The Board Issues a Notice of Proposed Rulemaking to Establish a New Class Exemption for Emergency Temporary Trackage Rights

On May 28, 2021, the Surface Transportation Board (Board) issued a decision granting the Association of American Railroads’ (AAR) petition to initiate a rulemaking proceeding to establish a new class exemption for emergency temporary trackage rights, with certain modifications made by the Board.  Pet. for Rulemaking—Railroad Consolidation Procedures—Exemption for Emergency Temporary Trackage Rights, EP 282 (Sub-No. 21) (STB served May 28, 2021).  The Board also proposed related changes to the class exemptions for trackage rights and temporary trackage rights.  Id., slip op. at 1. 

Under 49 U.S.C. § 10502, the Board is directed to provide an exemption from regulation whenever it finds that: “(1) regulation is not necessary to carry out the rail transportation policy (RTP) of 49 U.S.C. § 10101; and (2) either the transaction or service is of limited scope or regulation is not needed to protect shippers from an abuse of market power.”  Id., slip op at 2. In 2003, “the Board adopted a class exemption at 49 C.F.R. § 1180.2(d)(8) for temporary overhead trackage rights of not more than one year in duration.”  Id.  Pursuant to 49 C.F.R. § 1180.4(g)(1), an exemption sought under § 1180.2(d)(8) cannot become effective until at least 30 days after the railroad files verified notice of the transaction.  Id.  Thus, under current regulations, a railroad seeking to have a temporary trackage rights exemption become effective in less than 30 days must file an additional petition to waive the 30-day period.  Id.  In such cases, the Board is required to serve and publish the exemption notice in the Federal Register, in addition to issuing a separate decision acting on the waiver request and setting the effective date of the exemption.  Id

On October 9, 2020, AAR, seeking to make this process more efficient, filed a petition requesting that the Board institute a rulemaking proceeding to establish a “new emergency temporary trackage rights class exemption that could be invoked in specific situations and would allow emergency temporary trackage rights to take effect immediately, without need to waive the 30-day notice requirement under 49 C.F.R. § 1180.4(g)(1).”  Pet. for Rulemaking—Railroad Consolidation Procedures—Exemption for Emergency Temporary Trackage Rights, EP 282 (Sub-No. 21), slip op. at 1 (STB served Feb. 5, 2021). 

On November 4, 2020, SMART-Transportation Division-New York State Legislative Board (SMART/TD-NY) filed a reply in opposition to AAR’s petition, arguing that an emergency temporary trackage rights exemption is unwarranted and threatens rail safety.  Pet. for Rulemaking—Railroad Consolidation Procedures—Exemption for Emergency Temporary Trackage Rights, EP 282 (Sub-No. 21), slip op. at 3 (STB served May 28, 2021).  The Board subsequently granted AAR’s request to initiate a rulemaking proceeding to consider AAR’s proposal on February 5, 2021.  Pet. for Rulemaking—Railroad Consolidation Procedures—Exemption for Emergency Temporary Trackage Rights, EP 282 (Sub-No. 21) (STB served Feb. 5, 2021).

In its May 28, 2021 decision, the Board found SMART/TD-NY’s arguments to be unpersuasive.  Pet. for Rulemaking—Railroad Consolidation Procedures—Exemption for Emergency Temporary Trackage Rights, EP 282 (Sub-No. 21), slip op. at 4 (STB served May 28, 2021).  The Board noted that, contrary to SMART/TD-NY’s comments, the proposal “would make the process of obtaining temporary trackage rights in an emergency more efficient and predictable,” and it would not threaten rail safety.  Id.  Further, the Board determined that AAR’s requested exemption meets the requirements of 49 U.S.C. § 10502 and noted that petitions for waiver of the 30-day notice requirement are routinely granted.  Id.  Thus, the Board is proposing to establish a new class exemption for emergency temporary trackage rights.  Id., slip op. at 5.  The Board’s proposed rule differs in some respects from AAR’s initial request and also “includes certain related changes to the existing class exemptions for trackage rights and temporary trackage rights.”  Id

Specifically, the Board proposes to require that the new exemption only be available for “unforeseen” track outages that are expected to last more than seven days and where there is no reasonable alternative to maintain pre-outage levels of service.  Id.  Examples of emergency situations that may result in such unforeseen track outages include natural disasters and accidents or derailments.  Id.  The railroad’s verified notice should provide, to the extent possible, a description of the situation that includes the following information:

1. The nature of the event that caused the unforeseen outage;

2. The location of the outage;

3. The date that the emergency situation occurred;

4. The date the track outage was discovered; and

5. The expected duration of the outage.

Id.  The Board proposes to “limit[] the emergency temporary trackage rights to an initial period not to exceed three months, with the option to request a renewal for an additional three months.”  Id.  If the track outage is resolved and use of the trackage rights become unnecessary prior to the expiration of the exemption period, the Board would require that “the carrier file a notice stating that the outage has been resolved and that trackage rights are no longer needed, as well as the date on which use of the trackage rights ceased.”  Id, slip op. at 6.  Any such notice should be filed within 5 business days of the date on which use of the trackage rights ceased.  Id.

Additionally, the Board proposes that the exemption would become effective “upon service of the Board’s notice, which would occur within five days of filing of the railroad’s verified notice of exemption.”  Id.  The Board also proposes not to require a caption summary for exemptions under 49 C.F.R. § 1180.2(d)(9) and to eliminate the current caption summary requirements for exemptions under § 1180.2(d)(7) and § 1180.2(d)(8).  Id., slip op. at 7.  

Furthermore, the Board noted that, under 49 C.F.R. § 1180.4(g)(4), parties requesting Board approval for transactions under 49 C.F.R. part 1180 must certify “whether or not a proposed acquisition or operation of a rail line involves a provision or agreement that may limit future interchange with a third-party connecting carrier, whether by outright prohibition, per-car penalty, adjustment in the purchase price or rental, positive economic inducement, or other means.”  Id.  The Board proposes to clarify that 49 C.F.R. § 1180.4(g)(4) would not apply to transactions under the proposed 49 C.F.R. § 1180.2(d)(9), and to clarify that § 1180.4(g)(4) does not apply to trackage rights transactions under § 1180.2(d)(7) or § 1180.2(d)(8).  Id., slip op. at 8.

The Board noted that the proposed changes “are intended to make the process of obtaining Board approval of temporary trackage agreements in emergency situations more efficient and predictable and do not mandate the conduct of small entities.”  Id.  Comments are due by July 12, 2021.  Replies are due by August 11, 2021.

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