New Jersey, the Ann Arbor Railroad Company, the Lehigh and Hudson 
Valley Railroad Company, the Boston and Maine Corporation, the Erie 
Lackawanna Railway Company, and the Reading Railroad.
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    Section 304 of the 3R Act permitted the summary discontinuance of 
service over those lines not included in the Plan without Interstate 
Commerce Commission (ICC or Commission) approval if 60 days' notice was 
given and certain parties were notified. Beginning 120 days after such 
discontinuance, the summary abandonment of a line was allowed if 30 
days' notice was given and the parties were notified. The 3R Act, in 
effect, authorized the discontinuance and abandonment of the lines not 
included in the Plan; ICC approval was not needed.\3\ However, section 
304(c)(2) of the 3R Act (codified at 45 U.S.C. 744(c)(2)(A)) stated 
that an abandonment or discontinuance could not be carried out if a 
shipper, or public authority, or any responsible person offered a rail 
service continuation subsidy.\4\ The 4R Act amended the 3R Act by 
adding a new section 45 U.S.C. 744(d) which specified that a 
``designated operator'' would be the rail carrier conducting operations 
when a subsidizer guaranteed payment.\5\ Although not needing ICC 
authority to operate or abandon, the designated operators were common 
carriers.\6\
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    \3\ See Common Carrier Status of States, State Agencies and 
Instrumentalities, and Political Subdivisions 49 CFR 1120A, Finance 
Docket No. 28990F (ICC served July 16, 1981) at 9-10 (footnote 
omitted): ``A rail line which was approved for abandonment under the 
Final System Plan * * * but over which operations were continued by 
a [designated operator], comes within the meaning of abandoned or 
authorized for abandonment * * *.''
    \4\ This subsidy ``covers the difference between the revenue 
attributable to such rail properties and the avoidable costs of 
providing service on such properties plus a reasonable return on the 
value of such rail properties * * *.''
    \5\ The subsidy payment was now defined at section 744(d) as 
``the difference between the revenue attributable to such properties 
and the avoidable costs of providing service on such rail 
properties, together with a reasonable management fee as determined 
by [RSPO].'' (Emphasis supplied.)
    \6\ See Application Proc.-Construct, Acq. Or Oper. R. Lines, 365 
I.C.C. 516, 523 (1982) and Exemption of Certain Designated Operators 
from Section 11343, 361 I.C.C. 379 (1979), aff'd in part and 
remanded in part sub nom. McGinness v. ICC, 662 F.2d 853 (D.C. Cir. 
1981). See also 49 CFR 1150.16: ``Although the designated operator 
will not be required to seek and obtain authority from the Board 
either to commence or terminate operations, the designated operator 
is a common carrier by railroad subject to all other provisions of 
49 U.S.C. Subtitle IV.''
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    The use of the subsidy is limited to rail service and rail 
properties of a railroad in reorganization \7\ in the region \8\ that 
are not included in the Plan. 45 U.S.C. 744(a). Moreover, the subsidy 
must be made within 2 years of the effective date of the Plan \9\ or 
within ``2 years after the date on which the final rail service 
continuation payment is received, whichever is later * * *.'' 45 U.S.C. 
744(c)(1).
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    \7\ A ``railroad in reorganization'' is defined at 45 U.S.C. 
702(16) as a railroad which is subject to a bankruptcy proceeding 
and which has not been determined by a court to be reorganizable or 
not subject to reorganization pursuant to this chapter as prescribed 
in section 717(b) of this title. A `bankruptcy proceeding' includes 
a proceeding pursuant to section 77 of the Bankruptcy Act and an 
equity receivership or equivalent proceeding * * *.''
    \8\ ``Region'' is defined at 45 U.S.C. 702(17) as ``the States 
of Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode 
Island, New York, New Jersey, Pennsylvania, Delaware, Maryland, 
Virginia, West Virginia, Ohio, Indiana, Michigan, and Illinois; the 
District of Columbia; and those portions of contiguous States in 
which are located rail properties owned or operated by railroads 
doing business in the aforementioned jurisdictions (as determined by 
[ICC] order) * * *.''
    \9\ The Plan was submitted to Congress on July 26, 1975. It was 
approved when neither the House of Representatives nor the Senate 
objected to it. The Plan was formally approved in section 601(e) of 
the 4R Act.
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    The 3R Act, as amended by the 4R Act, also created RSPO \10\ which 
was authorized to issue standards for defining the subsidy-related 
terms ``revenue attributable to rail properties,'' ``avoidable costs of 
providing service,'' ``a reasonable return on the value,'' and 
``reasonable management fee'' found in section 304. Section 
205(d)(6).\11\ Subsequently, the ICC issued regulations that are now 
codified at 49 CFR 1155. The regulations define the terms noted above 
(revenue attributable, avoidable costs, return on value, reasonable 
management fee) for determining the subsidy payment for the 
continuation of train service over lines not included in the Plan. The 
regulations are largely self-executing with little role provided for 
the ICC.\12\
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    \10\ RSPO was established as ``an office in the Interstate 
Commerce Commission.'' Former 49 U.S.C. 10361. In resolving the 
issue of whether final orders or regulations of RSPO were to be 
considered orders or regulations of the ICC, the court held that 
``[a]lthough Congress gave to the RSPO final administrative 
responsibility for certain determinations, we conclude that the RSPO 
is sufficiently part of the ICC so that its orders are to be 
considered orders of the ICC for purposes of the Hobbs Act.'' 
Southeastern Pennsylvania Transp. Auth. v. I.C.C., 644 F.2d 238, 
240, n.3 (3d Cir. 1981).
    \11\ The language of section 205 pertaining to RSPO was 
eventually codified at 49 U.S.C. 10361-64.
    \12\ However, under 49 CFR 1155.3(a), a carrier giving notice of 
intent to discontinue service shall submit an ``Estimate of Subsidy 
Payment'' to, inter alia, RSPO. Under 49 CFR 1155.4(c), a party 
desiring an interpretation of the standards can file a petition with 
RSPO. Under Sec. 1155.9, if the parties cannot agree on certain 
issues, the matter could be arbitrated. The ICC was not directly 
involved in reviewing disputes.
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    The 4R Act also instituted the national OFA procedures. It allowed 
an abandonment to be postponed for up to 6 months if a financially 
responsible person offered to purchase or subsidize the line. Section 
802. (This provision was originally codified at 49 U.S.C. 1a(6)(a) and 
subsequently recodified without substantive change at former 49 U.S.C. 
10905.) In essence, the regional subsidy provision of 45 U.S.C. 744 was 
expanded to apply to all carriers. In November 1976, the ICC 
promulgated regulations that were predicated on the part 1155 
regulations, although, due to factual and statutory differences, there 
were certain variations. The OFA rules are now found at 49 CFR 
1152.27.\13\
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    \13\ The Staggers Rail Act of 1980, Public Law 96-448, 94 Stat. 
1895, further revised former 49 U.S.C. 10905. Section 402. The 6-
month negotiating period was shortened and, when a carrier and 
shipper could not agree to terms, the ICC upon request would set, 
and the carrier was bound by, the purchase or subsidy price.
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    The ICCTA was the latest legislative action applicable to these 
regulations. There was no change to 45 U.S.C. 744(c). The changes to 
section 744(d) do not affect part 1155. The RSPO statutes--49 U.S.C. 
10361-64--were repealed. Former 49 U.S.C. 10905 was modified and is now 
found at 49 U.S.C. 10904, but the changes there do not affect our 
analysis.
    In our NPR, we stated that we were reexamining part 1155 because of 
the changes made by the ICCTA, the availability of our national subsidy 
standards, and the likelihood that few situations fall within the 
regional subsidy framework. Comments were filed by the Association of 
American Railroads (AAR) and the Delaware Valley Railway Company, Inc. 
(DV).

Comments of the Parties

    The AAR, in its brief comment, supports the removal of part 1155, 
arguing that rules ``are of marginal, if any, utility * * *.''
    DV is a Class III short line railroad.\14\ It has operated over a 
rail line owned by a subsidiary of the Reading Company, the corporate 
successor of the bankrupt Reading Railroad Company. DV expresses its 
belief that the regional standards ``substantially duplicate the 
National OFA standards,'' and supports removal of the part 1155 
regional regulations because of the availability of the national OFA 
standards. It claims that, to keep separate regulations applicable to 
only a few lines and

[[Page 28289]]

another standard for all other lines, would cause ``unnecessary, 
wasteful, potentially inconsistent, and duplicative regulation.'' It 
seeks to amend the national OFA standards to handle the few situations 
that would still fall under the regional standards.
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    \14\ DV is involved in a pending proceeding in which relief is 
sought, inter alia, under 49 CFR part 1155. RailAmerica, Inc., and 
the Delaware Valley Railway Company, Petition to Set Subsidy Terms 
Under 45 U.S.C. 744(c) and 49 CFR Part 1155, STB Finance Docket No. 
33285.
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    In response to the question of whether there are any ``railroads in 
reorganization,'' DV claims that the Reading Company, while 
``concededly not a railroad in reorganization under that [3R Act] 
statute, is a successor to a railroad in reorganization and should be 
subject to the provisions of 49 CFR part 1155 on that basis.'' \15\ It 
argues that Congress did not intend that carriers could avoid 
regulatory oversight by reorganizing themselves, and that the Board 
should focus on the rail property and rail service at issue and not the 
status of the owning entity.\16\
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    \15\ DV claims it involves ``one of the few instances, if not 
the last instance, of rail service provided over railroad property 
owned by the successor to a bankrupt railroad not transferred to 
Conrail or another rail carrier under the [Plan].'' [Footnote 
omitted.]
    \16\ These concerns are moot, because we are finding that the 
abandonment and discontinuance of lines still being subsidized will 
fall under the special national OFA standards at 49 CFR 1152.27(n). 
Formerly subsidized lines that are being abandoned or discontinued 
will come under the regular OFA rules at section 1152.27.
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Discussion and Conclusions

    Because of the changes in the ICCTA and the fact that there appear 
to be few lines being operated under the regional subsidy regime, we 
will remove the more than 30 pages of regulations at part 1155. While 
technically there may no longer be any 3R Act railroads in 
reorganization, there appear to be a few lines that have been 
continuously subsidized under 49 U.S.C. 744, and these lines require 
special procedures. Therefore, we are issuing regulations at 49 CFR 
1152.27(n) that would provide for summary abandonment and 
discontinuance on notice by the carrier owning the line, and that would 
allow for the opportunity to subsidize and purchase lines under the 
national OFA rules.
    As noted, supra, these lines were effectively approved for 
abandonment and discontinuance under section 744, and, for those lines 
that have been continually subsidized, we do not believe that the 
approval to abandon or discontinue has been removed. Accordingly, Board 
authorization is not needed for cessation of service. Lines of railroad 
in the Northeast that were not included in the Plan and are no longer 
being subsidized under section 744 but continue to be operated are 
common carrier lines subject to the regular abandonment and national 
OFA regime of the Interstate Commerce Act.
    The commenters generally support the removal of part 1155 (with DV 
also seeking a concomitant modification of the national OFA rules). 
Moreover, the record indicates that the regulations appear to be 
unnecessary. They were determined and issued by an office (RSPO) that 
has been abolished by the ICCTA.\17\ Under former 49 U.S.C. 
10362(b)(7), RSPO was to ``maintain, and from time to time revise and 
republish * * * standards for determining the revenue attributable to 
the rail properties, the avoidable costs of providing transportation, a 
reasonable return on value, and a reasonable management fee * * *.'' As 
noted, this section, as well as RSPO, has been abolished. There are, 
however, parallel sections in force--45 U.S.C. 744(c) and (d)--that 
pertain to subsidies for the continuation of rail freight service. Even 
here, however, support for the subsidy regulations is uncertain, 
because section 744(d)(1) and (d)(2) refer to laws repealed by the 
ICCTA.\18\
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    \17\ We note that the regulations assign continuing 
responsibilities to the abolished office (issuing interpretations, 
receiving estimates of subsidy payments).
    \18\ Under 45 U.S.C. 744(d)(1), the defunct RSPO is to determine 
the terms a subsidizer is to pay a designated operator. Section 
744(d)(1) states that the terms ``revenue attributable,'' 
``avoidable costs,'' and ``reasonable management fee'' are to be 
determined by ``the Office,'' defined at 45 U.S.C. 702(12) as RSPO.
    Moreover, under 45 U.S.C. 744(d)(2), the term ``reasonable 
return on value'' is to be developed according to the standards of 
205(d)(6) of the 3R Act, which, as noted, was codified at the now 
repealed RSPO statute, 49 U.S.C. 10362.
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    Even if the ICCTA does not mandate the removal of the regulations, 
there appears to be little need for the subsidy rules, because of the 
availability of the national standards and because the circumstances 
and conditions that the regional standards were to address have largely 
expired. Under 45 U.S.C. 744(a)(1) and (c)(1), the regional subsidy 
program applies to a ``rail service on rail properties of a railroad in 
reorganization'' and is not available ``after 2 years from the 
effective date of the [Plan] or more than two years after the last rail 
service continuation payment is received, whichever is later * * *.'' 
There may not be any railroads in reorganization as defined by the 
statute. In Consolidated Rail Corp. v. Reading Co., 654 F. Supp. 1318, 
1323 (Sp. Ct. RRRA 1987) (Reading), a case arose that involved whether 
personal injury claims could be brought against Conrail and National 
Railroad Passenger Corporation pursuant to section 709(b) of the 3R Act 
(45 U.S.C. 797h(b)). That section provided for assumption by Conrail of 
personal injury claims against ``a railroad in reorganization.'' The 
court looked at the definition of railroad in reorganization (45 U.S.C. 
702(16)), supra, and stated that certain predecessor railroads of 
Conrail were not railroads in reorganization because they were no 
longer ``subject to a bankruptcy proceeding.'' These carriers had 
undergone reorganization, final consummation orders had been entered, 
and the carriers had been discharged in bankruptcy.<SUP>19</SUP> The 
court found that ``[w]here, as is the case here, the definition of a 
statutory term is clear and unequivocal it is controlling.'' Id. 
(citations omitted.)
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    \19\ The court noted (Id. at 1323, n.2) the following 
consummation dates: Erie Lackawanna, Inc. (November 30, 1982); 
Reading Co. (December 31, 1980); Penn Central Transportation Co. 
(October 24, 1978); Lehigh Valley Railroad Co. (September 1, 1982); 
and the Central of New Jersey (September 14, 1979). We note that 
despite this ruling, section 797h(b) has not been removed.
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    As a consequence of Reading, there will, at a minimum, be no new 
lines that can be added to the regional subsidy regime. This does not, 
however, end our inquiry. There appears to be at least one line that 
has been subsidized since the enactment of the regional subsidy 
program. Such lines have already been approved for abandonment and 
discontinuance. Moreover, it can be argued that these lines still fall 
within the ambit of section 744. Under these circumstances, we believe 
that the best approach will be to eliminate part 1155, but modify the 
OFA regulations for situations involving lines that are still being 
subsidized under the regional standards.
    The notice periods will follow the basic regime of section 744. 
Summary discontinuance of service without Board approval may be 
effected if 60 days' notice is given by the owner of the line and 
certain parties are notified.<SUP>20</SUP> Beginning 120 days 
thereafter, the summary abandonment of a line is allowed if 30 days' 
notice is given and the parties are notified.
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    \20\ Notice shall be to the Board, governor and transportation 
agencies and the government of each political subdivision of each 
state in which such rail properties are located and to each shipper 
who has used the rail service during the previous 12 months.
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    We are requiring the owner of the line, and not the designated 
operator, to provide the notice that triggers the OFA process. We are 
retaining the provision by which a designated operator may terminate 
service in accordance with the terms of its agreement and is only 
required to give notice of termination of service to the shippers on 
the line. 49 CFR 1150.11. No time period is specified for the notice. 
We hope that

[[Page 28290]]

the designated operator and line owner will coordinate the giving of 
notice so that there will be no break in service. We recognize, 
however, that under our present ``designated operator'' rules, it is 
possible that the operator could terminate service before the notice 
period has expired. This eventuality is a natural outcome of such 
subsidy regimes where service is tied specifically to an agreement. 
Nevertheless, given the specified time periods and the ability of the 
Board to set terms and conditions under the national standards, we 
expect that any breaks in service would be of short duration.

The New OFA Rules

    We are modifying 49 CFR 1152.27 by adding a new paragraph (n). 
Abandonment or discontinuance notice must be given, affording 
interested persons an opportunity to purchase or subsidize the line 
under our national OFA standards.<SUP>21</SUP> The applicable time 
limits will run from the date of the notice as the Board does not 
approve the cessation of service for these lines.
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    \21\ Under the statute, the standards for subsidizing lines are 
the same for both the national OFA (49 U.S.C. 10904(f)(1)(C)) and 
regional subsidy (45 U.S.C. 744(c)(2)): the difference between the 
revenue attributable to the line and the avoidable costs of 
providing service plus a reasonable return on the value of the line. 
The regional standards also provide that designated operators are to 
receive a reasonable management fee discussed infra. Unlike section 
744, however, the national OFA statute provides that the standard 
for purchasing a line is its fair market value. This standard will 
be used in processing offers under section 1152.27(n).
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    We will generally apply the national OFA standards applicable to 
class exemptions found at 49 CFR 1152.27 to these summary abandonments 
and discontinuances.<SUP>22</SUP> For example, a party may discontinue 
<SUP>23</SUP> or abandon service on a line of railroad formerly in 
reorganization that was not included in the Plan on 60 days' notice 
and, beginning 120 days after discontinuance, on 30 days' notice, 
respectively. Notice of summary abandonment or discontinuance will be 
published by the Board in the Federal Register within 20 days of 
filing. 49 CFR 1152.27(b)(2)(ii). Expressions of intent to file an 
offer must be filed no later than 10 days after the Federal Register 
publication. Paragraph (c)(2)(i) of section 1152.27. An offer must be 
filed within 30 days of the Federal Register publication. Paragraphs 
(b)(2)(ii) and (c)(2)(ii)(B) of section 1152.27.
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    \22\ The one significant difference is that we are incorporating 
into new section 1152.27(n)(2) the reasonable management fee 
standard for designated operators (4\1/2\ %) from section 1155.7(o).
    \23\ As noted, the owner of the lines gives the notice that 
triggers the OFA process for discontinuances. The designated 
operator follows the notice requirements of 49 CFR 1150.11.
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    The Board will review offers to determine if a financially 
responsible person has offered assistance. If this criterion is met, 
the Board will postpone the effective date of the summary abandonment 
(but not the discontinuance) <SUP>24</SUP> within 35 days of the 
Federal Register publication. Paragraph (e)(2) of Sec. 1152.27. If the 
carrier and financially responsible person fail to agree on the amount 
or terms of subsidy or purchase, either party may request the Board to 
establish the conditions and amount of the compensation. This request 
must be filed within 30 days after the offer of purchase or subsidy is 
made, and the Board will issue a decision within 30 days after the 
request is due. Paragraphs (g)(1) and (h)(1) of Sec. 1152.27.
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    \24\ We cannot postpone the effective date of the discontinuance 
because, under our rules, designated operators need only comply with 
the notice requirements of 49 CFR 1150.11, and, in instances of 
discontinuance, the line owner is not obligated to operate the line.
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    Lines of the former railroads in reorganization under the 3R Act 
are under Board jurisdiction insofar as the institution of new rail 
service is involved. See Delaware and Hudson Ry. Co.--Modified Cert. Of 
PC&N, 363 I.C.C. 808 (1981) (holding that where a line had formally 
been operated under subsidy and was later abandoned, the carrier was 
required to file an application under former 49 U.S.C. 10901 to operate 
the line). Thus, in those instances, any future abandonment or 
discontinuance would be subject to the abandonment and OFA procedures 
of 49 U.S.C. 10903-04.
    The Board concludes that the removal of the rule and the addition 
of the new rule will not have a significant effect on a substantial 
number of small entities. It appears that the eliminated, as well as 
the new, rule does not apply to many situations. In those situations 
where the rule changes are applicable, they are consistent with the new 
statutory framework. Moreover, there should not be any significant 
change from current practice under the new rules.
    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.

List of Subjects

49 CFR Part 1152

    Administrative practice and procedure, Conservation, Environmental 
protection, National forests, National parks, National trails system, 
Public land-grants, Public lands-rights-of-way, Railroads, Recreation 
and recreation areas, Reporting and recordkeeping requirements.

49 CFR Part 1155

    Railroads, Uniform System of Accounts.

    Decided: May 13, 1998.

    By the Board, Chairman Morgan and Vice Chairman Owen.
Vernon A. Williams,
Secretary.

    For the reasons set forth in the preamble and under the authority 
of 49 U.S.C. 721(a), title 49, chapter X of the Code of Federal 
Regulations is amended as set forth below:

PART 1152--ABANDONMENT AND DISCONTINUANCE OF RAIL LINES AND RAIL 
TRANSPORTATION UNDER 49 U.S.C. 10903

    1. The authority citation for part 1152 is revised to read as 
follows:

    Authority: 11 U.S.C. 1170; 16 U.S.C. 1247(d) and 1248; 45 U.S.C. 
744; and 49 U.S.C. 701 note (1995) (section 204 of the ICC 
Termination Act of 1995), 721(a), 10502, 10903-10905, and 11161.

    2. In Sec. 1152.27, paragraph (n) is added to read as follows:


Sec. 1152.27  Financial assistance procedures.

* * * * *
    (n) Special provisions for summary discontinuance and abandonment 
of lines not part of the Final System Plan. (1) Board authorization is 
not needed for the cessation of service on a line of railroad formerly 
in reorganization that was not included in the Final System Plan (Plan) 
under the Regional Rail Reorganization Act of 1973, 45 U.S.C. 701 et 
seq., as amended by the Railroad Revitalization and Regulatory Reform 
Act of 1976, if the line has been continuously subsidized since the 
inception of the Plan. To provide an opportunity for rail service 
continuation through offers of financial assistance, however, the owner 
of the line must give not less than 60 days' notice of a 
discontinuance, and beginning 120 days after discontinuance, not less 
than 30 days' notice of abandonment. Designated operators need only 
comply with the notice requirements of Sec. 1150.11 of this title. In 
instances of discontinuance by a designated operator, the line owner is 
not obligated to operate the line. Notice is to be sent by the line 
owner to the Board, the governor and transportation agencies and the 
government of each political subdivision of each state in which such 
rail properties are located and to each shipper who has used the rail 
service

[[Page 28291]]

during the previous 12 months. The Board will generally apply the OFA 
procedures in this section (49 CFR 1152.27) for class exemptions to 
summary abandonment and discontinuance notices (except that the Board 
will not postpone the effective date of a summary discontinuance). For 
example, notice of summary abandonment or discontinuance will be 
published by the Board in the Federal Register within 20 days of 
filing. Paragraph (b)(2)(ii) of this section. Expressions of intent to 
file an offer must be filed no later than 10 days after the Federal 
Register publication. Paragraph (c)(2)(i) of this section. An offer 
must be filed within 30 days of the Federal Register publication. 
Paragraphs (b)(2)(ii) and (c)(2)(ii)(B) of this section. The Board will 
review offers to determine if a financially responsible person has 
offered assistance. If this criterion is met, the Board will postpone 
the effective date of the summary abandonment (but not the 
discontinuance) within 35 days of the Federal Register publication. 
Paragraph (e)(2) of this section. If the carrier and financially 
responsible person fail to agree on the amount or terms of subsidy or 
purchase, either party may request the Board to establish the 
conditions and amount of the compensation. This request must be filed 
within 30 days after the offer of purchase or subsidy is made, and the 
Board will issue a decision within 30 days after the request is due. 
Paragraphs (g)(1) and (h)(1) of this section.
    (2) Where a designated operator is being used, it shall be paid a 
reasonable management fee. If the parties cannot agree on this fee, it 
shall be four and one-half percent of the total annual revenues 
attributable to the branch.

PART 1155--[REMOVED]

    3. Part 1155 is removed.

[FR Doc. 98-13592 Filed 5-21-98; 8:45 am]
BILLING CODE 4915-00-P