[Federal Register Volume 88, Number 215 (Wednesday, November 8, 2023)]
[Notices]
[Pages 77136-77139]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-24672]
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SURFACE TRANSPORTATION BOARD
[Docket No. AB 578X]
Austin Area Terminal Railroad, Inc--Discontinuance of Service
Exemption--In Bastrop, Burnet, Lee, Llano, Travis, and Williamson
Counties, Texas
On December 30, 2022, the Board, by decision of the Director of the
Office of Proceedings (Director), rejected the verified notice of
exemption filed by Austin Area Terminal Railroad, Inc. (AATR) to
discontinue service over an approximately 162-mile line in Texas
because the required certification concerning the absence of local
traffic on the line was deficient. AATR appealed that decision. For the
reasons discussed below, the Board will deny the appeal. Nevertheless,
the Board will grant on its own motion an exemption under 49 U.S.C.
10502 from the prior approval requirements of 49 U.S.C. 10903
permitting AATR to discontinue common carrier rail service over the
line.
Background
On November 30, 2022, AATR filed a verified notice of exemption
under 49 CFR 1152.50 to discontinue common carrier rail service over
approximately 162 miles of rail line owned by Capital Metropolitan
Transportation Authority, located between milepost AUNW-MP 0.0 (SPT-MP
57.00), west of Giddings, and milepost AUNW-MP 154.07 (SPT-MP 99.04),
at Llano, including the Marble Falls Branch (6.43 miles), the Scobee
Spur (3.3 miles), and the Burnet Spur (0.93 miles) in Bastrop, Burnet,
Lee, Llano, Travis, and Williamson Counties, Tex. (the Lines).
According to AATR, it received Board authority to provide common
carrier service over the Lines in 2002, replacing its parent company,
Trans-Global Solutions Inc., as operator. See Austin Area Terminal
R.R.--Change in Operators Exemption--Trans-Glob. Sols., Inc., FD 33972
(STB served Dec. 20, 2000); see also Trans-Glob. Sols., Inc.--Operation
Exemption--Cap. Metro. Transp. Auth., FD 33860 (STB served Apr. 4,
2000). AATR's verified notice states, however, that it has not operated
over the Lines in many years and that the Lines are presently operated
by Austin Western Railroad, L.L.C. (AWRR), a rail carrier unaffiliated
with AATR. (Verified Notice 1-2.) \1\
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\1\ See Austin W. R.R.--Operation Exemption--Cap. Metro. Transp.
Auth., FD 35072 (STB served Sept. 14, 2007).
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On December 30, 2022, the Director rejected the notice, noting
that, under 49
[[Page 77137]]
CFR 1152.50(b), ``[a]n abandonment or discontinuance of service or
trackage rights is exempt if the carrier certifies that no local
traffic has moved over the line for at least 2 years . . . .'' The
Director observed that, although AATR certified that it had not
provided service over the Lines for at least two years, AATR also noted
that the Lines were ``presently operated'' by AWRR. Austin Area
Terminal R.R.--Discontinuance of Service Exemption--in Bastrop, Burnet,
Lee, Llano, Travis, & Williamson Cntys., Tex., AB 578X, slip op. at 1
(STB served Dec. 30, 2022). Thus, because AATR had not certified that
there had been no local traffic on the Lines during the preceding two
years, the Director found that the verified notice did not meet the
requirements of the two-year out-of-service provision at 49 CFR
1152.50.
On appeal, AATR argues, among other things, that granting its
appeal would be consistent with certain agency precedent accepting
carrier-specific, two-year-out-of-service certifications--allowing
invocation of the discontinuance class exemption when a carrier has
certified that it has handled no traffic (local or otherwise) for at
least two years, regardless of whether the line in question has hosted
common carrier operations by other railroads in the past two years.
(AATR Appeal 6.) AATR further asserts that not allowing carrier-
specific certifications would unnecessarily increase regulatory
barriers to industry exit and, in turn, would discourage honest and
efficient management of railroads, contrary to the objectives of 49
U.S.C. 10101(7) and (9).\2\ (AATR Appeal 10.)
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\2\ AWRR and its parent company, Watco Holdings, Inc., filed a
joint pleading on January 20, 2023, confirming AWRR's role providing
common carrier service on the Lines and noting their general support
for AATR's discontinuance efforts.
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Discussion and Conclusions
Under 49 CFR 1011.7(a)(2)(x), the Board has delegated to the
Director the authority to determine whether to issue notices of
exemption. The Board, however, has reserved for itself the
consideration and disposition of all appeals of initial decisions
issued by the Director. See 49 CFR 1011.2(a)(7). In this proceeding,
AATR argues that the Director erred in rejecting its verified notice of
exemption. On appeal, the Board considers whether the notice was
properly rejected under the circumstances presented. See, e.g., Ill.
Cent. R.R.--Aban. Exemption--in Champaign Cnty., Ill., AB 43 (Sub-No.
189X), slip op. at 3 (STB served July 2, 2015).
The Board finds that the verified notice was properly rejected.
First, the Director's application of 49 CFR 1152.50(b) is consistent
with the literal language of the regulation, which states that ``[a]n
abandonment or discontinuance of service or trackage rights is exempt
if the carrier certifies that no local traffic has moved over the line
for at least 2 years . . . .'' (emphasis added). Indeed, the final rule
adopting the discontinuance class exemption noted that the meaning of
``out of service'' for the purpose of that exemption is the same as in
the rulemaking establishing the class exemption for abandonments.
Exemption of Out of Serv. Rail Lines (Discontinuance of Serv. &
Trackage Rts.), 1 I.C.C.2d 55, 56 (1984). The abandonment rulemaking
defined ``out of service'' rail lines as those lines where there had
been ``no traffic originating or terminating on the line for at least 2
years.'' Exemption of Out of Serv. Rail Lines, 366 I.C.C. 885, 887
(1983) (emphasis added). Further, the final rule adopting the
discontinuance class exemption noted that such discontinuances were
limited in scope, having ``little or no competitive or operational
impact,'' because they ``w[ould] usually pertain to short-line segments
with no shippers,'' and that regulation was ``not needed to protect
shippers from the abuse of market power, because the lines would not
have been used by shippers for at least 2 years.'' Exemption of Out of
Serv. Rail Lines (Discontinuance of Serv. & Trackage Rights), 1
I.C.C.2d at 57 (emphasis added).
The Director's ruling was also consistent with the discussion in
CSX Transportation in Jefferson & Indiana Counties, Pa., AB 55 (Sub-No.
453X) (ICC served Nov. 27, 1992), cited by the Director in the
challenged order. There, the agency explained that the ``test [under
the regulation] is not whether [the discontinuing carrier] has provided
any local service over the line in the past 2 years but whether there
has been any local service on the line during that period.'' CSX
Transp., AB 55 (Sub-No. 453X), slip op. at 2.\3\ Although AATR
characterizes CSX Transportation as ``obscure,'' (AATR Appeal 6), in
none of the cases AATR cites did the agency squarely address the issue
here: whether the regulation requires the discontinuing carrier to
certify that no local traffic at all--as opposed to just its own--has
moved over the line for at least two years. Nor did any party in the
decisions cited by AATR challenge the adequacy of a carrier-specific
certification versus one covering all local traffic on the line.\4\
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\3\ The ICC later acknowledged the findings in CSX
Transportation in a subsequent decision by the entire Commission.
See Buffalo & Pittsburgh R.R.--Discontinuance & Aban. Exemption--
Between DC Tower & Homer City, in Jefferson & Ind. Cntys., Pa., AB
369 (Sub-No. 2X) et al., slip op. at 2 n.3 (ICC served Nov. 17,
1993) (explaining that the notice in CSX Transportation was
``rejected because CSXT had failed to certify that there was no
local traffic on the Line'').
\4\ AATR notes that in Delaware & Hudson Railway--Discontinuance
of Trackage Rights Exemption--in Broome County, N.Y., AB 156 (Sub-
No. 27X) (STB served Oct. 18, 2016), the Board rejected several
challenges to the notice of exemption, ``including one focused on
the accuracy of [the carrier's] certification.'' (AATR Appeal 9.)
Questions were raised in that proceeding about whether the
discontinuing carrier had in fact conducted local traffic on the
relevant lines in the last two years. See, e.g., Reply to D&H Reply
to Pet. to Revoke at 7, May 12, 2015, Del. & Hudson, AB 156 (Sub-No.
27X) (arguing that if any of the traffic that ``D&H carries'' on the
trackage rights lines is local traffic, then the ``Exemption Notice
fails''). But no party in Delaware & Hudson argued that carrier-
specific certifications, in general, do not qualify for the class
exemption, and the Board accepted the certification there--as it did
in all the decisions cited by AATR--without discussing the issue
raised in the Director's order or in CSX Transportation.
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The Board acknowledges that carrier-specific certifications in two-
year-out-of-service discontinuance proceedings have been more recently
accepted without challenge or controversy. See, e.g., Minn. Com. Ry.--
Discontinuance of Trackage Rts. Exemption--in Anoka, Hennepin, Ramsey,
& Wash. Cntys., Minn., AB 882 (Sub-No. 4X) (STB served May 20, 2020);
Wheeling & Lake Erie Ry.--Discontinuance of Serv. Exemption--in Erie
Cnty., Ohio, AB 227 (Sub-No. 13X) (STB served Mar. 22, 2019); All.
Terminal R.R.--Discontinuance of Serv. & Discontinuance of Trackage
Rts. Exemption--in Denton & Tarrant Cntys., Tex., AB 1262X (STB served
Apr. 23, 2018). Moreover, as the Board has explained previously,
discontinuance of trackage rights that have not been operated for at
least two years is unlikely to negatively impact shippers, ``especially
. . . because a discontinuance of trackage rights still leaves [at
least the] line owner in place to conduct service.'' See Norfolk S.
Ry.--Acquis. & Operation--Certain Rail Lines of the Del. & Hudson Ry.,
FD 35873, slip op. at 20 (STB served May 15, 2015).
Nevertheless, to resolve the inconsistency, the Board clarifies
that the regulation should be applied as written and as intended at the
time of its adoption. Carriers using the two-year-out-of-service notice
must certify that no local traffic has moved over the line for two
years, not just their own traffic. The Board further notes that
carriers may petition for individual exemptions under 49 U.S.C.
10502(a). While the individual exemption process
[[Page 77138]]
is less streamlined than the class exemption procedures, it still
provides an avenue for obtaining ``expedite[d] decisions'' with
``minimize[d] regulatory burdens'' in uncontested or noncontroversial
proceedings involving rail line abandonments and discontinuances. See,
e.g., Minn. N. R.R.--Aban. Exemption--Between Redland Junction &
Fertile, in Polk Cnty., Minn., AB 497 (Sub-No. 2X), slip op. at 11 n.17
(STB served Nov. 14, 1997) (``Detailed revenue and cost analysis is
generally reserved for the application process . . . .'') Indeed, the
Board has readily granted petitions for exemption to discontinue unused
trackage rights in appropriate circumstances where there would be no
impact on service. See, e.g., Idaho N. & Pac. R.R.--Discontinuance of
Trackage Rts. Exemption--in Canyon, Payette, & Wash. Cntys., AB 433
(Sub-No. 4X) (STB served Jan. 3, 2013) (granting discontinuance
authority for one set of overhead trackage rights that had not been
used for 17 years, and another that had not been used for three years);
BNSF Ry.--Discontinuance of Trackage Rts.--in Peoria & Tazewell Cntys.,
Ill., AB 6 (Sub-No. 470X) (STB served June 4, 2010) (granting
discontinuance authority for overhead trackage rights that had not been
used in 28 years).
Therefore, based upon the foregoing, AATR's appeal of the
Director's decision rejecting the notice of exemption will be denied.
However, as discussed below, the Board will grant on its own motion the
discontinuance of rail service by AATR over the lines at issue.
The Sua Sponte Exemption
In rejecting a verified notice of exemption, the Board often
requires or suggests that a party file an application or petition for
exemption to obtain the necessary authority it seeks. Under the
circumstances here, however, and given the sufficiency of the current
record, the Board will minimize the burden on AATR by granting an
exemption for discontinuance authority over the Lines sua sponte.
Under 49 U.S.C. 10903, a rail carrier may not discontinue
operations without the Board's prior approval. Pursuant to 49 U.S.C.
10502(a), however, the Board shall, to the maximum extent possible,
exempt a transaction or service from regulation upon finding that (1)
regulation is not necessary to carry out the rail transportation policy
(RTP) of 49 U.S.C. 10101, and (2) either (a) the transaction or service
is of limited scope, or (b) regulation is not needed to protect
shippers from the abuse of market power.
Here, detailed scrutiny under 49 U.S.C. 10903 of discontinuance by
AATR is not necessary to carry out the rail transportation policy. By
minimizing the administrative expense of the application or petition
process, an exemption would reduce regulatory barriers to exit. See 49
U.S.C. 10101(2), (7), (15). An exemption would also encourage efficient
management by relieving AATR of the responsibility of operating over
rail lines it has not used in more than 15 years. See 49 U.S.C.
10101(9). Further, other aspects of the RTP would not be adversely
affected.
Regulation of the proposed discontinuance is also not needed to
protect shippers from the abuse of market power.\5\ AATR has not
operated over the Lines in many years, and shippers may request service
from AWRR, which offers common carrier service over the Lines.
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\5\ Given the Board's finding regarding market power, it need
not be determined whether the proposed discontinuance is limited in
scope.
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Employee Protection. Under 49 U.S.C. 10502(g), the Board may not
use its exemption authority to relieve a carrier of its statutory
obligation to protect the interests of its employees. Accordingly, as a
condition to granting this exemption, the Board will impose the
employee protective conditions set forth in Oregon Short Line
Railroad--Abandonment Portion Goshen Branch Between Firth & Ammon, in
Bingham & Bonneville Counties, Idaho, 360 I.C.C. 91 (1979).
Offers of Financial Assistance, Interim Trail Use/Rail Banking,
Public Use, and Environmental Review. Typically, in individual
exemption proceedings, formal expressions of intent to file an offer of
financial assistance (OFA) to subsidize continued rail service are due
within 10 days of the Federal Register publication giving notice of the
petition for exemption. See 49 CFR 1152.27(c)(1)(i). These filings must
indicate the intent to file an OFA for subsidy and demonstrate that the
filers are preliminarily financially responsible. See 49 CFR
1152.27(c)(2)(i). In this case, given the Board's sua sponte grant of
an exemption, formal expressions of intent must be filed by November
13, 2023.
Provided no formal expression of intent to file an OFA to subsidize
continued rail service has been received, this exemption will be
effective on December 3, 2023, unless stayed pending reconsideration.
And, because this is a discontinuance and not an abandonment, the Board
need not consider OFAs to acquire the Lines, interim trail use/rail
banking requests under 16 U.S.C. 1247(d), or requests to negotiate for
public use of the Lines under 49 U.S.C. 10905. Lastly, because there
will be an environmental review if abandonment is sought in the future,
environmental review is unnecessary here.
In sum, the Board permits the discontinuance of rail service by
AATR over the above-described rail lines, and notice of AATR's
exemption will be published in the Federal Register.
It is ordered:
1. AATR's appeal of the Director's decision is denied.
2. Under 49 U.S.C. 10502, the Board exempts from the prior approval
requirements of 49 U.S.C. 10903 the discontinuance of service by AATR
on the above-described lines, subject to the employee protective
conditions in Oregon Short Line Railroad--Abandonment Portion Goshen
Branch Between Firth & Ammon, in Bingham & Bonneville Counties, Idaho,
360 I.C.C. 91 (1979).
3. Notice of the exemption will be published in the Federal
Register.
4. This exemption will be effective December 3, 2023.
5. Formal expressions of intent to file an offer of financial
assistance (OFA) to subsidize continued rail service are due November
13, 2023.
6. Petitions to reopen and petitions to stay the effectiveness of
the exemption must be filed by November 20, 2023.
7. This decision is effective on its service date.
Decided: November 2, 2023.
By the Board, Board Members Fuchs, Hedlund, Oberman, Primus, and
Schultz. Board Member Fuchs concurred with a separate expression.
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BOARD MEMBER FUCHS, concurring:
I agree with today's decision (Decision) that the Director's
interpretation of ``no local traffic''--requiring a line-specific
certification--is consistent with the plain meaning of the regulation,
Decision 3, and supported by the relevant legal history.\1\ I write
[[Page 77139]]
separately to suggest that the Board ought to consider changing this
regulation. AATR's appeal understandably cites an extensive list of
cases in which the agency has allowed carrier-specific ``no local
traffic'' certifications via the notice process, (AATR Appeal 8-9),
and--in considering this overwhelming precedent--I find that the Board,
to carry out the rail transportation policy (RTP) at 49 U.S.C. 10101,
need not routinely subject carriers to the different, more burdensome
petition process in similar future cases. Over more than 30 years, the
Board has rightly saved taxpayers and many entities, including small
businesses, substantial resources by cutting up to 90 days out of the
exemption process and eliminating a significant number of unneeded
filings and decisions. See 49 CFR part 1121 (procedures for petitions
for exemption), 49 CFR 1152.60 (special rules for abandonment and
discontinuance petitions for exemptions); 49 CFR 1152.50 (exempt
abandonments and discontinuances); see also 49 U.S.C. 10101(2)
(minimizing the need for regulatory control over the rail
transportation system), section 10101(7) (reducing regulatory barriers
to entry and exit), section 10101(15) (providing for expeditious
handling of proceedings). Though not the highest agency priority, the
Board should consider, at the appropriate time, amending its
discontinuance exemption regulations to allow carrier-specific
certifications and once again achieve these savings.\2\
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\1\ The Decision accurately traces the relationship of the
discontinuance rulemaking to the abandonment rulemaking, and it
faithfully quotes multiple statements in the discontinuance
rulemaking preamble that treat phrases such as ``out of service''
and ``no local traffic'' as applying to all carriers on the line,
not just the filing carrier. Decision 3. Yet I am troubled that the
Federal Register notices accompanying the proposed and final rules
in the discontinuance proceeding state the exemption can apply when
``no traffic has been handled locally on the line by the carrier
seeking the discontinuance for at least 2 years.'' Exemption of Out
of Service Lines (Discontinuance of Service and Trackage Rights), 48
FR 27584 (June 16, 1983) (emphasis added). Ultimately, I find
Federal Register notices contain a drafting error because the phrase
``by the carrier seeking the discontinuance'' does not appear in the
related regulation or preamble. I also note that, after the agency
issued the final rule and associated Federal Register notice, the
D.C. Circuit--in upholding a remand decision that embraced both the
abandonment and discontinuance exemption proceedings--stated that
the ``originally proposed definition of `out of service,' which
encompassed only rail lines carrying no traffic at all for at least
two years, had been expanded in the final rule to include lines
carrying overhead traffic, i.e., traffic that neither originates nor
terminates on a line and can be rerouted over other lines.'' Ill.
Com. Comm'n v. ICC, 848 F.2d 1246, 1249 (D.C. Cir. 1988) (emphasis
added).
\2\ As part of the rulemaking process, the Board should consider
any necessary protections for when a carrier-specific certification
would raise problems relevant to carrying out the RTP, particularly
with respect to competition. But precedent shows such problems are
far from the norm. The suggested future rulemaking could also
address any problems or inconsistencies with the agency's treatment
of atypical cases. See e.g., Consol. R. Corp.--Exemption--Aban. of
the Weirton Secondary Track in Harrison & Tuscarawas, Cntys., Ohio,
AB 176 (ICC decided June 7, 1989) (revoking a class exemption as
applied to the proposed abandonment at issue and finding that a more
thorough review of the transaction was necessary to carry out the
national rail transportation policy).
Jeffrey Herzig,
Clearance Clerk.
[FR Doc. 2023-24672 Filed 11-7-23; 8:45 am]
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