[Federal Register Volume 75, Number 207 (Wednesday, October 27, 2010)]
[Proposed Rules]
[Pages 66057-66059]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-27167]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

49 CFR Part 1244

[Docket No. EP 646 (Sub-No. 3)]


Waybill Data Released in Three-Benchmark Rail Rate Proceedings

AGENCY: Surface Transportation Board, DOT.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Board is republishing its April 2, 2010 proposal to amend 
its rules with respect to the Three-Benchmark methodology used to 
adjudicate simplified rate case complaints, to include an expanded 
discussion of its rationale and regulatory objectives. This proposal 
provides for release to the parties to a Three-Benchmark proceeding of 
the unmasked Waybill Sample data of the defendant carrier for the 4 
years that correspond with the most recently published Revenue 
Shortfall Allocation Method (RSAM) figures. The parties would then use 
the released Waybill Sample data to form their traffic comparison 
groups. The Board seeks comments concerning the amount of data that 
would be available under the proposed rule, and the proposal that the 
parties would be permitted to draw from all 4 years of waybill data to 
form their comparison groups.

DATES: Comments on this proposal are due by November 26, 2010; replies 
are due by December 27, 2010.

ADDRESSES: Comments may be submitted either via the Board's e-filing 
format or in the traditional paper format. Any person using e-filing 
should attach a document and otherwise comply with the instructions at 
the E-FILING link on the Board's Web site, at http://www.stb.dot.gov. 
Any person submitting a filing in the traditional paper format should 
send an original and 10 copies to: Surface Transportation Board, Attn: 
Docket No. EP 646 (Sub-No. 3), 395 E Street, SW., Washington, DC 20423-
0001.
    Copies of written comments 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.

[[Page 66058]]


FOR FURTHER INFORMATION CONTACT: Valerie Quinn at (202) 245-0382. 
(Assistance for the hearing impaired is available through the Federal 
Information Relay Service (FIRS) at 1-800-877-8339.)

SUPPLEMENTARY INFORMATION: In Simplified Standards for Rail Rate Cases 
(Simplified Standards), EP 646 (Sub-No. 1) (STB served Sept. 5, 2007), 
aff'd sub nom. CSX Transp., Inc. v. STB (CSX Transp. I), 568 F.3d 236 
(DC Cir. 2009), and vacated in part on reh'g, CSX Transp., Inc. v. STB 
(CSX Transp. II), 584 F.3d 1076 (DC Cir. 2009), the Board modified its 
simplified rail rate guidelines, creating a simplified stand-alone cost 
approach for medium-size rail rate disputes and revising its Three-
Benchmark approach for smaller rail rate disputes.
    The Three-Benchmark method compares a challenged rate of the 
``issue traffic'' to the rates of a comparison group of traffic drawn 
from the Waybill Sample data of the defendant carrier. The Waybill 
Sample is a statistical sampling of railroad waybills of the carrier's 
shipments that is collected and maintained for use by the Board. See 49 
CFR 1244.1(c). The proposed rule in Simplified Standards would have 
required parties to draw their traffic comparison groups from the most 
recent year of Waybill Sample data of the carrier's other shipments. 
Simplified Standards for Rail Rate Cases, EP 646 (Sub-No. 1), slip op. 
at 32-33 (STB served July 28, 2006). The final rule, however, allowed 
parties to form comparison groups using Waybill Sample data from the 4 
most recent years. Simplified Standards, slip op. at 80.
    Several railroads \1\ and the Association of American Railroads 
challenged the final rule in court on the basis that, under 5 U.S.C. 
553(b)(3), the Board had not provided adequate notice and opportunity 
to comment on the change from 1 to 4 years of data from which the 
parties could draw to form their proposed comparison groups. CSX 
Transp. I, 568 F.3d at 246. Initially, the court determined that it 
would not address the merits of petitioners' argument, because the 
issue had not been presented to the Board prior to seeking judicial 
review and, therefore, had been waived. Id. at 246-47.
---------------------------------------------------------------------------

    \1\ Canadian Pacific Railway Co., Soo Line Railroad Company, 
Delaware & Hudson Railway Company, CSX Transportation, Inc., Norfolk 
Southern Railway Company, and Union Pacific Railroad Company.
---------------------------------------------------------------------------

    On rehearing, however, the court reversed its waiver determination 
and considered the merits of petitioners' argument. The court concluded 
that the Board had failed to provide adequate notice of the final rule 
regarding the available range of Waybill Sample data. Accordingly, the 
court vacated that portion of Simplified Standards. CSX Transp. II, 584 
F.3d at 1078. As a result, there is currently a gap in the Board's 
rules; i.e., there is no defined period for which unmasked Waybill 
Sample data is to be released in a Three-Benchmark proceeding.
    On April 2, 2010, the Board, through a notice of proposed 
rulemaking, proposed to provide for release to the parties in Three-
Benchmark proceedings of the unmasked Waybill Sample data of the 
defendant carrier for the 4 years that correspond with the most 
recently published RSAM figures. The parties would then draw their 
comparison groups in any combination they choose from the released 
Waybill Sample data. The Board solicited comments on this proposal.
    The Board received comments from shippers, railroads, the U.S. 
Department of Agriculture, and other interested organizations. Some 
commenters expressed concern that the Board did not provide the 
rationales and regulatory objectives behind the proposed rules. In 
response, this decision will provide the Board's rationales and 
regulatory objectives. This notice of proposed rulemaking proposes 
rules that are identical to those proposed on April 2, 2010.
    The use of multiple years of data for the Waybill Sample would be 
consistent with the Board's current practice in other contexts in 
Three-Benchmark cases. The Board already uses a 4-year averaging period 
to determine the other two benchmark components used in a Three-
Benchmark case: The RSAM and R/VC<INF>>180</INF> benchmarks. See Rate 
Guidelines--Non-Coal Proceedings, (Rate Guidelines) 1 S.T.B. 1004, 
1032-33 (1996). The reason for using this 4-year averaging period is to 
``smooth out annual variations and minimize the impact of any year that 
may have been aberrational for that carrier.'' Rate Guidelines, 1032-
33.
    A similar rationale applies to the rule proposed here. The 
availability of 4 years of Waybill Sample data would allow parties more 
flexibility to choose a comparison group that is a reasonable 
reflection of the traffic at issue and to avoid having to use data that 
may be aberrational. Giving the option to choose movements over a 
multi-year period would provide the parties with more data from which 
to choose, which should assist the parties in selecting a comparison 
group that more closely resembles the issue traffic. At the same time, 
limiting the pool of data to the 4 years that correspond with the most 
recently published RSAM figures would prevent the use of data that are 
too old to be reliable. By contrast, a shorter period, such as the 1-
year time span envisioned earlier, could cause the comparison groups to 
be too small.
    If the proposed rules are adopted, parties would not have incentive 
to specifically choose only the most favorable data from the 4-year 
data set because the Board will choose the comparison group that more 
closely resembles the traffic at issue. Thus, if a party selects a 
group that heavily favors its position at the expense of a reasonable 
comparison, then it is less likely that the Board would choose that 
comparison group.
    The Board will now provide an opportunity for additional input 
regarding the rules proposed here. While we will consider the comments 
and replies previously submitted in this proceeding, interested parties 
(whether or not they have already participated in this proceeding) may 
file additional comments and replies.
    The Board has authority to promulgate rules to meet statutory 
objectives. See 49 U.S.C. 721(a). The Board is issuing this notice of 
proposed rulemaking pursuant to the mandate to ``establish a simplified 
and expedited method for determining the reasonableness of challenged 
rail rates in those cases in which a full stand-alone cost presentation 
is too costly, given the value of the case.'' 49 U.S.C. 10701(d)(3). 
This proposed rule, if implemented, will be part of the framework for 
the simplified and expedited method of challenging rail rates.
    Under the Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, a 
notice of proposed rulemaking must either include an initial regulatory 
flexibility analysis, 5 U.S.C. 603(a), or a certification that the 
proposed rule will not have a ``significant economic impact on a 
substantial number of small entities,'' 5 U.S.C. 605(b). The proposed 
rule fills in a gap in the Three-Benchmark rate complaint framework by 
specifying the number of years of Waybill Sample data that will be made 
available to the parties in those cases. By providing clarity on that 
issue, the proposed rule would have a positive economic effect on small 
entities because it would allow Three-Benchmark rate cases to proceed 
more efficiently. Moreover, while the proposed rule delineates the 
range of data that would be made available, it does not require the 
parties to use any particular quantum of data. Accordingly, pursuant to 
5 U.S.C.

[[Page 66059]]

605(b), the Board certifies that the regulations proposed herein would 
not have a significant impact on a substantial number of small entities 
within the meaning of the Regulatory Flexibility Act. 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.
    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.

    Authority:  49 U.S.C. 721(a); 49 U.S.C. 10701(d)(3).

    Decided: October 21, 2010.

    By the Board, Chairman Elliott, Vice Chairman Mulvey, and 
Commissioner Nottingham.
Jeffrey Herzig,
Clearance Clerk.
[FR Doc. 2010-27167 Filed 10-26-10; 8:45 am]
BILLING CODE 4915-01-P