[Federal Register Volume 67, Number 51 (Friday, March 15, 2002)]
[Rules and Regulations]
[Pages 11582-11608]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-6046]
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DEPARTMENT OF TRANSPORTATION
Federal Railroad Administration
49 CFR Parts 244 and 1106
[FRA Docket No. 1999-4985, Notice No. 4]
Surface Transportation Board
[STB Ex Parte No. 574]
RIN 2130-AB24
Regulations on Safety Integration Plans Governing Railroad
Consolidations, Mergers, and Acquisitions of Control; and Procedures
for Surface Transportation Board Consideration of Safety Integration
Plans in Cases Involving Railroad Consolidations, Mergers, and
Acquisitions of Control
AGENCIES: Federal Railroad Administration (FRA), Surface Transportation
Board (STB), DOT.
ACTION: Final rules.
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[[Page 11583]]
SUMMARY: The Federal Railroad Administration (``FRA'') and the Surface
Transportation Board (``STB'' or ``Board''), working in conjunction
with each other, hereby issue joint final rules establishing procedures
for the development and implementation of safety integration plans
(``SIPs'' or ``plans'') by a Class I railroad proposing to engage in
certain specified merger, consolidation, or acquisition of control
transactions with another Class I railroad, or a Class II railroad with
which it proposes to amalgamate operations. The scope of the
transactions covered under the two rules is the same.
Under FRA's final rule, Class I railroads seeking to consummate a
covered transaction must file a proposed SIP with FRA after they seek
authority for the transaction from the Board. (A SIP is a written
document explaining how each step in implementing a contemplated
transaction would be performed safely.) FRA then reviews the proposed
SIP and advises the Board as to whether it provides a reasonable
assurance of safety for the transaction. The rule further requires
that, once the STB has approved a transaction, a railroad must operate
over property subject to the transaction in compliance with a SIP
approved by FRA, and authorizes FRA to exercise its full enforcement
remedies should a railroad fail to implement the terms of an approved
plan. Finally, the rule provides that FRA will consult with the STB at
all appropriate stages of SIP implementation, assuming FRA approves the
SIP and the STB approves the transaction.
Under the STB's final rule, rail carriers seeking to carry out a
regulated transaction are required to file a proposed SIP with FRA and
the Board 60 days after they seek authority for the transaction. FRA
will review the proposed SIP and file written comments with the Board's
Section of Environmental Analysis (``SEA''), which is responsible for
preparing the Board's environmental documents. SEA will then include
the proposed SIP, FRA's written comments on the proposed SIP, and any
additions or revisions based on continued discussions with FRA in the
Board's draft environmental documentation. After reviewing the proposed
SIP, SEA's analysis, and comments provided by interested persons during
the STB's environmental review process, the Board will then
independently evaluate the transaction and decide whether to approve
it. Should the Board approve the transaction and adopt the SIP, it will
require compliance with the SIP as a condition to its approval. FRA
then will oversee the implementation of the SIP, consult with the Board
at all appropriate stages of implementation, and advise the Board when
the proposed integration has been safely completed.
The final rules are designed to enable the Board and FRA to ensure
adequate and coordinated consideration of safety integration issues in
covered rail transactions while minimizing the burdens on the
applicants. FRA and the STB believe that the joint rules will serve the
public interest in promoting safety in the railroad industry,
consistency in decisions, and efficiency in compliance, enabling the
agencies to employ their areas of expertise to fulfill their respective
statutory objectives in a complementary manner.
DATES: Effective Date: The final rules become effective on April 15,
2002.
ADDRESSES: Petitions for reconsideration of FRA's rule should be
submitted to Docket Clerk, Office of Chief Counsel, FRA, 1120 Vermont
Avenue, NW., Mail Stop 10, Washington, DC 20590. Petitions for
reconsideration of the STB's rule should be submitted to Office of the
Secretary, STB, 1925 K Street, NW., Washington, DC 20423-0001.
FOR FURTHER INFORMATION CONTACT: Jon Kaplan, Trial Attorney, Office of
Chief Counsel, FRA, 1120 Vermont Avenue, NW, Mail Stop 10, Washington,
DC 20590 (telephone: (202) 493-6053 and E-mail:
[email protected]); and Evelyn G. Kitay, Office of the
General Counsel, STB, 1925 K Street, NW., Washington, DC 20423-0001
(telephone: (202) 565-1563 and e-mail: [email protected]). (TDD for
the hearing impaired: (202) 565-1695.)
SUPPLEMENTARY INFORMATION:
Joint FRA/STB Introduction
On December 31, 1998, FRA and the STB issued a joint notice of
proposed rulemaking (``NPRM'') establishing procedures for developing
and implementing SIPs by railroads proposing to engage in certain
specified merger, consolidation, or acquisition of control transactions
with another railroad. 63 FR 72225, Dec. 31, 1998. FRA's proposed rule
would have required railroads seeking to consummate any mergers,
acquisitions, or consolidations of property involving (i) Class I
railroads, (ii) Class II railroads when the railroads would directly
interchange freight with each other, (iii) transactions in which the
consummation of operations would produce revenue in excess of the Class
I threshold, (iv) a passenger railroad (intercity or commuter) with
another passenger railroad, a Class I railroad, or a Class II railroad;
or (v) start-up operations on a rail line or lines in which the
commencement of operations would either involve passenger service or
produce revenue in excess of the Class II threshold, to file a proposed
SIP for the agency's review and approval. (Class I railroads are rail
carriers generating operating revenue, measured in inflation-adjusted
1991 dollars, in excess of $250 million per year for a period of three
successive years. Class II railroads are rail carriers generating
operating revenue, measured in inflation-adjusted 1991 dollars, between
$20 million and $250 million.) Concurrently, the STB's proposed rule
would have required railroads seeking to engage in all transactions
addressed in FRA's NPRM other than start-up operations to file a SIP
with the Board for its review and approval.
The proposed rules set out specific procedures governing the
development, approval, and implementation of SIPs, and explained that
FRA and the Board are jointly responsible for promoting a safe rail
transportation system. Under FRA's proposed rules, railroads seeking to
consummate a covered transaction would be required to file a proposed
SIP with FRA contemporaneously with the filing of the SIP with the STB.
FRA would review the proposed SIP and advise the Board as to whether it
provides a reasonable assurance of safety for the transaction. The
proposed rule required a railroad to have a SIP approved by FRA before
it could execute operations over property subject to the transaction.
Where the Board has been involved in authorizing the transaction, FRA
would consult with the Board at all appropriate stages of
implementation.
Likewise, under the STB's proposed rules, rail carriers seeking to
carry out a transaction within the Board's jurisdiction that would
require a SIP would file their SIP with the Board and FRA. FRA would
review the SIP and file written comments with the Board's SEA. After
reviewing the SIP, SEA's analysis, and comments provided by interested
persons during the Board's environmental review process, the Board
would then independently evaluate the transaction and decide whether to
approve it. Should the Board approve the transaction, the railroads
would coordinate with FRA in implementing the SIP, including any
amendments made to the plan, and FRA would monitor the implementation
process and apprise the Board about the railroad's progress in carrying
out the plan until FRA advised the Board that the proposed integration
had been safely completed. Both FRA and the Board
[[Page 11584]]
would be authorized to exercise their full independent enforcement
remedies should either FRA or the Board reject the proposed SIP or a
railroad fail to implement the terms of an approved SIP.
FRA and the STB received written comments on the proposal from 11
entities and conducted a joint public hearing at the request of one of
the commenters in Washington, D.C., on May 4, 1999. Based on the
comments received, the testimony at the public hearing, and further
analysis of the rules proposed, FRA and the Board now publish these
joint final rules. As will be discussed below, both agencies underscore
the importance of SIPs when Class I railroads seek to engage in
mergers, consolidations, or acquisitions. These are railroads
transporting large volumes of freight, frequently including hazardous
materials. Given the size and complexity of their operations, careful
advance planning is critical to ensure that safety is maintained as the
transactions are implemented.
The agencies, however, agree with certain of the comments that the
final rules should be limited to consolidations, mergers, or
acquisitions of control involving either two or more Class I railroads
or a Class I railroad and a Class II railroad with which it proposes to
``amalgamate operations'' as defined by FRA at 49 CFR 244.9. (See also
the STB's final rule at 49 CFR 1106.2.) Only the complexity and
difficulty of these very large transactions are now believed to present
sufficient dangers to merit a SIP under these rules. This substantially
comports with the recommendations of some commenters.
In its final rule, FRA has modified the subject matter areas to be
addressed in a SIP to cover those disciplines that a regulated
transaction affects, and has decided not to require an applicant to
file a SIP when a transaction does not involve an amalgamation of
operations. In response to the comments, FRA and the Board have ``fine
tuned'' their respective procedures governing the filing, review, and
approval of a SIP, and their oversight of an approved plan. The final
rules also clarify the respective roles of the two agencies. It is made
clearer that (i) the STB is regulating the economic transaction and, in
the course of doing so, fulfilling its responsibility to assess
environmental impacts, as required by the National Environmental Policy
Act (``NEPA''), 42 U.S.C. 4321 et seq., and promote a safe
transportation system, and (ii) FRA is regulating the safety of the
implementation of any transaction the STB may approve, just as FRA
regulates all other aspects of railroad safety. FRA is not approving or
disapproving the transaction in any respect, and both agencies state
explicitly that FRA has no ``veto power,'' either explicit or implicit
as some commenters alleged, over transactions regulated by the STB. If
the STB approves a transaction, a railroad must conduct operations over
properties that are part of the transaction in compliance with a SIP
approved by FRA, just as it must conduct those operations in compliance
with the railroad safety statutes and implementing regulations
administered by FRA.
Discussion of Comments and Conclusions
FRA and the STB received written comments from various railroads
and their representative organizations, labor organizations, and public
service organizations. The railroad interests were represented by the
Association of American Railroads (``AAR''), American Short Line and
Regional Railroad Association (``ASLRRA''), National Railroad Passenger
Corporation (``Amtrak''), Guilford Transportation Industries (``GTI''),
and the Wheeling & Lake Erie Railway Company (``W&L''). The American
Train Dispatchers Department of the International Brotherhood of
Locomotive Engineers (``ATDD''), Transportation Trades Department,
American Federation of Labor-Congress of Industrial Organizations
(``TTD''), Brotherhood of Railway Carmen Division of the Transportation
Communications International Union (``BRC''), and Brotherhood of
Maintenance of Way Employes (``BMWE'') represented the interests of
rail labor. The public service organizations were represented by the
American Public Transit Association, now the American Public
Transportation Association (``APTA''), and the Oklahoma Department of
Transportation (``OK DOT''). At the public hearing held on May 4, 1999,
two organizations participated: the TTD and the AAR. The commenters
raised questions about the proposal itself, suggested alternative
language to some of the proposed rule text, and requested clarification
about the meaning and application of certain proposed rules. The
discussion that follows highlights the principal issues advanced by the
commenters and explains how the final rules reflect the comments
received. Because many of the comments focus on the rules proposed by
one agency and not the other, FRA and the Board present separate
sections addressing the comments and each agency's conclusions.
A. FRA's Response to Comments Concerning the Need To Require SIPs for
Mergers, Consolidations, and Acquisitions of Control
Several comments addressed the types of transactions that warrant
preparation of a SIP under these rules. The ATDD and TTD, for instance,
endorsed the breadth of FRA's proposed rule, asserting that that type
of rule is necessary to ensure the safety of railroad employees and the
public. The ATDD commented that operational changes, i.e., changes in
traffic volume and traffic patterns, timetable schedules, and labor
reductions, needed to be evaluated for safety concerns. The TTD added
that the rulemaking action should be transferred to FRA's Railroad
Safety Advisory Committee (``RSAC'') to secure fuller labor input in
the development of FRA's final rule. Amtrak also supported the
proposition of the SIP rules, agreeing that ``mega-mergers'' present
unique safety issues that should be identified and addressed at the
application stage to enable FRA and the Board to handle proposed
transactions as safely as possible.
GTI disagreed with the premise of the SIP rules. Specifically, GTI
claimed that FRA need not issue any regulations governing mergers,
consolidations, or acquisitions of control because the agency already
has the regulations necessary to ensure safe operations subject to a
proposed regulated transaction. GTI further postulated that FRA is
without expertise in regulating these transactions and that self-
regulation was most appropriate in this instance because merging
railroads recognize that unsafe operations lead to increased costs and
decreased returns on an investment. In other words, GTI recommended
that the agencies terminate this rulemaking action and apply the
existing regulations that govern regulated transactions.
The AAR argued that SIPs should be limited to consolidation,
merger, and acquisition of control proceedings involving at least two
Class I railroads and not to other less complex proceedings. The AAR
also argued that only the Board should have approval authority over
SIPs and that FRA's role should be limited to advising the Board.
According to the AAR, any regulations purporting to vest FRA with
authority to approve a SIP would be contrary to law and in derogation
of the Board's ``exclusive'' authority to approve merger transactions
under 49 U.S.C. 11321.
FRA strongly endorses the concept of the SIP rules and their
importance in
[[Page 11585]]
regulating the complex railroad transactions involving mergers,
consolidations, and acquisitions of large railroads where operations
are amalgamated. As the agencies explained in the NPRM, acquisitions,
consolidations, and mergers must be carefully planned and implemented
to maintain safety. See 63 FR 72226-27. Transactions involving Class I
railroads significantly change the carrier landscape and raise
potential safety issues relating to integrating operations, facilities,
personnel, safety practices, and corporate cultures. The NPRM noted
FRA's concerns regarding safety problems that resulted from inadequate
safety planning before implementation of the merger of the Union
Pacific Railroad Company (``UP'') and the Southern Pacific
Transportation Company (``SP'') (collectively referred to as ``UP/SP'')
and the merger of the Burlington Northern Railroad Company (``BN'') and
the Atchison, Topeka and Santa Fe Railway Company (``ATSF'')
(collectively referred to as ``BNSF''). See 63 FR 72227. The chief
executive officers of the Norfolk Southern Railway Company and CSX
Transportation, Incorporated, which acquired and divided Consolidated
Rail Corporation (``Conrail''), amplified this point when they
testified before the STB about the operational and safety difficulties
they encountered in implementing their respective transactions, even
with the planning and experiences of earlier mergers to guide them and
having prepared SIPs. See Public Views on Major Rail Consolidations,
STB Ex Parte No. 582, slip op. at 4-5 (STB served Mar. 17, 2000).
FRA believes that the final SIP rules accomplish the objective of
ensuring safe railroad operations during and after implementation of an
approved transaction. First, the regulations set out subject matter
areas that are critical to railroad safety that an applicant must
address in a proposed SIP. These requirements address safety issues
unique to the amalgamation of large, complex railroad operations that
are not covered in any existing Federal regulations, necessitating
their issuance here. Second, FRA has the necessary expertise in
railroad safety to review, analyze, approve, and oversee the
implementation of a proposed SIP. FRA has officials and inspectors with
knowledge, training, and experience in five railroad disciplines--
operating practices, motive power and equipment, signal and train
control, track safety, and hazardous materials--that cover the ambit of
railroad operations. Therefore, the final rules provide for FRA a
mechanism to evaluate and approve SIPs and monitor their implementation
if the transactions to which they relate are approved by the Board. As
discussed in greater detail below, FRA is regulating the safety aspects
of how a railroad implements a transaction permitted by the Board and
not whether the railroad is permitted to consummate the transaction or
on what economic terms. FRA concludes that the SIP rules are a step
forward in providing railroad safety and therefore adopts these final
rules. Although FRA entertained TTD's suggestion to add this proceeding
to those addressed by FRA's RSAC, the agency decided that a joint
rulemaking with the Board, using the complementary authority of both
agencies, would be the best way to proceed.
B. FRA's Views on Jurisdiction of FRA and the STB To Issue the Final
Rules
The AAR and GTI commented that the STB and not FRA is authorized to
issue any regulations governing acquisitions, consolidations, and
mergers. Relying on statutory authority, 49 U.S.C. 11321, and
decisional law, Schwabacher v. United States, 334 U.S. 182, 197 (1948);
Norfolk & Western Rwy. v. ATDA, 499 U.S. 117, 127-34 (1991); and City
of Auburn v. United States, 154 F.3d 1025 (9th Cir. 1998), cert.
denied, 527 U.S. 1022 (1999), the AAR claims that the Board is vested
with exclusive authority to issue regulations that are within the STB's
jurisdictional purview. GTI echoed the AAR's position, maintaining that
an application to consummate an acquisition, consolidation, or merger
is an economic transaction, which is fully within the Board's
authority.
FRA agrees that the Board has sole authority to regulate the
economic transactions, but disagrees with these commenters that
issuance of FRA's final rule trespasses upon that jurisdiction. FRA
believes that it and the STB have so interpreted their respective
statutes and jurisdiction as to reconcile them seamlessly, thereby
serving the public interest by assuring that all parts of the affected
statutes are given effect and the purposes of Congress are fully
carried out. Tyrrell v. Norfolk Southern Rwy. Co., 248 F.3d 517, 523
(6th Cir. 2001) (FRA's and the STB's ``complementary exercise of their
statutory authority accurately reflects Congress's intent for the
(Interstate Commerce Commission Termination Act) and the (Federal
Railroad Safety Act) to be construed in pari materia''). The Supreme
Court provides that ``it is a cardinal principle of construction that *
* * when there are two acts upon the same subject, the rule is to give
effect to both.'' United States v. Borden Co., 308 U.S. 188, 198
(1939). Congressional intent behind one Federal statute should not be
thwarted by the application of another Federal statute if it is
possible to give effect to both laws, id., and courts should ``construe
the relevant statutes in a manner that most fully effectuates the
policies to which Congress was committed.'' Commonwealth of
Pennsylvania v. Lynn, 501 F.2d 848, 857 (D.C. Cir. 1974); see also Food
and Drug Administration v. Brown & Williamson Tobacco Corp., 529 U.S.
120, 134 (2000) (a reviewing court should ``examin[e] a particular
statutory provision * * * (in) context and with a view to [its] place
in the overall statutory scheme''); Blanchette v. Connecticut General
Ins. Corp., 419 U.S. 102, 133-34 (1974) (statutory repeals by
implication are disfavored). The agencies have done so in a manner
entirely consistent with the cases cited by the commenters. Tyrrell,
248 F.3d at 523 (``while recognizing their joint responsibility for
promoting rail safety in their 1998 Safety Integration Plan rulemaking,
FRA exercised primary authority over rail safety matters under 49
U.S.C. 20101 et seq., while the STB handled economic regulation and
environmental impact assessment(,)'' citing the NPRM at n.2).
As FRA and the Board explained in the NPRM:
FRA and STB are jointly responsible for promoting a safe rail
transportation system.
Under Federal law, primary jurisdiction, expertise and oversight
responsibility in rail safety matters are vested in the Secretary of
the Department of Transportation, and delegated to the Federal
Railroad Administrator. 49 U.S.C. 20101 et seq.; 49 CFR 1.49. FRA
has authority to issue regulations to promote safety in every area
of railroad operations and reduce railroad-related accidents and
injuries. 49 U.S.C. 20101 and 20102. FRA has exercised its
jurisdiction to protect the safety of railroad operations through
the issuance and enforcement of regulations, partnering with
railroad labor organizations and management of particular railroads
to identify and develop solutions to safety problems, actively
participating in STB rail proceedings, and monitoring railroad
operations during the implementation of STB-approved transactions.
The Board is also responsible for promoting a safe rail
transportation system. The rail transportation policy (RTP), 49
U.S.C. 10101, which was adopted in the Staggers Rail Act of 1980,
Pub. L. 96-448, 94 Stat. 1895, and amended in the ICC Termination
Act of 1995, Pub. L. 104-88, 109 Stat. 803 (1995), establishes the
basic policy directive against which all of the statutory provisions
the Board administers must be evaluated. The RTP provides, in
relevant part, that, ``(i)n regulating the railroad industry, it is
the policy of the United States
[[Page 11586]]
Government * * * to promote a safe and efficient rail transportation
system'' * * * (by allowing rail carriers to) ``operate
transportation facilities and equipment without detriment to the
public health and safety * * * .'' 49 U.S.C. 10101(8). The rail
transportation policy applies to all transactions subject to the
Board's jurisdiction.
Thus, both FRA and STB are vested with authority to ensure
safety in the railroad industry. Each agency, however, recognizes
the other agency's expertise in regulating the industry. FRA has
expertise in the safety of all facets of railroad operations.
Concurrently, the Board has expertise in economic regulation and
assessment of environmental impacts in the railroad industry.
Together, the agencies appreciate that their unique experience and
oversight of railroads complement each other's interest in promoting
a safe and viable industry.
63 FR 72225-26. FRA believes that each agency's interpretation of its
statute is reasonable, reflects a plausible construction of the plain
language of the statutes, and gives effect to Congress' expressed
intent. Tyrrell, 248 F.3d at 523 (statutory construction that FRA has
primary authority over national rail safety policy and STB is
responsible for encouraging ``safe and suitable working conditions''
properly reflects Congress's purpose in enacting the Federal railway
laws).
FRA has ``primary jurisdiction, expertise and oversight
responsibility in rail safety matters' under 49 U.S.C. 20101 et seq.,
as delegated by the Secretary of Transportation to the Federal Railroad
Administrator at 49 CFR 1.49, and has the authority ``to issue
regulations to promote safety in every area of railroad operations and
reduce railroad-related accidents and injuries'' under 49 U.S.C. 20101
and 20102. 63 FR 72225. Specifically, 49 U.S.C. 20103 confers authority
on FRA to ``prescribe regulations'' ``for every area of railroad
safety,'' 49 U.S.C. 20103(a), and ``in prescribing regulations[,]'' FRA
``shall consider existing relevant safety information and standards.''
49 U.S.C. 20103(c). Congress intended that FRA would possess the
authority to regulate ``all those means of rail transportation as are
commonly included within the term * * * in addition to those areas
currently regulated.'' H.R. No. 91-1194, Federal Railroad Safety and
Hazardous Materials Transportation Control Act of 1970, Pub. L. 91-458,
reprinted in 1970 USCCAN 4104, 4114 (1970). In other words, Congress
authorized FRA to promulgate regulations to ensure railroad safety
after analyzing safety data.
A key element in the argument of the AAR and other commenters is
that, by approving a SIP, FRA is encroaching upon the STB's
jurisdiction, supposedly because approving a SIP is equated with
approving a transaction and because the NPRM states that the railroad
resulting from a covered transaction ``shall have an FRA approved
Safety Integration Plan before changing its operations to implement a
proposed transaction * * *.'' See proposed 49 CFR 244.21(a) at 63 FR
72241. These commenters have misinterpreted both FRA's intentions and
the meaning of the text. FRA has amended the text to eliminate the
possibility of interpreting it as giving FRA authority to approve a
transaction, and to clarify FRA's intentions. See the discussion of
Sec. 244.21(a) below. This change makes clear that FRA has no intention
of approving or disapproving or vetoing a transaction covered by this
part. FRA agrees that approving or disapproving a transaction covered
by this part is wholly within the jurisdiction of the STB. FRA's role
in the STB's process is an advisory one, providing expert advice to the
STB on safety issues presented by a transaction. As the STB said in the
NPRM, it relies upon FRA's safety expertise, and it is clearly in the
public interest that FRA make its expertise available to the STB.
On the other hand, regulation of ``every area of railroad safety''
is FRA's jurisdiction. In approving or disapproving a SIP under this
part, and enforcing one, FRA is regulating the safety aspects of how a
railroad implements a transaction permitted by the STB and not whether
the railroad is permitted to consummate the transaction or on what
economic terms. This is an appropriate exercise of the ``plenary safety
authority with respect to the safety of rail operations--before,
during, and after a transaction,'' which the AAR acknowledges that FRA
enjoys. AAR comments at 9. In that regard, approval of a SIP is no
different than approval of an engineer certification program under 49
CFR part 240. There is no question that a railroad must have an
engineer certification program approved by FRA and operate in
accordance with it at all times, whether or not the railroad is
involved in a transaction within the STB's jurisdiction. The
commenters' view would require a repeal by implication of some portion
of the Federal railroad safety laws (``safety laws''), 49 U.S.C. 5101
et seq. and 20101 et seq., to except from them railroad operations
conducted during implementation of transactions approved by the STB.
Such repeals by implication are strongly disfavored. See Tyrrell, 248
F.3d at 523. Here, there is obviously no need to infer any such repeal.
In FRA's view, it is necessary for safety purposes for the agency
to approve or disapprove SIPs to provide a baseline for enforcement.
First, FRA approval or disapproval denotes whether a railroad has
submitted a proposed SIP meeting the requirements of the rule. Upon
disapproval of a proposed SIP, FRA can take enforcement action if the
railroad does not change its SIP to bring it into compliance with the
law. Upon approval of a SIP, FRA can take enforcement action if the
railroad fails to implement the SIP. Absent FRA approval, it is hard to
see how FRA could take enforcement action in this arena.
FRA believes that the suggestion that FRA could veto a transaction
by disapproving a proposed SIP is a red herring because only the STB
can approve and veto a transaction. In any event, the standard set by
the rule for approval of a proposed SIP can easily be met by any Class
I or Class II railroad, and FRA cannot arbitrarily or capriciously
reject a SIP that meets the standard. If FRA disapproves a proposed SIP
because it fails to be thorough, complete, or clear, FRA must
articulate to the railroad what is missing or unclear. If FRA
disapproves a proposed SIP because it fails to describe a logical and
workable transition or because it is insufficiently detailed, FRA must
articulate how the proposed SIP is illogical or unworkable or lacking
in detail. In either of those cases, upon receiving FRA's reasons for
disapproval, a railroad can readily remedy its submission. In practice,
FRA will continue to work informally with railroads proposing a covered
transaction to assure that their proposed SIPs comply. It should be
easy for applicants to secure FRA approval of their proposed SIPs in
time for the Board's SEA to include the proposed SIP in the draft
environmental documentation for the STB proceeding. FRA has no interest
in blocking transactions and has a powerful interest in seeing that
transactions are implemented safely.
The text also makes clear that FRA is not prescribing any
particular way to implement covered transactions. Instead, FRA is
requiring the railroads involved to be thorough and logical, and to
maintain a reasonable assurance of safety at every step of the proposed
transaction.
Correspondingly, FRA recognizes that the STB is also vested with
authority to promote a safe rail transportation system in determining
whether a
[[Page 11587]]
proposed transaction should be permitted and, if so, on what economic
terms. As discussed in Tyrrell and in the NPRM, the rail transportation
policy (``RTP''), 49 U.S.C. 10101, which was adopted in the Staggers
Rail Act of 1980, Pub. L. 96-448, 94 Stat. 1895, and amended in the
Interstate Commerce Commission Termination Act of 1995 (``ICCTA''),
Pub. L. 104-88, 109 Stat. 803 (1995), provides the foundation for which
all of the statutory provisions the Board administers must be analyzed.
See Tyrrell, 248 F.3d at 522-23. The RTP provides, in relevant part,
that, ``(i)n regulating the railroad industry, it is the policy of the
United States Government * * * to promote a safe and efficient rail
transportation system'' * * * (by allowing rail carriers to) ``operate
transportation facilities and equipment without detriment to the public
health and safety * * *.'' 49 U.S.C. 10101(8). The STB applies the RTP
to all transactions within its jurisdiction, authorizing it to consider
the impact a merger, consolidation, or acquisition of control has on
safety of railroad operations. See Major Rail Consolidation Procedures,
STB Ex Parte No. 582 (Sub-No. 1), slip op. at 5 (STB served Mar. 31,
2000) (49 U.S.C. 10101, in part, directs the Board to ensure that
safety concerns are addressed in railroad merger cases).
FRA submits that the cases AAR cited are misplaced. Read together,
Schwabacher, ATDA, and City of Auburn stand for the proposition that
the STB and its predecessor, the Interstate Commerce Commission, have
exclusive authority to examine, condition, and approve mergers,
consolidations, or acquisitions of control. The statute at issue, 49
U.S.C. 11321 (formerly, 49 U.S.C. 11341), specifically exempts a
railroad from complying with all other laws to the extent ``necessary
to (let that railroad) carry out an approved transaction,'' ATDA, 499
U.S. at 134, thereby preempting any Federal or state law remedies. City
of Auburn, 154 F.3d at 1030. FRA's SIP rule will not impede or restrict
the Board in approving or rejecting a proposed transaction and, since
the STB contemplates requiring a SIP when it approves covered
transactions, a railroad could not logically assert that an exemption
from FRA's rule would be ``necessary to carry out an approved
transaction.'' Instead, the rule provides that FRA will determine
whether a SIP provides a reasonable assurance of safety for the subject
transaction and provide expert advice to the STB on safety issues
presented by a proposed transaction. The Board, in turn, will rule on
the application based in part on FRA's recommendations. This process
employs FRA's plenary authority over railroad safety and respects and
complements the Board's role of determining whether a transaction
should be approved. At bottom, FRA believes that it and the Board each
are fully exercising their respective statutory authorities by
examining a transaction for its safety aspects (FRA), and the impact
that safety has on an application as a whole (STB).
In FRA's view, the final SIP rule fulfills this objective. The rule
responds to critical safety shortcomings and errors in planning and
implementation of significant transactions that may have occurred in
the past where no SIP was prepared. FRA documented its concerns in the
NPRM by examining the difficulties of the BNSF and UP/SP mergers. See
63 FR 72227-28. To illustrate, after the UP/SP merger, five employees
were killed in accidents during the Summer of 1997, and employee
injuries rose nine percent in 1998. FRA determined that the BNSF and
UP/SP mergers faced significant challenges in harmonizing information
systems; training dispatchers; modifying operational practices and
procedures; implementing personnel policies directed toward safety;
determining appropriate staffing requirements; and providing adequate
rail facilities, infrastructure and rolling stock and equipment.
Likewise, FRA identified serious safety shortcomings in CSX
Transportation, Incorporated's (``CSXT''), and the Norfolk Southern
Railway Company's (``NS'') initial filings in the Conrail Acquisition
\1\ proceeding before the Board. The agency determined that the
railroads had not articulated a detailed plan explaining the manner in
which they individually and collectively intended to implement the
transaction, and thus they had not thoroughly assessed the safety
impacts of the proposed acquisition. As a result, FRA requested that
the Board require the carriers to provide information detailing how
they proposed to provide for the safe integration of their corporate
cultures and operating systems, if the Board were to approve the
proposed transaction. The Board agreed with FRA's suggestion and
directed the applicants to file detailed SIPs pursuant to guidelines
developed by FRA.\2\ The railroads complied with the STB's order and
after FRA approved the respective SIPs, the Board, concluding that
applicants had satisfactorily addressed the safety implementation
concerns presented by the transaction to date, approved the transaction
in 1998. Nevertheless, FRA, while monitoring the railroads'
implementation of their respective SIPs,\3\ has concluded that more
needs to be done, and that, among other things, the railroads should
address information technology problems resulting in a lack of
hazardous materials documentation on trains, and conduct more advanced
safety training of supervisory and operating personnel at designated
terminals to ensure adequate staffing and retention of institutional
knowledge. See Conrail Merger Surveillance: NS, CSXT, and CRCX Second
Safety Integration Plan/Safety Update, pp. 1-3 (June 23, 2000)
(hereinafter ``SIP Update''). In short, FRA believes, based on its
experience in recent cases, that ``mega-mergers,'' consolidations, or
acquisitions of control present safety challenges during
implementation, which are best remedied by requiring SIPs for these
complex transactions. FRA concludes that SIPs achieve a safety purpose
within the purview of 49 U.S.C. 20103, and thus are within FRA's
rulemaking authority. Tyrrell, 248 F.3d at 523 (FRA's responsibility in
the SIP joint rulemaking action focuses on rail safety matters); see
also Brown & Williamson, 529 U.S. at 134 (``if Congress has not
specifically addressed the (precise question at issue), a reviewing
court must respect the agency's construction of the statute so long as
it is permissible''); accord Oklahoma Natural Gas Company v. Federal
Energy Regulatory Comm'n, 28 F.3d 1281, 1283-84(D.C. Cir. 1994) (agency
is afforded Chevron \4\ deference in interpreting its statutory
authority); Western Coal Traffic League v. Surface Transportation
Board, 216 F.3d 1168, 1171 (D.C. Cir. 2000) (judicial review of
agency's statutory jurisdiction is premised on Chevron standards);
[[Page 11588]]
Transmission Access Policy Study Group v. Federal Energy Regulatory
Comm'n, 225 F.3d 667, 694 (D.C. Cir. 2000) (``it is the law of (the
D.C.) (C)ircuit that the deferential standard of Chevron applies to an
agency's interpretation of its own statutory jurisdiction'' (citing
Oklahoma Natural Gas)), affirmed sub nom. New York v. FERC, 2002 U.S.
LEXIS 1380 (U.S. Mar. 4, 2002). See generally Chrysler Corp. v. Brown,
441 U.S. 281, 302 (1979) (regulations issued by an agency must be
promulgated pursuant to statutory authority in which ``the grant of
authority contemplates the regulations issued'').
---------------------------------------------------------------------------
\1\ CSX Corporation and CSXT Transportation, Inc., Norfolk
Southern Corporation and Norfolk Southern Railway Company--Control
and Operating Leases/Agreements--Conrail Inc. and Consolidated Rail
Corporation, STB Finance Docket No. 33388 (hereinafter ``Conrail
Acquisition'').
\2\ Conrail Acquisition, STB Decision No. 52, served Nov. 3,
1997.
\3\ A detailed explanation of the SIP process in the Conrail
Acquisition, including the Memorandum of Understanding the Board
executed with FRA in establishing an ongoing monitoring process, is
set out in the NPRM at 63 FR 72228.
\4\ Chevron is shorthand for the landmark Supreme Court case
Chevron U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S.
837 (1984), which stands for the proposition that courts must defer
to an agency's interpretation of a statute, even if other statutory
constructions are more plausible, if the statute is silent or
ambiguous with respect to a specific issue.
---------------------------------------------------------------------------
C. FRA's Views on Issuance of a Final Rule v. Guidelines
The AAR commented that the SIP process is best employed through the
issuance of policy guidelines adopting the model procedures that were
used in the Conrail Acquisition and Canadian National Railway Company/
Illinois Central Railroad Company \5\ control transactions, and
embodied in the memoranda of understanding (``MOU'') between FRA and
the STB entered in these cases. See 63 FR at 72228. Under this
approach, the Board would determine when a SIP would be required for a
transaction within its jurisdiction.
---------------------------------------------------------------------------
\5\ Canadian National Railway Company, Grand Trunk Corporation,
and Grand Trunk Western Railroad Incorporated--Control--Illinois
Central Corporation, Illinois Central Railroad Company, Chicago,
Central and Pacific Railroad Company, and Cedar River Railroad
Company, STB Finance Docket No. 33556 (STB Decision Nos. 5 and 6,
served June 23, 1998, and Aug. 14, 1998) (hereinafter ``CN/IC'').
---------------------------------------------------------------------------
The AAR based its position on three points. First, this approach
would ensure that each agency would respect each other's division of
authority and role in overseeing the SIP process. Second, an MOU would
offer the flexibility for an applicant to meet changing customer needs
and market opportunities, such as staffing levels reached through
collective bargaining agreements (``CBAs''), infrastructure
improvements for highway-grade crossings, and designating repair
facilities and computer software operating systems. Finally, a rule
along the lines suggested by the NPRM would, according to AAR,
represent government micromanagement of rail operations and
implementation programs and could potentially delay integration,
leaving an applicant at a competitive disadvantage with other
railroads.
FRA respectfully disagrees with the AAR's proposal. The agency
believes that the issuance of final rules ensures that all applicants
seeking to consummate a regulated transaction will execute a SIP and
complete the SIP process as enunciated in the rules. These final rules
codify the prescribed requirements and stake out the legal landscape
for regulating complex railroad transactions. See Attorney General's
Manual on the Administrative Procedure Act 14-15 (1947) (``(t)he object
of [a] rulemaking proceeding is the implementation or prescription of
law or policy for the future * * *.''). In other words, the rules will
prescribe substantive and procedural standards that will govern each
application filed with the STB to carry out a transaction and the
safety of operations during implementation of transactions the STB
approves. Cf. the Administrative Procedure Act, 5 U.S.C. 551(4), which,
in part, defines a rule as ``the whole or part of an agency statement
of general or particular applicability and future effect designed to
implement, interpret, or prescribe law or policy.'' FRA believes that
the SIP process should be mandatory in large mergers, acquisitions of
control, and consolidations cases because of the unique nature of the
transactions involved and the complexity of safely integrating
operations that are part and parcel of the transactions.
On the other hand, guidelines are simply recommendations issued by
an agency that do not prescribe or mandate any standards on the
regulated community. See Industrial Safety Equipment Ass'n, Inc. v.
EPA, 837 F.2d 1115 (D.C. Cir. 1988). Rather than impose a regimen for
conduct or action, guidelines do not ``change any law or official
policy presently in effect,'' id. at 1119-21, nor do they ``implement,
interpret, or prescribe law or policy.'' 5 U.S.C. 551(4); see also
National Ornament & Elec. Light Christmas Ass'n v. Consumer Product
Safety Comm'n, 526 F.2d 1368 (2d Cir. 1975). Without sufficient
``effect'' to regulate conduct, guidelines have an ``advisory
character'' without any firm commitment to law or policy. FRA believes
that the issuance of guidelines would preclude the agencies from
mandating standards or binding applicants to meet these requirements,
creating an illusion of adequate safety oversight. FRA, like the Board,
is committed to safe integration of complex railroad transactions and
believes that these rules can best achieve that objective.
FRA also maintains that these rules enable the agencies to
articulate interpretations of their respective statutes and reconcile
them effectively, thereby preserving and recognizing each agency's
authority to regulate aspects of these transactions. See Tyrrell, 248
F.3d at 523. The joint rules ensure that the agencies' roles and
responsibilities complement each other in establishing SIP procedures
and standards, and complete the rulemaking process announced in the
NPRM. Lastly, the final rules will provide uniformity in regulating
SIPs and preempt other efforts to regulate the safety of implementing
transactions. FRA concludes that the issuance of rules is the most
effective instrument in defining each agency's function in the SIP
process and requirements a railroad must satisfy for transactions that
warrant a SIP.
Concurrently, FRA takes issue with the reasons supporting the AAR's
recommendation. First, as previously explained, the final rules cement
the division of authority and prescribe textual interface between the
agencies in regulating SIPs. Next, FRA believes that the SIP contents
and subject matter areas capture the operations that are affected by a
complex transaction. Although an applicant may propose a flexible plan
to address these topics, the SIP elements themselves should not be
compromised to ensure a safe transition of operations.
Finally, FRA rejects the notion that the rules represent government
micromanagement of rail operations and implementation programs. The
premise of the rules focuses on an applicant's preparation, issuance,
and implementation of a plan that provides safe integration of rail
operations. FRA's and the STB's individual and collective roles are to
review and approve the railroad's SIP, and monitor its implementation.
The agencies' oversight is to ensure that the SIP provides a reasonable
assurance of safety. It is not to ``second guess'' the proposed
migration or deployment of resources necessary to carry out a plan.
Therefore, FRA characterizes its role as that of a ``gatekeeper'' to
cross-check the SIP and its implementation against the safety aspects
in integrating operations.
D. FRA's Views on Issues Involving the Framework of the Joint Final
Rules
FRA received several comments from interested parties about the
framework of the proposed SIP rules. The comments focused on two
issues-scope and applicability of the joint rules, and the approval and
disapproval process of an application.
FRA proposed to require certain railroads seeking to merge,
consolidate, or acquire control of another railroad, or ``start-up''
operations as a railroad to file proposed SIPs with FRA before
[[Page 11589]]
consummating the regulated transaction. The NPRM proposed covering the
following transactions: (1) A Class I railroad, a railroad providing
intercity passenger service such as Amtrak, or a commuter railroad
seeking to acquire, merge, or consolidate with a Class I or Class II
railroad, a railroad providing intercity passenger service, or a
commuter railroad; (2) a Class II railroad proposing to consolidate,
merge, or acquire another Class II railroad with which it connects so
as to involve the integration of operations; (3) any merger,
consolidation, or acquisition resulting in operations that would
generate revenue in excess of the Class I railroad threshold, except
those transactions involving Class III freight only railroads; and (4)
all start-up operations involving the establishment of a new line for
passenger or freight service generating revenue that would exceed the
Class II railroad threshold. Correspondingly, the Board proposed
covering all transactions addressed in FRA's NPRM with the exception of
``start-up'' operations.
The AAR, Amtrak, and OK DOT commented that the STB lacks
jurisdiction to regulate Amtrak or commuter railroads, citing 49 U.S.C.
10501(c) and Norfolk & Western Railway Company-Petition for Declaratory
Order-Lease of Lines, STB Finance Docket No. 32279 (STB served February
3, 1999), for the proposition that the Board may not regulate any mass
transportation provided by any local governmental authority, and
arguing that the Amtrak Reform and Accountability Act of 1997, Pub. L.
105-134, 111 Stat. 2570, 2585, amending 49 U.S.C. 24301(c)(1)(C),
prohibits the Board from regulating Amtrak. Accordingly, the commenters
recommended that the scope of the joint rules be curtailed.
FRA agrees that the scope of the joint rules should be narrowed to
cover unique complex transactions. After considering the comments, the
agency has determined that acquisitions, consolidations, or mergers
involving large railroads present transactions of significant size and
complexity that warrant a SIP. These transactions generally involve
substantial changes in railroad operations that impact effective
communications, coordination, and execution of operations, i.e., all
aspects of safety. The final rules narrow the scope and applicability
sections to capture these significant transactions because of the
correlation between complexity of large rail entities and operational
safety. As a result, the joint final rules only apply to transactions
in which a Class I railroad proposes to merge, consolidate with, or
acquire control of another Class I railroad or a Class II railroad with
which it also proposes to amalgamate operations.
Some of the comments addressed each agency's independent approval
process for a SIP, and any amendments thereto. The TTD endorsed the
proposed two-step disposition process in which FRA and then the Board
would review and approve a proposed SIP before an applicant could
consummate a transaction. The AAR disagreed, claiming that FRA is
without the authority to sanction a transaction that is within the
STB's jurisdiction.
FRA believes that the safe transition of integrating operations is
best achieved when FRA and the STB work together using their respective
jurisdictions. As discussed above and in the NPRM, FRA enjoys primary
jurisdiction, expertise, and oversight responsibility in railroad
safety matters and is best positioned to ensure that a plan will comply
with the safety laws and otherwise provide for safe railroad
operations. See Canadian Pacific Limited, et al.--Purchase and Trackage
Rights--Delaware & Hudson Railway Company, STB Finance Docket No.
31700, slip op. at 1, 5 (served Mar. 2, 2000) (hereinafter ``CP
Purchase'') (FRA entitled to ``great weight'' in identifying potential
safety problems before STB imposes conditions on a transaction). At the
same time, the Board, which has expertise in economic regulation and
assessment of environmental impacts in the railroad industry, Tyrrell,
248 F.3d at 523, considers safety in the transactions that it
regulates. Id. (STB's ``duty [is] to encourage ``safe and suitable
working conditions'' for railway employees through its assessment of
individual railway proposals subject to its authority''). FRA believes
that these final rules meet the safety objectives of both agencies
while interpreting their respective jurisdictions in a complementary
way that is in the public interest.
E. Foundation of FRA's Final Rule
FRA received comments from three interested parties about the
elements set out in the proposed rule. Generally, the labor
organizations supported the subject matter areas contained in the
regulatory text because they addressed the ``four adequates''--adequate
work force, adequate training, adequate rest, and adequate familiarity
with the subject territory. In fact, the TTD went further, contending
that an applicant should detail information in the subject matter areas
that are required in a SIP to prevent a railroad from pledging vague
commitments in filing a plan.
The AAR, however, objected to the proposed rule's SIP elements on
two grounds. First, the AAR asserted that the subject matter areas go
beyond the scope of assuring safe integration. The AAR maintained that
a SIP should center on railroad lines that will experience changes in
motive power and equipment, signal and train control, dispatching
operations, highway-rail grade crossings, personnel staffing, capital
investment, and relationships between freight and passenger service;
and changes in operations or traffic volume that will affect a
railroad's systems or programs. These requirements, the AAR posited,
should be captured in a SIP to enable FRA to review an applicant's
practices and procedures to ensure that they provide a ``reasonable
assurance of safety.'' The AAR added that the proposed SIP rules impose
new standards on the railroad industry that are not required under the
existing regulations and serves as a ``back door'' vehicle for issuing
substantive regulations that impact selected transactions. These rules,
the AAR reflects, impose new burdens, costs, and delays on an
applicant, which leaves it at a competitive disadvantage with other
railroads.
FRA agrees in part and disagrees in part with the AAR's comments.
The agency has amended the subject matter areas in its proposed rule to
require an applicant to focus its SIP on changes in railroad operations
during the integration phase. The agency believes that a plan must
analyze the major changes that will occur as railroads subject to a
regulated transaction integrate their operations from commencement to
completion. Advance planning will require an applicant to consider the
nature of operations involved in the transaction and the migration or
transition from two or more entities to one entity. The final rule
satisfies these concerns.
FRA disagrees with AAR's characterization that the SIP rules are a
``back door'' approach to regulating subject matter areas that are not
already covered under the existing regulations. The integration of very
large and complex railroad operations present safety hazards not found
(or not found to a degree sufficient to merit regulatory attention)
either before a transaction or after operations have been successfully
integrated. It is entirely appropriate for FRA to address those hazards
in the limited context in which they are found. For example,
integrating the operations of two railroads will usually require
choosing a set of operating rules that differ in important respects
from the operating rules used by one of the
[[Page 11590]]
railroads. The employees of that railroad will have to be trained in
the new operating rules and will have to overcome the bias common among
railroaders that the railroad on which they started had the best way of
running a railroad.
There are several essential tasks that affect railroad safety,
e.g., training, qualifications, fatigue, hazardous materials inspection
programs, and information system compatibility. Failing to address such
issues adequately can jeopardize railroad safety, as some recent
mergers have demonstrated. FRA believes that UP/SP, for instance, faced
increased exposure to accidents, injuries, and fatalities as overworked
officials and employees encountered workforce reductions, inadequate
infrastructure and equipment, and service delays and disruptions.
Between June 22 and August 31, 1997, UP/SP experienced five major train
collisions that resulted in the deaths of five UP/SP employees and two
trespassers. These accidents were in addition to a series of yard
switching accidents that claimed the lives of four UP/SP train crew
employees. In connection with the UP/SP merger, for example, FRA
launched a comprehensive review of UP/SP's operations, including its
dispatching operations. FRA observed inefficient and unsafe practices
by supervisors and dispatchers caused by inadequate training and work
overload. FRA made specific recommendations, which UP/SP accepted, such
as creating additional dispatch operations, realigning dispatcher
territories to better balance the workload, hiring new dispatchers,
tripling the number of dispatching supervisors, making improvements to
the software in UP/SP's CAD computer system, and forming a working
group consisting of representatives of FRA, rail labor, and UP/SP
management to continually monitor and address dispatching issues that
may arise. As a result of FRA's effort, UP/SP's safety performance
recovered rapidly; UP/SP's fatalities due to train collisions dropped
from seven in 1997 to none in 1998.
Similarly, FRA believes that most of the other recent mergers
involving Class I railroads had safety integration problems. The BNSF
merger, for example, resulted in the merged entity having incompatible
electronic database systems used by BN and ATSF. This incompatibility
resulted in terminal offices generating and transmitting inaccurate and
incomplete train consist lists and waybills, which compromised the
safety of train crews transporting the shipments. Even at a very simple
level, BN and ATSF each had locomotives bearing the same number; this
problem was not addressed before integrated operations began, resulting
in dangerous confusion for dispatchers and train crews. In NS's and
CSXT's acquisition of Conrail, both railroads also grappled with
information technology shortcomings in preparing hazardous materials
shipping papers, and training deficiencies in the computer software
programs and the safety laws.
Based on observation, professional experience and judgment, and
empirical evidence, FRA believes that there is a nexus between safe
integration of large railroads and the subject matter areas identified
in the SIP rule. Although filing a SIP will involve certain costs,
burdens, and delays, FRA reasons that the safety benefits that will
result from the SIP process outweigh these impediments.
Finally, there was some confusion within the regulated community
that the SIP rules would impose explicit standards for the elements the
railroads would have to address in their SIPs. FRA therefore clarifies
that its rule only requires a railroad to identify measures, efforts,
commitments, and targeted completion dates that it will take to
completely integrate those elements identified in Sec. 244.13. See
Sec. 244.11 for the contents required in a SIP. FRA's review and
approval is predicated on whether the details in executing the elements
in the plan provide ``a reasonable assurance of safety.'' 49 CFR
244.19. As enunciated in the NPRM, FRA reiterates that:
[I]t has no intention of operating the railroad or questioning
management decisions implementing the SIP. Instead, the agency sees
it[s] role as conducting a rational basis review of the SIP, meaning
that the plan must be reasonable.
63 FR 72234. Provided that the SIP comprehensively explains how an
applicant intends to proceed from commencement to completion in
executing a transaction, FRA will approve the plan, contingent upon
fulfillment of the elements enunciated in the plan and execution of
those operations. In summary, a SIP must provide for the safety of
operations, systems, practices, and programs that are identified in
FRA's final rule before FRA will approve the plan.
FRA's Section-by-Section Analysis of Its Final Rule
The final rule contains significant changes from the proposed rule
in response to the written comments received, the testimony at the
public hearing, and further review and reflection within FRA. This
section of the preamble explains the changes made in the final rule to
the provisions of the NPRM. FRA informs interested parties that this
section focuses on the specific requirements of FRA's proposed and
final rules as applied to the coextensive authority of the STB to
regulate the transactions identified, and respectfully refers the
regulated community to the agency's Section-by-Section Analysis of the
NPRM for a full discussion of those aspects of the proposed rule that
remain unchanged in the final rule. See 63 FR 72228-35.
Subpart A--General
Section 244.1--Scope, Application, and Purpose
Proposed rule: FRA proposed that a railroad seeking to consummate
certain discrete transactions would be required to file a SIP. Section
244.1(a)(1) proposed that a Class I railroad, a railroad providing
intercity passenger service, or a commuter railroad seeking to acquire,
merge, or consolidate with a Class I or Class II railroad, a railroad
providing intercity passenger service, or a commuter railroad would be
subject to this part. The rule further proposed that a Class II
railroad applying to acquire, consolidate, or merge with another Class
II railroad with which it would connect so as to involve the
integration of operations would also be required to file a SIP.
Additionally, part 244 would apply to any merger, consolidation, or
acquisition, excluding a transaction involving a Class III freight-only
railroad, that would result in operations generating revenue in excess
of the Class I railroad threshold, and all start-up operations as
defined in Sec. 244.9.
Paragraph (b) of this section explained that the proposed rule was
designed to mandate that a railroad detail a plan before it would
merge, consolidate, or acquire another railroad to ensure that safety
interests were advanced before integrating operations of complex
transactions. Section 244.1(c) informed the regulated community that
part 244 applied only to FRA's disposition of an application filed
pursuant to this part, and did not apply to the STB's rules, 49 CFR
part 1106, governing transactions under the STB's authority.
Comments: FRA received several comments addressing a wide range of
views on the proposed scope of the SIP rule. The AAR recommended that
the rule should cover only Class I--Class I or Class I--passenger
operations transactions because of the magnitude and complexity of
these transactions and the lack of evidence that the other proposed
transactions demonstrated a compromise to railroad safety. The ASLRRA
and W&L suggested that the
[[Page 11591]]
rule regulate only Class I transactions given that Class II railroad
operations are less complex than their Class I counterparts, e.g.,
lower volume, slower speeds, shorter consists, and more condensed
networks, and the weight of the evidence shows that only Class I
railroads need to be regulated. The ASLRRA and W&L added that Class II
railroads should be regulated on an ad hoc basis and that the proposed
coverage of start-up operations should be dropped. Amtrak commented on
start-ups as well, expressing its position that a SIP should only be
required when a start-up involves a new railroad and not existing
railroads commencing operations over newly constructed track. APTA
opined that the rule should not apply to start-ups covering existing
commuter railroads that commence operations over newly constructed
track or extending service on existing track.
Conversely, the BMWE, BRC, and TTD suggested that the scope of the
rule be expanded to cover Class II and Class III railroads. The BRC,
for instance, asserted that although Class III railroads present less
complex operations than their Class I counterparts, shortline railroads
use less sophisticated roadway equipment and track maintenance
practices because of their lower revenue base, and employ workers who
may not understand the complexities of Class I rail traffic control
systems with which they interchange. The TTD supported its position by
claiming that shortline railroads lack sufficient capital resources,
training requirements, and staffing levels to execute transactions, and
that these railroads have higher casualty and accident rates than Class
I railroads.
Final Rule: Having considered the entire spectrum of comments, FRA
believes that the SIP rule should apply only whenever a Class I
railroad proposes to merge with, consolidate with, or acquire control
of another Class I railroad or a Class II railroad with which it also
proposes to amalgamate operations. The agency has re-examined the
anecdotal and empirical evidence and determined that there is a
correlation between large-scale transactions and compromises to
railroad safety in the absence of advance planning and the preparation
of a SIP. As the recent UP/SP and BNSF mergers illustrated, large-scale
transactions present unique challenges in operations that can affect
the resulting carrier's ability to conduct business while complying
with the safety laws. (Indeed, CSXT and NS may have experienced the
same shortcomings in the Conrail Acquisition had FRA and the STB not
required the railroads to file individual SIPs addressing a systematic
plan that assessed the safety effects of the transaction and explaining
the manner in which they intended to implement the transaction.)
Integrating cultures and differing work rules, migrating work forces,
deploying capital resources, and adopting information systems are
initial steps that must be planned before consummation and implemented
during integration to ensure the safety of railroad employees and the
public, and the protection of the environment. Therefore, to combat
safety and operational problems associated with complex transactions,
FRA is requiring a SIP for Class I--Class I transactions and Class I--
Class II transactions when there is an amalgamation of operations. The
agency believes that advance safety planning by an applicant will
promote safety of its lines and minimize exposure to unnecessary
accidents, incidents, injuries, or fatalities.
Although FRA recognizes that transactions not involving Class I
railroads (e.g., Class II railroads, passenger railroads, and start-
ups) can be sophisticated operations, the agency has decided to
withhold regulating these transactions for the time being.
Nevertheless, FRA reserves the right to revisit the scope section
should evidence or experience warrant expanding the reach of the SIP
rule.
FRA also notes that paragraph (b) of this section has been modified
from the proposed regulatory text to read, ``This part does not
preclude a railroad from taking additional measures not inconsistent
with this part to provide for safety in connection with a
transaction.'' The meaning and application of this paragraph, however,
remains unchanged.
Section 244.3--Preemptive Effect
Proposed Rule: FRA proposed this section to inform the public of
its views regarding the preemptive effect of the proposed rule. The
rule would provide that 49 U.S.C. 20106 preempts any State regulatory
agency rule covering the same subject matter as the regulations
proposed with the exception of a provision directed at an essentially
local safety hazard.
Comments: The AAR commented that FRA's reading of the preemption
provision of the safety laws is incompatible with the STB's exclusive
jurisdiction over economic regulation of railroads.
Final Rule: The final rule adopts the proposed rule in full. (The
AAR's comments and FRA's response are discussed in the preamble above.)
Section 244.5--Penalties
Proposed Rule: FRA proposed Sec. 244.5 to identify the penalties
that the agency may assess upon any person, including a railroad or
employees of a carrier, that violated any requirement of this part. The
provision would provide that any person who violates any requirement of
this part or causes the violation of any such requirement is subject to
a civil penalty of at least $500 and not more than $11,000 per
violation, and FRA may assess a penalty of up to $22,000 per violation
where a grossly negligent violation or a pattern of repeated violations
creates an imminent hazard of death or injury to persons, or causes
death or injury. Each day would constitute a separate offense, and the
agency could assess civil penalties against individuals for only
willful violations of this part. Criminal penalties would be available
for persons knowingly and willfully falsifying entries or reports
required by the SIP rule.
Paragraph (b) of this section would authorize FRA to exercise any
of its other enforcement remedies available under the safety laws if an
applicant failed to comply with this part. For instance, FRA could
issue an emergency or compliance order or seek the issuance of a
mandatory or prohibitory injunction should a railroad violate
Sec. 244.21.
Comments: Two parties commented on this section. The TTD suggested
that the agency clarify the penalty provision to reflect that an
individual may be subject to the maximum penalty under the safety laws.
The AAR restated its jurisdictional argument that was discussed
earlier, asserting that FRA lacks the authority to assess penalties
against an applicant, and that conditions or remedies imposed by the
STB, such as a cease and desist order, would suffice to address a
noncomplying condition.
Final Rule: FRA adopts the proposed rule in full. FRA refers the
TTD to the definition of ``person'' contained in Sec. 244.9, which
covers individuals such as managers, supervisors, officials, or other
employees or agents of a railroad, and independent contractors
providing goods or services to a railroad. As explained earlier in the
preamble, the agency believes that the safety laws authorize the
issuance of this final rule and its penalty provisions. FRA further
reasons that enforcement is a necessary and effective tool to promote
compliance with the safety laws. Such enforcement actions include
assessing civil penalties, issuing compliance, disqualification, or
emergency orders,
[[Page 11592]]
seeking equitable remedies in Federal court, or referring selected
incidents to the Department of Justice for criminal investigation and
prosecution. In the SIP rule, these sanctions are necessary to ensure
that applicants obtain agency approval of a proposed SIP before
implementing a regulated transaction, and execute all measures provided
in an approved plan. FRA approval or disapproval of a SIP serves as a
baseline for enforcement. Should the agency disapprove of a SIP or
portions thereof, this provision provides various remedies if the
railroad does not change its SIP to bring it into compliance with the
law. Likewise, FRA can take enforcement action if the railroad fails to
implement specific requirements of an approved SIP that currently exist
under the safety laws. In summary, FRA believes that this section will
ensure compliance with the SIP rule by identifying the legal and
equitable remedies available.
At this time, FRA has decided not to include a schedule of civil
penalties for this rule. The agency received no comments from
interested parties about the appropriate penalties corresponding to the
sections violated in the rule. Therefore, FRA will reserve Appendix A
to 49 CFR part 244 until further notice. Because such penalty schedules
are statements of policy, notice and comment are not required before
their issuance. See 5 U.S.C. 553(b)(3)(A).
Section 244.7--Waivers
Proposed Rule: Proposed Sec. 244.7 would provide the procedures for
seeking a waiver of compliance with the requirements of the SIP rule.
Any railroad subject to part 244 could petition for such a waiver, and
FRA would conduct its own independent investigation to determine
whether an exception to the general criteria existed to warrant
granting the waiver, provided that the waiver would not compromise or
diminish rail safety.
Comments: The AAR suggested that FRA's waiver provision be modified
to meld it with the STB's waiver provision.
Final Rule: The proposed rule is adopted with the addition of
paragraph (d). FRA believes that its rule text is closely aligned with
the STB's counterpart, but informs interested parties that its waiver
provision governs only FRA's disposition of a petition for a waiver. An
applicant must still seek a waiver from the STB to be free and clear of
any SIP requirements under 49 CFR parts 244 and 1106. This caveat is
spelled out in paragraph (d) of this section.
Of special note, FRA informs applicants that a petition for a
waiver in which a Class I railroad seeks to consummate a transaction
with a small Class II railroad with which it proposes to amalgamate
operations may be received more favorably than a waiver request in a
transaction involving two Class I railroads. Presently, FRA intends to
focus its energies on monitoring transactions involving Class I and
large-scale Class II railroad operations, e.g., the Canadian National
Railway Company's acquisition of the Wisconsin Central Transportation
Corporation,\6\ where it believes systemic operating deficiencies are
most likely to manifest themselves during the integration phase if no
SIP is prepared and implemented. Although transactions involving
smaller-scale Class II railroads may present safety challenges, FRA
opines that not every merger, consolidation, or acquisition covered in
this rule should face a comprehensive SIP review. Rather, FRA invites
applicants seeking to execute less complex transactions to petition for
a waiver of this rule's requirements. FRA will then review the petition
on an ad hoc basis and may grant it should the agency determine that it
is in the public interest and is consistent with rail safety.
---------------------------------------------------------------------------
\6\ A SIP was prepared and adopted in that case. See Canadian
National Railway Company, et al.--Control--Wisconsin Central
Transportation Corporation, et al., STB Finance Docket No. 34000, 66
FR 23757 (May 9, 2001) (STB Decision No. 2, served May 9, 2001) (STB
order mandates the preparation of a SIP) (hereinafter ``CN/WCTC'');
and CN/WCTC, STB Finance Docket No. 34000 (STB Decision No. 10,
served Sept. 7, 2001) (STB adopts the SIP and approves the
transaction).
---------------------------------------------------------------------------
FRA reminds the regulated community that it reserves the right to
impose any conditions as it believes are necessary to promote rail
safety. The agency further advises that it has plenary authority to
approve or reject a petition for a waiver of this rule, and its
decision is ``agency discretion by law.'' 5 U.S.C. 701(a)(2); see also
Heckler v. Chaney, 470 U.S. 821 (1985).
Section 244.9--Definitions
Proposed Rule: The NPRM proposed an extensive set of definitions
that would introduce the regulations. As FRA explained in the proposed
rule, the definitions were issued to clarify the meaning of important
terms as employed in the rule text and were designed to minimize any
possible misinterpretation of the rule. Because the commenters only
responded to two proposed definitions, FRA will focus on these terms.
The agency refers interested parties to the NPRM for a complete
recitation of the meaning and application of those definitions that are
adopted as proposed. See 63 FR 72230.
FRA proposed defining ``corporate culture'' to mean the attitudes,
commitments, directives, and practices of railroad management with
respect to safe railroad operations. The concept was to cover a
railroad management's attitudes, directives, planning and resource
allocations when safety was at issue. ``Best practices'' was defined to
mean the safest and most efficient rules or instructions governing rail
operations that a railroad issued.
Comments: FRA received two comments on ``corporate culture.'' The
AAR represented that the definition as applied could not be quantified
in an objective fashion to place an applicant on notice about the
measures that must be taken to comply with this element. At the same
time, the BMWE wanted to expand the definition to include modifications
or changes to CBAs that were not negotiated under the Railway Labor Act
that the applicants wished to have the STB impose under the authority
of 49 U.S.C. 11321 (commonly referred to as ``cram downs''). See 49
U.S.C. 11324(c).
The AAR also questioned the definition of ``best practices,''
asserting two reservations. First, the AAR asserted that the clause
``railroad industry standards'' is code for FRA practices. Second, the
railroad organization claimed that the proposed definition invited the
agency to formulate business decisions. In response, the AAR
recommended qualifying the definition to permit an applicant to select
the ``best practices'' of the parties that are subject to the
transaction, which would best promote the safety interests.
Final Rule: FRA amends the proposed definitions. ``Corporate
culture'' is now defined as ``the totality of the commitments, written
and oral directives, and practices that make up the way a railroad's
management and its employees operate their railroad.'' The notion is to
capture the business directives issued by a railroad's management and
the practices implementing these directives by labor to encompass a
wide range of field operations. These activities include the
formulation, development, issuance, and execution of measures and
programs related to safe railroad operations that involve consultations
between railroad management and railroad employees. The heart of the
safety issue involved is that FRA has observed (1) that a railroad
tends to operate more safely when all of its employees understand that
the railroad has a defined way of operating and comply with it and (2)
that employees coming from different railroads will
[[Page 11593]]
tend to continue to do their jobs as they learned them on their first
railroad until they are taught to operate differently. This part of the
rule is intended to get the railroads subject to a covered transaction
to observe their differences, choose how the resulting railroad is to
operate, and assure that their employees adopt the chosen culture. FRA
does not intend to impose its own choice of corporate safety culture,
but insists that the railroad choose and implement its choice.
FRA grappled with ``corporate culture'' in light of the AAR's
comments about how objectively the agency could apply its meaning in
evaluating a proposed SIP, and in light of BMWE's suggestion that it be
expanded to include ``cram downs.'' FRA believes that ``corporate
culture'' quantifies sufficient elements to provide for meaningful and
objective agency review, and given the spirited debate over cram downs,
and the recent settlement among most Class I railroads and labor
organizations representing most rail employees, including the BMWE, on
the issue of CBA overrides, FRA cannot adopt the BMWE's suggestion that
cram downs be considered a part of the definition of corporate culture.
``Best practices'' is modified to read those ``measures that are
tried, tested, and proven to be the safest and most efficient rules or
instructions governing railroad operations.'' This amended definition
incorporates the change recommended by the AAR. To reiterate, FRA does
not intend to substitute its judgment for that of a railroad in
determining which legally permissible safety and efficiency measures to
use, but instead will defer to a railroad's construction and
application of its operating rules and practices that promote these
interests. Put another way, the agency believes that the railroad has
the prerogative in identifying the best practices to be employed within
the law.
Subpart B--Safety Integration Plans
Section 244.11--Contents of a Safety Integration Plan
Proposed Rule: FRA proposed Sec. 244.11 to frame the structure of a
SIP that a railroad must file. The section would require an applicant
to prepare a roadmap or playbook detailing the practices and
procedures, financial commitment, and timetable for integrating or
commencing field operations identified as subject matter areas under
Sec. 244.13. In particular, the NPRM would require a plan to propose a
timetable from commencement to completion to implement the transaction.
Comments: Only one interested party commented on this section. The
AAR generally agreed with FRA's proposal with one exception. The
railroad organization opposed the timetable provision in paragraph (f)
because it was perceived as being too rigid to afford flexibility in
reaching proposed milestones in the plan. The AAR countered with its
own textual proposal to require a general overview of steps and order
in which the steps would be implemented.
Final Rule: The rule is adopted as proposed with minor textual
changes and paragraphs (c)-(e) redesignated as paragraphs (d), (e), and
(c), respectively. Paragraph (a) replaces the conjunctive clause ``and
the best practices of these railroads'' with ``including the rules or
instructions governing railroad operations of these railroads,'' and
paragraph (b) adds the text ``including a reconciliation of the
differing rules or instructions governing railroad operations of the
railroads involved in the transaction'' at the end of the provision to
narrow the scope of the information on integrating operating practices
a SIP must provide. Paragraph (f) inserts the word ``targeted'' in lieu
of ``stated'' to enable an applicant to set benchmarks for completing
the specified elements. FRA understands the dynamics of assimilating
disparate operating practices and procedures and recognizes the
flexibility needed to achieve their integration. The change of the
operative word ``stated'' to ``targeted'' thus assuages the AAR's
concern. FRA intends to hold a railroad accountable for conducting
front-end planning measures and executing the same within identified
milestones to complete the integration of operations.
FRA believes that the final rule should delineate the SIP contents
and SIP subject matter areas as separate regulatory functions. The
contents provision provides the basis for identifying and addressing
the subject matter areas and facilitates a well organized plan that
will articulate the execution and implementation of these elements.
Section 244.11 best exemplifies the roadmap or playbook concept
necessary to address the subject matter areas provided in Sec. 244.13.
Accordingly, the section's regulatory heading and introductory text
remain unchanged.
Section 244.13--Subjects To Be Addressed in a Safety Integration Plan
Involving an Amalgamation of Operations
FRA received several comments expressing a wide variety of opinions
about the contents of Sec. 244.13. To improve the flow of this
analysis, each paragraph will be treated as a separate section,
summarizing the proposal, comments, and final rule. FRA refers
interested parties to the NPRM's Section-by-Section Analysis for the
background of the elements identified in this section, and the
justification for requiring these subject matter areas for transactions
that involve an amalgamation of operations. Because FRA received no
comments about the basis for or scope of proposed Sec. 244.13, the
introductory text of the regulation is adopted as proposed.
Section 244.13(a)--Corporate Culture
Proposed Rule: FRA proposed paragraph (a) to require an applicant
to explain the basis for its safety culture. Specifically, the
regulation would require a railroad to identify and describe
differences in corporate cultures for each safety-related area;
describe how these cultures lead to different practices governing rail
operations; and explain how the proposed integration of corporate
cultures would result in a system of `best practices' when the proposed
transaction was implemented.
Comments: Management and labor organizations commented on the
``corporate culture'' provision. APTA wanted ``corporate culture'' to
address the safety of passenger operations, and the TTD suggested that
a railroad detail similarities and differences in corporate culture to
avoid issuing ``boilerplate language'' in its proposed SIP.
Concurrently, the AAR agreed with the proposed rule text because it
provided sufficient flexibility in accounting for different
organizational structures, styles, and operations.
Final Rule: The proposed rule is adopted with revisions to
Sec. 244.13(a)(1), and (3). Subparagraph (1) is refined to mandate that
an applicant ``(i)dentify and describe differences for each safety-
related area between the corporate cultures of the railroads involved
in the transaction(,)'' and subparagraph (3) is changed to read that
the railroad must ``(d)escribe, in step-by-step measures, the
integration of these corporate cultures and the manner in which it will
produce a system of `best practices' when the transaction is
implemented.'' These provisions draw a closer nexus between safety and
corporate culture
[[Page 11594]]
than the proposed rule and require a railroad to detail the incremental
measures it will take to integrate disparate cultures that will
culminate in adopting safe and efficient standards governing railroad
operations.
As FRA explained in the proposed rule, safety culture is an
instrumental element in achieving rail safety. Acquisitions,
consolidations, and mergers of large rail operations are complicated
transactions that require a railroad to adopt an operating structure
that underscore safety and good communications among management,
employees, and the employees' union representatives. Such a structure
should unify the different cultures under which railroads operate that
draw upon the best practices of each to facilitate the formulation,
development, issuance, and implementation of safety practices and
procedures within a seamless merged company.
To carry out this task, an applicant needs to describe how it will
successfully integrate the underlying priorities, practices, and
philosophies while implementing the transaction. For example, UP
recently published a three-step directive to its officials. First, the
railroad indicated that it would focus, in part, on adequate staffing
levels and predictable work schedules. Second, it would direct its
attention to values, leadership development, training, and quality.
Finally, the railroad pledged that it would build a new relationship
with its employees. At the same time, NS has established a culture that
elevates training, professionalism, commonality of purpose, and rules
compliance to achieve safety on its railroad. NS has acknowledged that
rules compliance is most fundamental to avoid accidents or incidents,
and has stressed effective communications between management and the
rank-and-file workers to implement this measure. CSXT has amplified the
importance of safety culture by establishing a cooperative program
comprising management officials and labor union members that educates,
counsels, and improves the performance of safety-sensitive employees
who commit operating rules violations, and instituting safety culture
offices that ensure that safety is foremost in job performance. See SIP
Update at 22.
At bottom, FRA posits that it will not dictate attitudes,
directives, planning, or resource allocation criteria under this part.
Rather, the agency intends to defer to proposed and implemented
planning processes that promote and value railroad safety. It is
incumbent on a railroad to resolve different cultures, direct and carry
out programs that emphasize safety practices, and engage management and
labor to develop, issue, and implement an iteration process to execute
these programs. To this end, FRA endorses the corporate culture concept
and incorporates the textual standards accordingly.
Section 244.13(b)--Training
Proposed Rule: The proposed rule would require a railroad to
discuss its training and educational programs to ensure that its
employees and supervisors who are responsible for field operations
would be proficient and qualified. FRA identified the employment crafts
that would be covered in the NPRM, which were train and engine service
employees, dispatchers or operators, roadway workers, signal employees,
mechanical officials, and hazardous materials personnel.
Comments: FRA received diverse comments from interested parties.
The TTD, for example, wanted the rule to set minimum qualifications and
training requirements, and require an applicant to detail the number of
class and on-the-job training hours and file a report on hazardous
materials training. At the same time, the BRC wanted to establish
qualification and training standards for car inspectors when defect
ratios exceed three percent for an applicant, and the ATDD suggested
training and qualification requirements for dispatchers. The AAR agreed
with the regulatory concept, but opposed new training requirements that
are not prescribed under the safety laws because such standards do not
present an integration issue.
Final Rule: FRA adopts the proposed rule with some substantive
changes to the introductory text and paragraph (b)(6). The rule centers
on ensuring that designated employees, including information technology
personnel affecting hazardous materials transportation, are proficient,
qualified, and familiar with the operating rules and operating tasks of
territory assigned when these employees are moved to a new territory or
the operating rules on a given territory are changed. Training impacts
integration of operations when employees are either transferred to new
divisions or subdivisions, or when operating rules, timetables, or
timetable special instructions, e.g., superintendent bulletins, are
changed in an assigned territory. In other words, when operating
circumstances change, the ``front line'' employees must be familiar
with all aspects of their crafts or occupations. A SIP should also
include details identifying the scope and depth of the type of training
operating personnel will receive, discuss the resources allocated to
conduct and complete training, and a proposed schedule for reaching
this milestone.
FRA and the AAR are in agreement about the concept of the SIP rule.
It is not the agency's intention to prescribe new substantive standards
in this rulemaking action. Instead, the rule requires a railroad
seeking to consummate a transaction to inaugurate and implement certain
programs when integration commences. In this instance, an applicant
needs to make certain that its operating employees are conversant in
logistics, operations, and equipment handling in unfamiliar localities,
and when operating rules, timetables, or timetable special instructions
are changed in an assigned territory. Although FRA is receptive to the
labor organizations' recommendations, the agency believes that training
standards are more appropriate in another rulemaking action and
therefore, declines the invitation.
Section 244.13(c)--Operating Practices
Proposed Rule: FRA proposed requiring a railroad to provide
operating practices information that would address operating rules,
accidents/incidents, hours of service laws, and the alcohol and drug
and locomotive engineer qualification and certification programs. The
regulation would also require an applicant to discuss the efforts taken
to minimize fatigue of covered service employees, i.e., employees who
perform train and engine service, dispatching, or signal system
service, to enhance safety in the field and reduce the likelihood of
committing errors while performing safety-sensitive functions.
Comments: Four parties filed comments on this proposal. The labor
union commenters supported the proposal, but suggested changes. The
BMWE wanted the rule to also require a railroad to consider fatigue
management of roadway workers because of the physical demands of their
labor and the travel necessary to carry out their assigned tasks. The
BRC recommended that the proposed accident/incident reporting
procedures be amended to require an applicant to certify the integrity
of electronic data entered and a security system to reflect any
amendments to initial data entries. The TTD supported the provision,
but suggested four changes. First, the labor organization wanted a
railroad to identify the size of current operating crews and detail the
injuries, fatalities, and expenditures on safety-related claims.
Second, it recommended that an applicant file a compilation of all
[[Page 11595]]
alcohol and drug tests performed and their results for the previous
three years, and an explanation of its options for substance abuse
treatment. Next, it wanted a railroad to specify the measures necessary
to minimize employee fatigue. Lastly, the TTD wanted a SIP to identify
how an engineer would be qualified on the physical characteristics to
operate over any new territory.
The AAR also commented on paragraph (c). The railroad organization
agreed with the operating rules provision because of its integral
nature in governing operations on a new railroad system, but opposed
the accident/incident reporting and alcohol and drug testing provisions
on the ground that they are not integration issues unique to regulated
transactions.
Final Rule: FRA adopts the proposed rule with two modifications.
The agency amends Sec. 244.13(c)(1) to add ``freight and passenger
service'' to the provision requiring a railroad to identify the
operating rules, timetables, and timetable special instructions that
govern railroad operations. The inclusion of this proviso renders
Sec. 244.13(l) redundant, which substantiates its withdrawal from the
final rule. FRA also drops proposed paragraph (c)(2) from the final
rule, agreeing with the AAR that there is no correlation between
accident/incident reporting procedures and safe integration of
operations. The agency has determined that accidents/incidents
reporting is not a safety problem with the transactions it has
reviewed. FRA believes that the current regulations under 49 CFR part
225 achieve the interests of safety for reporting accidents or
incidents and establishing an internal control plan under Sec. 225.33.
Therefore, the accidents/incidents provision is unnecessary and is
withdrawn.
FRA believes that the final rule captures the information a
railroad needs to address in a SIP to ensure that operations are
performed safely during the integration phase. Although the agency
considered expanding the reach of the operating practices area, it
decided to focus on those employees and practices that will be most
affected by a transaction, particularly those aspects that involve
logistics, operations, and equipment handling in unfamiliar
territories, and the need to retain institutional knowledge on lines
experiencing operational changes. A railroad, for instance, needs to
identify the alcohol and drug testing programs that will apply after it
consummates operations to facilitate continuity and consistency during
the transition period. Again, the rule's objective is to require an
applicant to conduct advance planning of operations that impact rail
safety. The operating practices enumerated in the rule text are such
critical operations that mandate detailed planning. This rationale thus
undergirds the requirements contained in this provision.
Section 244.13(d)--Motive Power and Equipment
Proposed Rule: Section 244.13(d) would require an applicant to
identify the qualification standards for employees who inspect,
maintain, or repair rolling stock and designate the facilities that
will repair the rolling equipment, and provide adequate assurances that
mechanical officials who are responsible for performing required
inspections and tests of the equipment are proficient in mechanical
practices to safeguard the use of freight or passenger cars and
locomotives on a railroad.
Comments: The AAR, BRC, and TTD shared their respective comments
with FRA about the proposed rule. The AAR agreed that the regulation
should be adopted with the proviso that a railroad be afforded
flexibility to change the designation of repair facilities without the
need of agency approval. The BRC took issue with the provision
``designation of facilities that will repair such equipment'' because
it implies that a railroad would be authorized to assign repair
facility locations irrespective of safety concerns. The BRC recommended
that the sentence read, in part, that an applicant must identify ``all
facilities being used, and that will be used following consummation of
the transaction, to repair such equipment,'' to enable FRA to determine
whether a railroad is eliminating redundant repair facilities or
increasing the distance noncomplying cars may be permitted to travel.
The TTD also wanted to amend the provision to require a railroad to
identify the average and mean age of engines owned by an applicant and
the location of new repair facilities.
Final Rule: FRA agrees with the BRC that a SIP must identify all
repair facilities that are being used or will be used after a
transaction is consummated. The agency is concerned about the safety of
rolling stock and believes that the modification will enable it to
determine whether an applicant is eliminating redundant repair
facilities or increasing the distance in which noncomplying rolling
equipment may travel, thereby compromising rail safety. FRA thus
rewords the last clause in the provision to read ``the designated
facilities used, or to be used, to repair such equipment'' to reflect
this amendment.
Section 244.13(e)--Signal and Train Control
Proposed Rule: The NPRM would require a railroad to identify the
signal and train control systems used, and maintenance, capital
improvement, and research and development projects planned for signal
and train control operations.
Comments: The TTD supported the proposed requirement, but
recommended that the rule should also require an applicant to identify
signal malfunctions and false signal reports, dark territory, and
accidents in signal and non-signal territory. The AAR opposed the TTD's
suggestion to require a railroad to identify signal malfunction
reports, asserting that it does not present an integration issue.
Final Rule: FRA agrees with the AAR that the TTD's proposal does
not present an integration issue but instead, an operational issue
affecting the routine movement of engines, equipment, or trains. The
TTD's suggestion is therefore not adopted. The final rule tailors the
proposed rule text to require a railroad to address ``any planned
amendments or modifications to capital improvement'' to focus an
applicant on advance planning of signal systems integration to prevent
any incompatibility between signal and train control systems and
reconcile or harmonize signal practices and standards when dissimilar
systems exist.
Section 244.13(f)--Track Safety Standards and Bridge Structures
Proposed Rule: FRA would require a railroad to identify the
maintenance and inspection programs for track and bridges to ensure
that its infrastructure was safe or would be repaired, rehabilitated,
or replaced, if necessary.
Comments: The labor organizations, led by the BMWE and TTD, wanted
the regulation to require an applicant to identify the qualification
standards for trackside workers to track the requirements contained in
Sec. 244.13(d). The AAR opposed the NPRM, claiming that Track Safety
Standards and bridge structures do not present an integration issue.
Final Rule: Based on FRA's recent assessment of the Conrail
Acquisition, the agency believes that track safety does present an
integration issue that should be addressed in the final rule. FRA's
audit found that CSXT experienced track maintenance and inspection
practices shortcomings after the implementation of the Conrail
Acquisition. In 1999, FRA determined
[[Page 11596]]
that the railroad's track defects ratios did not improve from the
previous year, and track-related accidents remained a problem on its
lines. These accidents were caused by wide gage and defective switch
points and track hardware at turn-outs, which were easily preventable
and evidence the need for the railroad to redouble its efforts in
upgrading its track program. See SIP Update at 24. Because track
maintenance and inspection programs are essential elements to promote
safe rail operations during integration, FRA believes that the roadway
or trackside workers should be qualified in carrying out these tasks.
As a result, the final rule adopts the labor organizations'
recommendation by requiring a SIP to identify the qualification
standards for these workers.
Section 244.13(g)--Hazardous Materials
Proposed Rule: Section 244.13(g) proposed requiring an applicant to
address hazardous materials in a SIP. First, a railroad would have to
identify a hazardous materials inspection program that covered field
inspection practices, communication standards, and emergency response
procedures. Second, the applicant would have to discuss its development
and deployment of an automated system at designated locations for
immediate retrieval of hazardous materials shipping papers.
Comments: Three parties commented on the proposal. The BMWE and TTD
wanted an applicant to provide an emergency action hazardous materials
plan. Conversely, the AAR opposed the requirement of developing and
delivering computer software operating systems because there was
insufficient evidence that the regulation would promote the safe
integration of hazardous materials safety programs.
Final Rule: FRA has reorganized paragraph (g) by requiring a
railroad to identify a hazardous materials inspection program that
covers four discrete areas. The first three are identical to the
proposed rule. The fourth area reconfigures proposed Sec. 244.13(g)(2)
to require the program to address information technology (``IT'')
systems and employees who are responsible for shipping papers
accompanying hazardous materials shipments. The provision also
stipulates that a SIP should identify preventive measures that an
applicant will use in responding to IT integration and hazardous
materials documentation problems.
FRA believes that IT systems that transmit and receive hazardous
materials information must employ programs that properly place cars in
train consists and identify the contents of hazardous materials
shipments to the hostler and train and engine crews. The agency
documented several IT deficiencies in implementing the Conrail
Acquisition, finding improper hazardous materials shipping papers and
inaccurate train consists hauling hazardous materials shipments because
of, in part, the lack of familiarity with the data systems used to
process hazardous materials documentation. See SIP Update at 2, 25, and
28. To prevent recurrences, FRA believes that a railroad should test
the computer systems that will be responsible for handling hazardous
materials paperwork to detect and eliminate any incompatibility
problems found and provide for information accuracy. FRA's revision
captures the lesson learned from a recent transaction.
Section 244.13(h)--Dispatching Operations
Proposed Rule: Paragraph (h) would require a railroad to identify
the dispatching system to be adopted, the migration of the existing
system to the adopted one, if applicable, the qualifications for
determining duties performed by dispatchers or operators, and the
volume of work assigned to the dispatchers or operators.
Comments: The ATDD and AAR provided disparate comments on this
proposal. The ATDD opined that a railroad should be required to address
the familiarity of the dispatchers with the territory that is subject
to the transaction, whereas the AAR opposed this recommendation because
no current substantive regulation exists and proper training alone may
provide adequate territory familiarization. The AAR also asserted that
the dispatching requirements should apply only to operations that are
affected by the transaction.
Final Rule: FRA adopts the suggestions that were provided. The
proposals are incorporated in Sec. 244.13(b) introductory text and
Sec. 244.13(b)(4) by requiring a SIP to identify training programs for
dispatchers to ensure familiarity with the operating tasks of the
territory assigned when these employees are assigned to a new territory
or the rules governing an assigned territory are changed. Otherwise,
the term ``workload'' is added to paragraph (h)(3) and paragraph (h)(4)
is withdrawn. This cosmetic change retains the sum and substance of the
information on dispatcher workloads in a SIP without setting out a
separate regulatory function.
Section 244.13(i)--Highway-Rail Grade Crossing Systems
Proposed Rule: The NPRM would require a SIP to address highway-rail
grade crossing signal system safety, emergency response measures,
public education initiatives, and proposals to improve grade crossings
and grade crossing system warning devices.
Comments: Only one party commented on the proposal. The AAR
maintained that the proposed regulation was inappropriate because
railroads already discuss grade crossing issues and upgrades with state
highway departments, and FRA's insertion into the process may create
conflicts with these government agencies and impose unnecessary burdens
on an applicant. Alternatively, the AAR suggested that a SIP require a
railroad to discuss grade crossing safety programs and the integration
of the programs in a transaction.
Final Rule: The final rule adopts the AAR's suggestion in part and
breaks out the information required in a SIP in more detail. The
regulation mandates that an applicant identify the grade crossings that
will experience an increase in traffic as a result of the transaction,
the existing grade crossing programs of the railroads as they apply to
these crossings, the integration of the grade crossing programs of the
railroads that are subject to the transaction to the extent the
programs differ, emergency response action plans, measures to avoid
blocking or obstructing grade crossing systems, and signs used for
changes to rail traffic patterns.
FRA believes that grade crossing safety is a critical element that
a SIP must address. As was explained in the NPRM, statistics show that
the vast majority of fatalities and injuries during railroad operations
occur at grade crossings due to collisions or trespass incidents. 63 FR
72233. A complex transaction presents its own challenges given that a
railroad acquiring, consolidating, or merging with another railroad
will dedicate traffic on certain corridors or lines. The SIP rule
requires an applicant to consider the impact of increased traffic
density in a territory on the safety of grade crossings.
Again, FRA's role is not to approve or reject specific measures,
such as upgrading grade crossings, a railroad may take during the
course of a transaction. Rather, the agency reviews the applicant's
proposed plan within the context of providing a ``reasonable assurance
of safety.'' FRA does not foresee that such a review process will
interfere with a railroad's consultations with a state highway agency
or impose
[[Page 11597]]
a substantial burden on the railroad. The interests of safety direct an
applicant to develop and implement a grade crossing program that will
reduce accidents, incidents, injuries, and fatalities that occur at
crossings. The grade crossing element is thus retained in the final
rule.
The rule also sets out discrete new items-avoidance of blocked
crossings and signs used for changes in traffic patterns-that a
railroad must address in its grade crossing program. Blocked crossings
are of particular concern to FRA and communities that will experience
increased rail traffic over its crossings. To illustrate, the agency
found that a significant number of NS crossings were blocked for
extended periods of time in the State of Ohio during the end of 1999.
See SIP Update at 20. The agency has determined that this deficiency is
more systematic and frequent than previously believed, creating
unnecessary challenges for emergency response vehicles and creating
congestion at crossings. To reduce the likelihood of similar problems
occurring in the future, FRA believes that a railroad should identify
in its SIP practices to alleviate blocked crossings, which may include
identifying additional sidings required, crew change points, and other
actions or construction needed. (The agency notes that this requirement
is similar to the STB regulations requiring applicants to submit
evidence about potentially blocked grade crossings as a result of
anticipated merger-related traffic increases. See 49 CFR 1105.7(e)(7)
and 49 CFR 1180.1(f)(3)(ii) and 1180.8(a)(2), requiring an applicant to
identify specific measures to be employed to avoid blocking crossings
that may result otherwise due to the consummation of a transaction, at
66 FR 32582, 32585 and 32589, June 15, 2001.) The SIP must also discuss
the signs used for changes in traffic patterns. FRA believes that these
signs serve to advise motorists and pedestrians of the frequency of
rail traffic traversing crossings to protect them from possible
collisions.
Section 244.13(j)--Personnel Staffing
Proposed Rule: Paragraph (j) would require a SIP to cover personnel
staffing in terms of the number of employees, both current and
proposed, for certain occupations carrying out safety-sensitive service
in the railroad industry.
Comments: FRA received two comments to this proposal. The ATDD
agreed with the regulatory text as proposed. The AAR wanted to clarify
the proposal by authorizing a railroad to file a copy of its Labor
Impact Exhibit that is filed with an application to the STB under 49
CFR part 1180 to avoid any redundancies in information provided
pursuant to an application.
Final Rule: FRA adopts the proposed rule with one minor
modification. An applicant need only address the personnel staffing
element when it projects a change of operations that will impact
workforce duties or responsibilities. A railroad may omit this section
if it expects operations will remain constant after the transaction is
consummated. Otherwise, it must address the full litany of job
functions that are provided in subparagraphs (1)-(8).
FRA declines to accept AAR's suggestion in authorizing a railroad
to file a copy of its Labor Impact Exhibit to satisfy this provision.
Under 49 CFR 1180.6(a)(2)(v), also known as the Labor Impact Exhibit
requirement, the STB only requires an applicant to address projected
changes that a transaction will impact on its employees by class or
craft, the geographic locations where the impact will occur, the
timeframe of the impact, and whether any employee protection agreements
have been reached. The Board's regulation thus does not cover current
employees and does not enunciate specific job duties that are
prescribed here. Because the two regulations are not congruent, the
filing of a Labor Impact Exhibit alone will fall short of the
requirements enumerated in this section. Nevertheless, a railroad may
use the same information provided in its Labor Impact Exhibit to meet
portions of this regulation where appropriate.
Section 244.13(k)--Capital Investment
Proposed Rule: Paragraph (k) would require an applicant to explain
its capital investment program by describing its intended investments
in the company's infrastructure and addressing changes to existing
investment forecasts.
Comments: The TTD agreed with the capital investment proposal.
Final Rule: FRA adopts the rule as proposed.
Section 244.13(l)--Relationship Between Freight and Passenger Service
Proposed Rule: FRA proposed requiring a railroad to describe the
relationship of freight and passenger service on railroad lines subject
to a transaction.
Comments: The agency received comments from APTA and OK DOT about
proposed paragraph (l). APTA requested that the regulation enunciate
the schedule changes involving commuter and freight service on
operations subject to the transaction. OK DOT, on the other hand,
wanted the provision to require an applicant to address the density of
combined freight and passenger operations.
Final Rule: Upon further consideration, FRA has concluded that
freight and passenger service should be addressed within the context of
the operating rules that will govern their operations. The agency
reasons that safe integration is premised on identifying those rules
and practices that will govern these services on property that is the
subject of a transaction. Service alone does not present an integration
issue that warrants separate analysis and requiring a railroad to
address schedule changes or density concerns serves to ``micromanage''
an application, which is contrary to the purpose of the SIP rule.
Service falls within the rubric of railroad operations that must be
evaluated to identify the potential safety impact and the measures
directed to minimize any consequences during integration. Based on this
analysis, FRA withdraws proposed paragraph (l) and transfers ``freight
or passenger service'' to paragraph (c)(1).
Section 244.13(m) (Now Section 244.13(l))--Information Systems
Compatibility
Proposed Rule: Section 244.13(m) proposed requiring a railroad to
address the steps it intended to execute to provide a single interface
of data on train consists, freight car and locomotive movements and
movement history, also known as ``wheel reports,'' dispatching
operations, accident/incident reporting and recordkeeping requirements,
and emergency cessation of operations.
Comments: Both the BMWE and TTD suggested expanding the regulation
to require information systems to address movement and movement history
of roadway equipment and hi-rail vehicles.
Final Rule: FRA adopts the proposed rule, now redesignated as
Sec. 244.13(l), with two changes. First, the final rule removes
proposed subparagraph (4), which addressed accident/incident reporting
and recordkeeping requirements within the information systems context.
As explained in its discussion of Section 244.13(c)(2) above, FRA has
concluded that accidents/incidents reporting is not a problem
warranting a SIP. The agency therefore believes that requiring an
applicant to explain the transmission and receipt of such information
when integrating computer technologies is unnecessary. Consequently,
the provision is withdrawn.
[[Page 11598]]
Second, this section adds one provision. A SIP must also address
the compatibility of information systems that are responsible for
transporting hazardous materials to ensure their safe movement while a
railroad is switching or converting hardware, software, or program
systems. The agency found that both NS and CSXT experienced
difficulties in identifying and tracking hazardous materials shipments
through their respective computer systems after they switched over from
Conrail's ``CATS'' system in June 1999. See, e.g., SIP Update at 25,
28, and 32. For example, CRCX employees, who work for the Shared Assets
Areas in the Conrail Acquisition, reportedly had difficulty in
obtaining documentation from CSXT and NS computer systems to properly
place hazardous materials shipments in train consists. Id. at 32.
Hazardous materials shipping papers must represent the contents of
shipments being transported on the railroad. To this end, the IT
systems must be capable of receiving and transmitting accurate
hazardous materials documentation to ensure the seamless and efficient
flow of information during the interchange of shipments. FRA, however,
disagrees with expanding the regulation to include roadway equipment or
hi-rail vehicles. There has been no evidence of problems associated
with these service vehicles during the integration of complex
transactions. Therefore, FRA demurs on the suggestion.
Section 244.15--Subjects To Be Addressed in a Safety Integration Plan
Not Involving an Amalgamation of Operations
Proposed Rule: FRA proposed, in part, requiring a railroad engaging
in a transaction that did not involve an amalgamation of operations to
file a SIP that covered only the training, personnel staffing, and
capital investment elements.
Comments: The AAR opposed requiring a SIP for a ``paper
transaction'' because such a transaction does not present operational
changes and only serves to impose an unnecessary burden on an applicant
without any consummate safety benefit. In response, the AAR proposed
revising the provision to require a SIP on an ad hoc basis when no
operational changes exist.
Final Rule: FRA agrees with the AAR's rationale that a ``paper
transaction'' presents minimal changes in operations that will affect
rail safety and revises the regulation as suggested. An applicant
seeking to consummate a transaction that does not propose an
amalgamation of operations need not file a SIP unless FRA directs the
railroad to do so.
As we explained in the NPRM, FRA distinguishes ``operational
transactions'' that present a migration of personnel or equipment, or
infrastructure changes from ``paper transactions'' that are limited to
changes in company letterhead. See 63 FR 72234. FRA advises interested
parties, however, that changes in operating rules, timetables,
bulletins, special instructions, or any other written directives that
affect the movement of locomotives or rolling stock impact safety and
are therefore designated as ``operational transactions,'' requiring the
filing of a SIP. FRA thus adopts a broad interpretation of
``amalgamation of operations'' by mandating a SIP for transactions that
propose only changes in practices or procedures governing railroad
operations.
Section 244.17--Procedures
Proposed Rule: The NPRM proposed a set of procedures that would
govern the filing and handling of an application to carry out a
transaction. Section 244.17(a) provided that a railroad would be
required to file a SIP with FRA and the STB no later than the date it
submitted its request for authority to the Board. Under paragraphs (b)
and (c), FRA would review and comment on the proposed SIP, and the
railroad would provide additional information supporting its plan
should the agency require it. Paragraph (d) proposed requiring FRA to
issue its factual findings and conclusions on the proposed SIP to the
STB before the Board ruled on the application. Section 244.17(e) would
require a railroad to coordinate with FRA in implementing a proposed
SIP approved by FRA and the STB until integration was complete. The
proposed rule also set out the interplay between FRA and the Board
during the implementation phase of the transaction in paragraph (f).
Comments: The AAR maintained that the proposal to require the
contemporaneous filing of a proposed SIP and a request for authority
with the STB was unrealistic, as the same employees generally would
write both the operating plan for the STB application and the SIP. The
organization also questioned the proposal because it may compromise the
quality of the SIP and was inconsistent with the Conrail Acquisition
proceeding in which the STB gave NS and CSXT four months to file their
separate plans after they filed their respective applications. As an
alternative, the AAR proposed that the rule provide a railroad 30-90
days after it files its application with the Board to file a proposed
SIP.
The AAR further opposed proposed paragraph (b) on the ground that
the regulatory text called for information that was beyond the scope of
the rule. The organization recommended amending the text to authorize
FRA to obtain additional information on matters that address specific
safety concerns. Finally, the AAR requested that proposed paragraph (f)
be amended to establish a three-year window of regulatory oversight of
a railroad's SIP implementation, and that the section add a provision
covering the confidential treatment of information provided by an
applicant to the agency to safeguard proprietary and competitively
sensitive information.
Final Rule: FRA revises Sec. 244.17 to reflect the proposals
advanced by the AAR and to clarify the procedural requirements
governing the SIP process. Paragraph (a) is amended to give a railroad
up to 60 days after it files an application with the STB to file a
proposed SIP with FRA. FRA believes that a two-month interim will
provide sufficient time for the company to complete its SIP after
filing its operating plan. The agency also adds the phrase ``to satisfy
the requirements of this part'' to paragraph (b) to assuage the AAR's
concerns. Restated, the regulation now requires a railroad to provide
additional information in a SIP that FRA may require to meet the rule's
requirements, such as the operational elements within the framework of
the plan's contents as provided in Sec. 244.11. The final rule also has
been revised to delete the reference to ``exemptions'' filed with the
STB, because Class I carriers typically file applications in
consolidation transactions.
FRA adds paragraph (f) to Sec. 244.17 to require a railroad to
communicate with the agency about any changes and refinements to its
plan in response to unfolding developments, and file any amendments to
its plan with FRA for approval. Proposed paragraph (f) is redesignated
paragraph (g), and the last sentence of the proposed provision is
amended to reflect that FRA will oversee the implementation of a SIP
for a period of five years, for a period prescribed by an order issued
by the Board, or when FRA advises the Board in writing that the
integration of operations is complete, whichever is shorter. The
oversight period is necessary to ensure that the SIP is being
implemented as intended, that the railroads are adhering to the
representations made in the SIP, that no unforeseen circumstances have
arisen
[[Page 11599]]
requiring FRA to exercise any of its enforcement remedies, and that the
milestones established in the SIP are being met in a timely fashion.
Finally, the agency adds paragraph (h) to provide a procedural
mechanism for an applicant to request that advance drafts of a proposed
SIP and information filed in support of the proposed or approved plan
receive confidential treatment should an outside party submit a request
for the documents under the Freedom of Information Act (``FOIA''), 5
U.S.C. 552. The regulation directs the railroad to comply with the
procedures enumerated under 49 CFR 209.11 to petition for such
treatment. Nevertheless, FRA reminds the regulated community that the
agency alone will decide whether to grant or deny a request, but that
it will afford a company whose request was denied an opportunity to
respond no less than five days before the agency discloses the
information. See 49 CFR 209.11(e). It should be noted, however, that
FRA, like the STB, will not treat a proposed or approved SIP that is
filed pursuant to the regulations prescribed under 49 CFR 244.17(a) and
1106.4(a) as confidential because the proposed plan will be
incorporated in the Board's environmental documentation, which will be
made available for public review and comment.
Section 244.19--Disposition
Proposed Rule: Section 244.19 would enunciate FRA's review and
approval process of a proposed SIP. The regulation proposed requiring a
plan that detailed a logical and workable transition from conditions
existing before the proposed transaction to conditions intended to
exist after the transaction was consummated. FRA would review the SIP
on a ``reasonable assurance of safety'' standard, meaning that the
agency would conduct rational basis review of the plan to ensure that
it was reasonably sufficient to comply with the safety laws, provide
for safe railroad operations, and satisfy expectations of integration
of operations. The agency would then issue its notice of approval
should the SIP prove satisfactory, provided that the railroad
implemented the plan as proposed.
The rule also would authorize amendments to a SIP. A railroad could
amend its plan as needed with FRA's approval or the agency could
mandate changes consistent with rail safety should it identify
deficiencies during implementation of an approved plan that were
unforeseen while the plan was under review. Again, SIP approval would
be contingent on a railroad's fulfillment of the subject matter
elements in the plan and the execution of operations necessary to
implement the plan.
Comments: The AAR was the only commenter to the proposed section.
The railroad organization opposed FRA's formal review and approval
process of a SIP, and any amendments thereto, on the grounds of the
agency's lack of jurisdiction to consider transactions within the STB's
scope of authority, and the need to maximize flexibility in updating
and improving safety plans and minimize the burdens imposed by the
rule. The AAR proposed four revisions to the section. First, FRA would
advise the Board in reviewing a proposed SIP on practices and
procedures relating to rail safety, with the STB to determine whether
to approve or disapprove of a plan based on its adequacy after FRA
comments on it. Second, an applicant would be permitted to file any
amendments with FRA and explain the need for the changes should the
agency request the same. Third, the section would authorize amendments
to take effect within 20 days after they are filed with the agency and
remove the review process of amendments. Finally, the AAR recommended
modifying paragraph (b) by replacing ``later developments'' with
``amendments to a SIP.''
Final Rule: FRA adopts the core of the proposed rule and certain
changes advanced by the AAR. Paragraph (a) is rewritten to articulate
the standard of review for a proposed SIP, and any amendments thereto,
up front. The rule further explains the structure of the plan to be
filed, which the NPRM set out. Recast, the SIP must be thorough,
complete, and clear; and address a logical and workable transition of
railroad operations from conditions before the transaction to
conditions intended after the transaction is consummated that provide a
reasonable assurance of safety at every step during implementation. FRA
intends to work informally with an applicant both before and after the
transaction is approved and consummated to ensure that the SIP complies
with the regulations and that the transaction is safely implemented.
Consistent with the AAR's proposal, FRA amends paragraph (b) by
inserting ``any amendments to the plan approved by FRA'' in lieu of
``all later developments subject to FRA approval that could not be
completed before approval of it.'' This revision clarifies an
applicant's role in fulfilling the elements of an approved SIP by
requiring it to implement all of the plan's measures and any amendments
to the plan. The agency notes that it may approve portions of a SIP
while disapproving other portions if it concludes that the actions
under the plan can be segregated without jeopardizing safety.
Section 244.19(c) is also amended by requiring a railroad to
substantiate any changes to its SIP and communicate with the agency to
resolve any comments about the amendments. The regulation also
prescribes that any amendments approved by FRA will take effect within
20 days of approval, and the agency may ``request'' rather than
``require'' a railroad to amend its approved plan should circumstances
dictate. The operative word ``request'' is inserted to afford the
agency discretionary review of the plan while it is being implemented
and sufficient leverage to proffer a change that promotes safety
interests.
FRA takes issue with the AAR's suggestion that the agency lacks
authority to adopt a formal review and approval process of SIPs. As FRA
explained earlier, the agency believes that it has the authority to
regulate railroad safety during implementation of mergers,
consolidations, and acquisitions that are approved by the STB. FRA has
always done so for the hazards presented by railroading generally. In
this rule, FRA is exercising its existing jurisdiction and expertise in
regulating the safety hazards presented by the proposed integration of
operations of different railroads. See 49 U.S.C. 20103. In short, the
transaction that is approved by the STB is the context within which the
potential safety hazards are presented and dealt with, but the
transaction itself is not regulated by FRA. The rule does not authorize
FRA to sanction or veto a transaction subject to STB approval or to
impose conditions upon which approval of the transaction is authorized
because those functions are exclusively vested with the STB. See 49
U.S.C. 11321-24.
FRA believes that there is a need to codify an ongoing SIP approval
process to allow for appropriate enforcement. There are two parts to
this process. First, a railroad must submit a proposed SIP for agency
review and approval to determine whether the plan meets the
requirements of the rule. Second, assuming the proposed SIP, including
any amendments thereto, is approved, the railroad must implement the
SIP as approved. Should FRA disapprove a SIP, or portions thereof, or
the railroad fail to implement the SIP, the rule authorizes the agency
to take enforcement action to ensure safety. See 49 CFR 244.21(b).
[[Page 11600]]
Section 244.21--Compliance and Enforcement
Proposed Rule: Proposed Sec. 244.21 would require a railroad to
have an FRA-approved SIP before it could change its operations to
implement a transaction. Additionally, the rule would authorize the
agency to use any of its enforcement remedies available under the
safety laws should the railroad either change its operations without an
approved plan or fail to execute any measure in an approved plan. The
regulation also provided that FRA would consult with the STB at all
appropriate stages of SIP implementation for a transaction that
involved Board authorization.
Comments: The AAR objected to this proposal, asserting that FRA is
not authorized to take any enforcement action against a railroad under
this part because the STB is the only agency with jurisdiction to
approve or disapprove a proposed SIP.
Final Rule: FRA revises Sec. 244.21(a) to clarify that, in
approving a SIP, FRA is regulating the safety of railroad operations
and is neither approving nor disapproving the transaction before the
STB nor exercising an alleged veto over whether that transaction can be
consummated if it should be approved by the STB. FRA also withdraws
proposed paragraph (c) because it duplicates the requirements provided
under Sec. 244.17(g). The regulation now requires a railroad
implementing a transaction to operate in compliance with the SIP
approved by FRA until all of its operations are completely integrated.
The rule is rewritten in this fashion to eliminate the possibility of
interpreting the rule, as some commenters did, to equate FRA's approval
or disapproval of a SIP with approving or disapproving an application
to the STB to approve a transaction. As explained above, FRA agrees
that the STB has exclusive authority to approve or disapprove a
transaction covered by this part.
Correspondingly, FRA's role in the STB's process is to advise the
Board on safety issues identified in a transaction. Indeed, the Board's
own proposed and final rule relies upon the FRA's safety expertise as
the Board evaluates the merits of a transaction and disposes of an
application. See 49 CFR 1106.4; see also Tyrrell, 248 F.3d at 523; CP
Purchase, slip op. at 5-6 (the STB gives ``great weight'' to FRA's
expert view on rail safety in determining whether to impose any
conditions on a proceeding).
Briefly stated, regulation of ``every area of railroad safety'' is
FRA's jurisdiction. Tyrrell, 248 F.3d at 523 (``FRA exercise[s] primary
authority over rail safety matters under 49 U.S.C. 20101 et seq.''). In
approving or disapproving a SIP under this part, and enforcing one, FRA
is regulating the safety aspects of how a railroad operates while
implementing a transaction permitted by the STB, not whether the
railroad is permitted to consummate the transaction or on what economic
terms. This is an appropriate exercise of the ``plenary safety
authority with respect to the safety of rail operations-before, during,
and after a transaction'' which the AAR acknowledges that FRA has. AAR
comments at 9. In that regard, approval of a SIP is no different than
approval of an engineer certification program under 49 CFR part 240.
There is no question that a railroad must have an engineer
certification program approved by FRA and operate in accordance with it
at all times, whether or not the railroad is involved in a transaction
within the STB's jurisdiction.
In summary, FRA is authorized to exercise any of its legal or
equitable enforcement remedies should a railroad either not operate in
accordance with an approved SIP or not comply with any element provided
in that plan.
Regulatory Impact of FRA's Final Rule
Executive Order 12866 and DOT Regulatory Policies and Procedures
FRA is adopting rules that will require merging or acquiring
railroads to adopt SIPs before commencing merged operations. Two
railroads, NS and CSXT, prepared such plans for their acquisition of
the Conrail system. One of those railroads has informed FRA that its
SIP cost $300,000, the other said it cost $212,000. The main difference
is that the more expensive plan was developed almost exclusively by a
contractor, while the other was mostly done in-house. It is unlikely
that any SIP would cost much more. It is possible that a SIP for a
smaller Class I railroad might cost less. A likely range for the cost
of a SIP is $150,000 to $400,000. A SIP for a Class II railroad might
cost much less. The Class II railroad's business plan will be smaller,
and the safety information will be easier to gather. A SIP for a Class
II might cost $25,000 to $100,000. It is a one-time expense for any
railroad. The assumed total cost of the SIP rule to a railroad is twice
the initial cost of preparing the SIP, to account for such vagaries as
SIP modifications and restrictions on training.
Although FRA cannot with certainty say which of the several
accidents following mergers were the result of poor planning, it
appears extremely likely that at least one of them could have been
prevented with a SIP. Assuming that the SIP would prevent two
fatalities and $600,000 in damage implies that a SIP for the UP/SP
merger would have saved at least $6,000,000 in accident costs. FRA
believes that one or more of these accidents could have been prevented
based on its findings when it did a detailed analysis of the UP/SP
operations. For other railroads the accident savings might vary. For a
larger railroad, the accident savings might be twice as much
($12,000,000), while for smaller Class I railroads the safety benefits
might be one-fourth that much ($1,500,000). FRA does not have as much
information on Class II railroads, but it appears that the accident
savings on a Class II railroad might be one percent ($60,000) or as
much as twenty percent ($1,200,000) of the savings that would have been
available for the UP/SP. These figures are roughly based on ratios of
reported accidents, noting that when railroads merge, they become
larger entities than they are now.
FRA's careful review of the impacts of mergers that have taken
place in the recent past has clearly revealed that mergers and
acquisitions disrupt existing safety and operating patterns. Because
these transactions are generally justified in significant part by cost
savings, there is pressure to close redundant facilities and eliminate
positions. This can lead to degradation of safety programs unless
formal, written, systematic, and detailed plans are prepared to ensure
that safety programs are continued and closely followed. Any less
attention to safety could produce catastrophic results, both in terms
of economic cost and, more importantly, loss of life.
The final rule will cost $300,000 to $800,000, and will prevent
$1,500,000 to $12,000,000 in accident costs for Class I railroads, and
will cost $50,000 to $200,000, and will prevent $60,000 to $1,200,000
for Class II railroads. The final rule will not apply to small
entities, i.e., the Class III railroads. In addition, the railroad may
avoid substantial service difficulties by carrying through the safety
planning process. This could save the railroad hundreds of millions or
billions of dollars. In the first three quarters of 1998, UP reported
losses exceeding $900,000,000 due to service difficulties. The societal
losses of these delays is probably much greater, as the figures only
account for costs to UP. FRA notes that although numerous parties have
submitted data to the STB regarding the impact of the service
difficulties, the Board has not attempted to quantify the
[[Page 11601]]
societal costs of these service problems. See Rail Service in the
Western United States, STB Ex Parte No. 573 (STB Decision served Feb.
25, 1998).
Regulatory Flexibility Act
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601 et seq.,
requires an assessment of the impact of rules on ``small entities.''
The final rule relates to acquisitions, consolidations, and mergers
involving only Class I railroads and a Class I railroad with a Class II
railroad where there is a proposed amalgamation of operations. Given
FRA's recently published interim policy establishing ``small entities''
as being railroads that meet the line haulage revenue requirements of a
Class III railroad, FRA certifies that this proceeding will not have a
significant economic impact on a substantial number of small
businesses. See Interim Statement of Policy Concerning Small Entities
Subject to the Railroad Safety Laws, 62 FR 43024, Aug. 11, 1997.
Paperwork Reduction Act
The information collection requirements (``ICRs'') in this final
rule have been submitted for approval to the Office of Management and
Budget (``OMB'') under the Paperwork Reduction Act of 1995, 44 U.S.C.
3501 et seq. The sections that contain the ICRs and the estimated time
to fulfill each requirement are as follows:
----------------------------------------------------------------------------------------------------------------
Total annual
CFR Section Respondent Total annual Average time burden (in Total annual
universe reponses per response hours) burden cost
----------------------------------------------------------------------------------------------------------------
244.13--Subjects to be 8 railroads.... 1 SIP (plan)... 360 hours...... 360 $22,224
addressed in a Safety
Integration Plan (SIP)
involving an amalgamation of
operations.
244.17--Procedures........... 8 railroads.... 25 reports..... 40 hours/2 92 $5,152
hours.
--Coordinating Implementation 8 railroads.... 50 phone calls. 10 minutes..... 4 $224
of Approved SIP with FRA.
--Request For Confidential 8 railroads.... .5 request..... 8 hours........ 8 1,224
Treatment.
244.19--Disposition.......... 8 railroads.... 2 16 hours....... 32 1,792
communications.
----------------------------------------------------------------------------------------------------------------
All estimates include the time for reviewing instructions,
searching existing data sources, gathering or maintaining the needed
data, and reviewing the information. Pursuant to 44 U.S.C.
3506(c)(2)(B), FRA solicits comments concerning whether these ICRs are
necessary for the proper performance of the agency's function,
including whether the information has practical utility; the accuracy
of FRA's estimates of the burden of the information collection
requirements; the quality, utility, and clarity of the information to
be collected; and whether the burden of collection of information on
those who are to respond, including through the use of automated
collection techniques or other forms of information technology, may be
minimized.
Organizations and individuals desiring to submit comments on the
ICRs should direct them to the Office of Management and Budget, FRA
Desk Officer, Washington, DC 20503. OMB is required to make a decision
concerning the ICRs contained in this final rule between 30 and 60 days
after publication of this document in the Federal Register. Therefore,
a comment to OMB is best assured of having its full effect if OMB
receives it within 30 days of publication.
FRA hereby notices that it cannot impose a penalty on persons for
violating ICRs that do not display a current OMB control number, if
required. FRA intends to obtain a current OMB control number for any
new ICRs resulting from this rulemaking action before the effective
date of the agency's final rule. The OMB control number, when assigned,
will be announced by separate notice in the Federal Register.
Environmental Impact
FRA has evaluated the final rule in accordance with its procedures
for ensuring full consideration of the potential environmental impacts
of FRA actions, as required by NEPA, other environmental statutes,
Executive Orders, and related directives. This rule meets the criteria
that establish this action as a non-major action for environmental
purposes.
Federalism Implications
The final rule has been analyzed in accordance with the principles
and criteria contained in Executive Order 13132, and it has been
determined that this action does not have sufficient federalism
implications to warrant the preparation of a Federalism Assessment.
Statement of Energy Effects
The final rule has been reviewed in accordance with Executive Order
13211 (66 FR 28355, May 22, 2001), which requires agencies to prepare a
Statement of Energy Effects describing the effects of certain
regulatory actions on energy supply, distribution, or use when such
measures are identified as ``significant energy actions.'' FRA
certifies that this rulemaking action is not a significant energy
action to warrant the preparation of such a statement.
STB's Statement of Basis
The circumstances that led to the promulgation of these rules are
set out in the NPRM. As explained there, in the advance notice of
proposed rulemaking (``ANPRM'') published in the Federal Register on
December 4, 1997, at 62 FR 64193, the Board requested comments on the
extent to which railroads should be required to provide information
pertaining to the manner in which they intend to provide for the safe
implementation of merger and acquisition authority granted by the
Board. The Board explained that for several years the Board and its
predecessor agency, the Interstate Commerce Commission (``ICC''), have
considered the issue of safety along with other relevant issues in
individual cases. As particularly pertinent here, in the Conrail
Acquisition proceeding, \7\ the Board for the first time required
applicants to submit detailed information on how they proposed to
provide for the safe integration of their corporate cultures and
operating systems, if the Board were to approve the proposed
transaction. \8\ (The Board required the same type of showing in the
CN/IC merger, \9\ which the Board approved on May 25, 1999. A SIP also
[[Page 11602]]
was prepared and adopted in the CN/WCTC merger proceeding. \10\
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\7\ Conrail Acquisition, STB Finance Docket No. 33388 (STB
Decision No. 52, served Nov. 3, 1997).
\8\ The Board did so at the suggestion of FRA and rail labor
interests.
\9\ CN/IC, STB Finance Docket No. 33556 (STB Decision Nos. 5 and
6, served June 23, 1998, and Aug. 14, 1998).
\10\ See CN/WCTC, STB Finance Docket No. 34000 (STB Decisions
Nos. 2, 9, and 10 served May 9, August 2, and September 7, 2001,
respectively) (hereinafter ``CN/WCTC Decisions'').
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Specifically, the Board's practice in recent railroad merger
proceedings involving Class I and Class II railroads has been to
require applicants to file detailed SIPs based on guidelines issued by
FRA. The railroads' submissions are made part of the environmental
record in those proceedings and addressed in the ongoing environmental
review process in those proceedings. This allows review and comment by
FRA, other interested parties, and the public. The Board's
environmental staff, SEA, also independently reviews the plans.
Moreover, the Board has entered into an MOU with FRA, with DOT's
concurrence, to establish an ongoing monitoring process during
implementation of these transactions. The MOU clarifies the actions
that FRA and the Board will take to ensure the successful
implementation of the SIP. Under the terms of the MOU, FRA monitors,
evaluates, and reviews the applicants' progress in implementing the
approved SIP. The MOU provides that FRA may request action by the Board
in the exercise of its oversight authority over the applicants to
correct safety deficiencies identified and to address other safety-
related concerns resulting from the approved transaction. FRA also
agrees to report to the Board at least on a biannual basis regarding
the applicants' implementation of the SIP. In those circumstances in
which FRA informs the Board of safety deficiencies that may require
Board action, FRA will identify the deficiencies and provide
recommendations for correcting them. FRA's reporting will continue
until FRA advises the Board in writing that the proposed integration of
operations has been safely completed.
The Board's ANPRM explained that, having developed a vehicle by
which to evaluate safety integration issues in the Conrail Acquisition,
it was appropriate to consider promulgating rules extending this
process to other rail transactions subject to the Board's jurisdiction.
Accordingly, the Board solicited comments from FRA and any other
interested persons on how the Board should proceed to ensure the safe
implementation of rail transactions subject to its jurisdiction (i.e.,
whether the STB should proceed broadly by general rule or exclusively
on a case-by-case basis, and whether procedures other than those
adopted in Conrail Acquisition might be preferable in Board-approved
transactions outside the merger area). \11\
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\11\ The administrative process permits the Board to proceed
either on a case-by-case basis or by rule, and to address some kinds
of transactions by rule and some by reliance on the development of
precedent.
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Based on the comments received and the Board's experience with the
SIP process in Conrail Acquisition, the Board issued its decision
served on July 27, 1998, finding sufficient merit to warrant further
exploration of establishing regulations addressing the safe
implementation of Board approved transactions. Safe Implementation of
Board-Approved Transactions, STB Ex Parte No. 574 (STB served July 27,
1998). The Board directed its staff to develop a joint notice of
proposed rulemaking with FRA that would address the issues that have
arisen in this proceeding and that are of concern to FRA.
Following the issuance of the Board's July 27, 1998, decision, the
Board's staff met informally with FRA staff regarding the development
of an appropriate proposal that would accomplish the objectives of both
agencies, avoid gaps and inconsistencies in the two agencies'
regulatory requirements, and impose as little burden as possible on the
participating parties. The NPRM was published in the Federal Register
on December 31, 1998, at 63 FR 72225. On May 4, 1999, a public hearing
was held jointly with FRA to hear testimony on the proposed rules.\12\
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\12\ AAR and TTD presented testimony at the oral hearing. AAR
filed supplemental comments following the hearing.
---------------------------------------------------------------------------
As noted, eleven parties representing labor, freight and passenger
railroads, and state departments of transportation filed comments on
the NPRM. Many of the commenters endorsed the objectives of the SIP
rules and indicated that they were generally satisfied with the
approach used in the Conrail Acquisition and CN/IC proceedings.\13\
However, they offered a number of recommendations on how the proposed
rules could be clarified and improved. In issuing final rules, the
Board has taken into account all the concerns raised in the parties'
written comments and presented at the hearing. As discussed below, the
Board is adopting some of the suggestions offered.
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\13\ See also Major Rail Consolidation Procedures, STB Ex Parte
No. 582 (Sub-No. 1) (STB served June 11, 2001) (``Major Rail
Consolidation Procedures''), slip op. at 36-37 (practice of
requiring applicants to work with FRA to formulate SIPs in major
mergers received wide public support, and no opposition, in
proceeding adopting new rules for major rail consolidations).
Indeed, some commenters including the AAR questioned whether formal
rules in this area were necessary because the Board could continue
to work with FRA on a case-by-case basis, as in the Conrail
Acquisition and CN/IC proceedings. The Board agrees with the AAR
that the SIP process used in these proceedings generally has been
successful and is publishing final rules to codify existing
practices and FRA's role in advising the Board on safety integration
matters in transactions that the Board regulates.
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STB's Analysis of the Comments Pertaining to the Scope of the Rules
A number of commenters expressed concerns about the scope of the
STB's proposed rules. The AAR and Amtrak asserted that the proposed
inclusion of transactions that involve a passenger railroad or commuter
service in a metropolitan area would exceed the Board's jurisdiction.
\14\ (See proposed 49 CFR 1106.2.) In response to the comments, the
definitions of ``applicant'' and ``transaction'' in Sec. 1106.2 have
been amended. The new definitions clarify that the SIP requirement
applies only to a Class I railroad proposing to merge, consolidate, or
acquire another Class I railroad or a Class II railroad with which it
proposes to ``amalgamate operations,'' as defined in FRA's regulations
at 49 CFR 244.9. (The Board also adds FRA's definition of
``amalgamation of operations'' to its rule.) The changed definitions
coincide with the scope of the transactions covered by FRA's final
rule, which will promote consistency and efficiency in the interplay
between FRA and the Board.
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\14\ Under 49 U.S.C. 10501(c), the Board does not have
jurisdiction over mass transportation (commuter service) provided by
a local governmental entity. Thus, a transaction involving a
railroad subject to the STB's jurisdiction and a commuter railroad
``is now a one-railroad transaction over which [the Board does] not
have jurisdiction under 49 U.S.C. 11323.'' Norfolk & Western Railway
Company--Petition for Declaratory Order--Lease of Line in Cook &
Will Counties, IL. To Commuter Rail Division of the Regional Transp.
Auth. of Northeast Illinois, STB Finance Docket No. 32279 (STB
served Feb. 3, 1999). Moreover, except for certain provisions not
relevant here, Amtrak is not subject to the Board's jurisdiction. 49
U.S.C. 24301(c).
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Rail labor interests took the position that the Board's SIP rule
should apply to transactions involving Class III carriers, \15\ i.e.,
those railroads that generate revenue, measured in 1991 dollars, of
less than $20 million per year, whereas the railroad interests argued
that it is not necessary to require the preparation of a SIP for
transactions that do not involve two or more Class I railroads. \16\
Commenters also suggested that freight traffic density or combined
freight and passenger traffic (rather than the Class of railroad) could
[[Page 11603]]
serve as a benchmark for determining the necessity of a SIP. \17\
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\15\ See the comments of TTD, ATDD, BRC, and BMWE.
\16\ See the comments of AAR, ASLRRA, and W&LE.
\17\ For example, OK DOT notes that the Board's environmental
regulations at 49 CFR 1105.7(e)(5) consider the amount of increased
traffic on a line in determining whether there is a need for
environmental review.
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The Board's final rule covers Class I railroads and Class II
railroads that will have their operations amalgamated by a Class I
railroad. The Board believes that this scope of coverage is reasonable
because it is consistent with the scope of FRA's rule and Congress has
treated Class II railroads more like Class I railroads than like Class
III railroads in ICCTA. \18\ The Board believes that it would be unduly
burdensome to expand the proposed rules to cover transactions involving
Class II railroads or Class III railroads as a matter of course. Under
Secs. 1106.5 and 1106.6 of the final rule, however, the Board retains
the flexibility to require a SIP for such transactions if warranted, or
to waive or modify SIP requirements on a case-by-case basis, if it
concludes that doing so is appropriate for particular transactions.\19\
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\18\ The Board's recently adopted new rules for major railroad
mergers and consolidations involving two or more Class I railroads,
published at 66 FR 32582, June 15, 2001, require Class I applicants
to bear a substantially heavier burden in demonstrating that a
merger proposal is in the public interest. The agency concluded that
the current merger regulations at 49 CFR part 1180, subpart A, are
not adequate to address future major rail merger proposals that, if
approved, would likely result in the creation of two North American
transcontinental railroads. But although the economic and service
issues that drove the Board's action in Major Rail Consolidation
Procedures are of concern principally when two Class I railroads
merge, the safety considerations underlying SIPs also apply to
mergers, consolidations, and acquisitions involving a Class I
railroad and a Class II railroad with which it proposes to
amalgamate operations.
\19\ In the NPRM, the Board specifically solicited comments from
interested parties as to whether the final rule should cover Class
III railroads. The comments did not persuade the Board that
transactions involving Class III railroads typically create
sufficient safety problems to warrant requiring the preparation of a
SIP. However, the Board's final rule at 49 CFR 1106.6 would allow
the agency to require a SIP in particular cases involving Class III
railroads if it concluded that doing so is necessary in its proper
consideration of the proposed transaction.
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AAR indicated that the Board should allow an additional 30 to 90
days for preparing and filing a proposed SIP, rather than requiring the
SIP to be submitted simultaneously with the application. This request
is reasonable. Therefore, section 1106.4(a) of the STB's final rule
provides 60 days from the date of the application \20\ for the filing
of a proposed SIP.
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\20\ Because the Board is narrowing the scope of transactions
that require a SIP to those filed under 49 U.S.C. 11323(a) involving
Class I railroads and Class II railroads that will have their
operations amalgamated with Class I railroads, the final rule
eliminates the reference to ``exemptions'' in Sec. 1106.4(a)(1). The
reference to ``applications'' and ``other requests for authority''
in the definition of ``transaction'' in Sec. 1106.2, and in the
reservation of jurisdiction provision in Sec. 1106.6, however, give
the Board the flexibility to require a SIP in cases filed by
exemption as well as by application should it be appropriate to do
so.
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The BMWE urged that the Board clarify proposed Sec. 1106.4(b)(4),
which, it argued, could be construed to give the Board discretion to
approve a transaction without a SIP or without requiring compliance
with the SIP. To eliminate any possible confusion, the Board's final
rule has been clarified to specifically state that, if the Board
approves the transaction and adopts the SIP, the Board will require
compliance with the SIP as a condition to its approval of the
transaction.
STB's Section-By-Section Analysis of Its Final Rule
Sec. 1106.1 Purpose.
The regulations are designed to assure adequate and coordinated
consideration of safety integration issues by the Board and FRA in
implementing certain transactions subject to the Board's jurisdiction.
Sec. 1106.2 Definitions.
This section sets forth definitions used in this part; these
definitions are self explanatory.
Sec. 1106.3 Actions for Which Safety Integration Plan is Required.
This section explains which transactions require a railroad to file
a SIP with the Board. As noted above, a Class I railroad proposing to
merge, consolidate, or acquire another Class I railroad, or a Class II
railroad with which it proposes to amalgamate operations, as defined in
FRA's rule at 49 CFR 244.9, will be subject to the requirements of this
rule. Where the filing of a SIP is required by the Board's rules, the
Board will enforce the requirement with appropriate sanctions,
including suspending the processing of the application or, in extreme
cases, dismissing the application itself.
Sec. 1106.4 The Safety Integration Plan Process
Section 1106.4 sets out the procedures for an applicant to file a
proposed SIP, and the procedures by which the Board will consider a
proposed SIP in connection with its approval of transactions for which
the Board has concluded such consideration is required. A railroad
seeking to carry out a covered transaction must file a proposed SIP
prepared in accordance with FRA's regulations with the STB's SEA and
FRA no later than 60 days from the date the application is filed with
the Board. The proposed SIP will become part of the environmental
documentation in the Board proceeding, and will be considered in the
Board's environmental review process conducted in accordance with NEPA
and the Board's environmental rules at 49 CFR part 1105. Generally,
covered transactions will be subject to environmental review because
the nature of the transaction involves operational changes that exceed
the regulatory thresholds established under 49 CFR 1105.7(e)(4) or (5).
See 49 CFR 1105.6(b)(4)(i). In the event that a SIP should be required
in a transaction that would not be subject to environmental review, see
49 CFR 1105.6(c)(2), the Board intends to develop appropriate case-
specific SIP procedures.\21\
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\21\ See CN/WCTC Decisions, STB Finance Docket No. 34000 (STB
Decision Nos. 2 and 9, served May 9 and Aug. 2, 2001, respectively)
(SIP prepared even though no environmental review was required).
---------------------------------------------------------------------------
After FRA reviews the proposed SIP, FRA will issue its findings and
conclusions on the adequacy of the plan and will provide its analysis
of the proposed SIP early enough to permit incorporation in the Board's
draft environmental assessment or draft environmental impact statement.
Nevertheless, recognizing that the SIP is an ongoing and fluid process,
as in the Conrail Acquisition proceeding, FRA may comment on the plan
and on an applicant's progress in completing a SIP, without endorsing
the plan in full. The Board agrees with FRA that flexible procedures
for FRA's response are necessary to enable an applicant to complete a
comprehensive plan.
Additionally, this approach will enable the Board to incorporate
FRA's comments in its draft environmental documentation, which, in
turn, will encourage the public to review and comment on the proposed
SIP. SEA will then independently review the proposed SIP and respond to
comments received on the plan in its final environmental documentation.
Finally, the Board will consider the entire environmental record,
including information concerning the SIP, in deciding whether to
approve the proposed transaction. Should the Board approve the
transaction and adopt the SIP, it will require that the applicants
comply with the SIP as a condition to its approval and require each
applicant to coordinate with FRA in implementing the SIP, including any
amendments to the plan, if necessary. (See FRA's Section-By-Section
Analysis
[[Page 11604]]
discussing amendments to 49 CFR 244.17 for a more complete discussion.)
As explained in FRA's Section-By-Section Analysis of
Sec. 244.17(g), FRA will advise the Board about its findings on the
ongoing implementation process in accordance with an agreement that the
agencies will enter into and execute (1) over a five-year period, (2)
during any other oversight period for the transaction established by
the Board, or (3) until FRA advises the Board that, in its view, the
proposed integration of the applicants' operations has been safely
completed, whichever is shortest.\22\ Should FRA identify shortcomings
or deficiencies during the integration process, the Board reserves
jurisdiction to reopen the proceeding and impose terms and conditions
on the transaction to ensure that the transaction is safely
implemented.
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\22\ The Board's new rules at 49 CFR 1180.1(g) provide for at
least a five-year oversight period for major railroad mergers and
consolidations involving two or more Class I railroads.
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Sec. 1106.5 Waiver.
The Board can waive or modify the requirements of this part where a
carrier shows that relief is warranted or appropriate.
Sec. 1106.6 Reservation of Jurisdiction.
The Board reserves the right to require the filing of a SIP in
transactions other than those provided in this part or to adopt
modified SIP requirements in individual cases if it concludes that
doing so is necessary to properly consider an application or other
request for authority.
Regulatory Flexibility Act
The Board certifies that its decision to adopt regulations
requiring Class I and Class II railroads to prepare safety integration
plans under certain circumstances will not have a significant effect on
a substantial number of small entities.
Environmental Impact
This action will not significantly affect either the quality of the
human environment or the conservation of energy resources.
Statement of Energy Effects
Even though the Board is an independent regulatory agency, it
recognizes the importance of the policy objective in Executive Order
13212 to expedite consideration of projects that would increase the
production, transmission, or conservation of energy. The SIP rulemaking
action, however, should not affect the production, transmission, or
conservation of energy.
Federal Railroad Administration 49 CFR Chapter II
List of Subjects in 49 CFR Part 244
Administrative penalties, practice and procedure, Railroad safety,
Railroads, Safety Integration Plans.
In consideration of the foregoing, FRA amends chapter II of title
49, Code of Federal Regulations, to read as follows:
1. Part 244 is added to read as follows:
PART 244--REGULATIONS ON SAFETY INTEGRATION PLANS GOVERNING
RAILROAD CONSOLIDATIONS, MERGERS, AND ACQUISITIONS OF CONTROL
Subpart A--General
Sec.
244.1 Scope, application, and purpose.
244.3 Preemptive effect.
244.5 Penalties.
244.7 Waivers.
244.9 Definitions.
Subpart B--Safety Integration Plans
244.11 Contents of a Safety Integration Plan.
244.13 Subjects to be addressed in a Safety Integration Plan
involving an amalgamation of operations.
244.15 Subjects to be addressed in a Safety Integration Plan not
involving an amalgamation of operations.
244.17 Procedures.
244.19 Disposition.
244.21 Compliance and Enforcement.
Appendix A to Part 244--Schedule of Civil Penalties [Reserved]
Authority: 49 U.S.C. 20103, 20107, 21301; 5 U.S.C. 553 and 559;
Sec. 31001(s)(1), Pub. L. 104-134, 110 Stat. 1321-373 (28 U.S.C.
2461 note); and 49 CFR 1.49.
Subpart A--General
Sec. 244.1 Scope, application, and purpose.
(a) This part prescribes requirements for filing and implementing a
Safety Integration Plan with FRA whenever a Class I railroad proposes
to consolidate with, merge with, or acquire control of another Class I
railroad, or with a Class II railroad where there is a proposed
amalgamation of operations.
(b) The purpose of this part is to achieve a reasonable level of
railroad safety during the implementation of transactions described in
paragraph (a) of this section. This part does not preclude a railroad
from taking additional measures not inconsistent with this part to
provide for safety in connection with a transaction.
(c) The requirements prescribed under this part apply only to FRA's
disposition of a regulated transaction filed by an applicant. The
transactions covered by this part also require separate filing with and
approval by the Surface Transportation Board. See 49 CFR part 1106.
Sec. 244.3 Preemptive effect.
Under 49 U.S.C. 20106, issuance of these regulations preempts any
State law, regulation, or order covering the same subject matter,
except an additional or more stringent law, regulation, or order that:
(a) Is necessary to eliminate or reduce an essentially local safety
hazard;
(b) Is not incompatible with a law, regulation, or order of the
United States Government; and
(c) Does not unreasonably burden interstate commerce.
Sec. 244.5 Penalties.
(a) Any person who violates any requirement of this part or causes
the violation of any such requirement is subject to a civil penalty of
at least $500, but not more than $11,000 per day, except that:
Penalties may be assessed against individuals only for willful
violations, and, where a grossly negligent violation or a pattern of
repeated violations has created an imminent hazard of death or injury
to persons, or has caused death or injury, a penalty not to exceed
$22,000 per violation may be assessed. Each day a violation continues
shall constitute a separate offense.
(b) As specified in Sec. 244.21, FRA may also exercise any of its
other enforcement remedies if a railroad fails to comply with
Sec. 244.21.
(c) Any person who knowingly and willfully makes a false entry in a
record or report required by this part shall be subject to criminal
penalties under 49 U.S.C. 21311.
Sec. 244.7 Waivers.
(a) A person subject to a requirement of this part may petition the
Administrator for a waiver of compliance with any requirement of this
part. The filing of such a petition does not affect that person's
responsibility for compliance with that requirement pending action on
such a petition.
(b) Each petition for a waiver under this section must be filed in
the manner and contain the information required by part 211 of this
chapter.
(c) If the Administrator finds that a waiver of compliance is in
the public interest and is consistent with railroad safety, the
Administrator may grant the waiver subject to any conditions the
Administrator deems necessary.
(d) The procedures governing a petition for a waiver that are
prescribed under this part apply only to FRA's
[[Page 11605]]
disposition of such a petition. A person seeking a waiver of a Surface
Transportation Board regulation would need to file a petition for a
waiver with the Board. (See 49 CFR 1106.5.)
Sec. 244.9 Definitions.
As used in this part--
Administrator means the Administrator of the Federal Railroad
Administration or the Administrator's delegate.
Amalgamation of operations means the migration, combination, or
unification of one set of railroad operations with another set of
railroad operations, including, but not limited to, the allocation of
resources affecting railroad operations (e.g., changes in personnel,
track, bridges, or communication or signal systems; or use or
deployment of maintenance-of-way equipment, locomotives, or freight or
passenger cars).
Applicant means a Class I railroad or a Class II railroad engaging
in a transaction subject to this part.
Best practices means measures that are tried, tested, and proven to
be the safest and most efficient rules or instructions governing
railroad operations.
Class I or Class II railroad has the meaning assigned by
regulations of the Surface Transportation Board (49 CFR Part 1201;
General Instructions 1-1), as those regulations may be revised by the
Board (including modifications in class thresholds based on the revenue
deflator formula) from time to time.
Corporate culture means the totality of the commitments, written
and oral directives, and practices that make up the way a railroad's
management and its employees operate their railroad.
Control means actual control, legal control, or the power to
exercise control through:
(1) Common directors, officers, stockholders, a voting trust, or a
holding or investment company, or
(2) Any other means. See 49 U.S.C. 10102.
Consolidation means the creation of a new Class I railroad by
combining existing Class I railroads or a Class I railroad and a Class
II railroad where there is an amalgamation of operations, or by a
railroad or a corporate parent of a Class I railroad taking over the
assets or assuming the liabilities, or both, of another Class I
railroad such that the resulting unified entity has the combined
capital, powers, and subsidiaries and affiliates, if applicable, of all
of its constituents.
Environmental documentation means either an Environmental
Assessment or Environmental Impact Statement prepared in accordance
with the Surface Transportation Board's environmental rules at 49 CFR
part 1105.
Merger means the acquisition of one Class I railroad or Class II
railroad where there is amalgamation of operations by a Class I
railroad such that the acquiring railroad or a corporate parent of that
railroad acquires the stock, assets, liabilities, powers, subsidiaries
and affiliates of the railroad acquired.
Person means an entity of any type covered under 1 U.S.C. 1,
including the following: A railroad; a manager, supervisor, official,
or other employee or agent of a railroad; any owner, manufacturer,
lessor, or lessee of railroad equipment, track, or facilities; any
independent contractor providing goods or services to a railroad; and
any employee of such owner, manufacturer, lessor, lessee, or
independent contractor.
Railroad means any form of non-highway ground transportation that
runs on rails or electromagnetic guideways, including:
(1) Commuter or other short-haul rail passenger service in a
metropolitan or suburban area; and
(2) High speed ground transportation systems that connect
metropolitan areas, without regard to whether those systems use new
technologies not associated with traditional railroads. The term does
not include rapid transit operations in an urban area that are not
connected to the general railroad system of transportation.
Safety Integration Plan means a comprehensive written plan
submitted to and approved by FRA in compliance with this part that
demonstrates in required detail how an applicant will provide for safe
railroad operations during and after any transaction covered by this
part, and otherwise assure compliance with the Federal railroad safety
laws.
Section of Environmental Analysis or ``SEA'' means the Section of
the Surface Transportation Board that prepares its environmental
documentation and analyses.
Transaction means a consolidation, merger, or acquisition of
control subject to the requirements of this part.
Subpart B--Safety Integration Plans
Sec. 244.11 Contents of a Safety Integration Plan.
Each Safety Integration Plan shall contain the following
information for each subject matter identified in Sec. 244.13 or
Sec. 244.15:
(a) A detailed description of how the applicant differs from each
railroad it proposes to acquire or with which the applicant proposes to
consolidate or merge, including the rules or instructions governing
railroad operations of these railroads;
(b) A detailed description of the proposed manner of operations of
the resulting railroad, including a reconciliation of the differing
rules or instructions governing railroad operations of the railroads
involved in the transaction;
(c) The measures to be taken to comply with applicable Federal
railroad safety laws and regulations;
(d) The proposed specific measures, expressed step-by-step, for
each relevant subject matter that the applicant believes will result in
safe implementation of the proposed transaction consistent with the
requirements of this part;
(e) The allocation of resources, expressed as human and capital
resources within designated operating budgets, directed to complete
safety-relevant operations subject to the transaction; and
(f) The timetable, targeted in specific terms from commencement to
completion, for implementing paragraphs (c), (d) and (e) of this
section.
Sec. 244.13 Subjects to be addressed in a Safety Integration Plan
involving an amalgamation of operations.
Each Safety Integration Plan involving an amalgamation of
operations shall address the following subjects for railroad operations
conducted on property subject to the transaction:
(a) Corporate culture. Each applicant shall:
(1) Identify and describe differences for each safety-related area
between the corporate cultures of the railroads involved in the
transaction;
(2) Describe how these cultures lead to different practices
governing rail operations; and
(3) Describe, in step-by-step measures, the integration of these
corporate cultures and the manner in which it will produce a system of
``best practices'' when the transaction is implemented.
(b) Training. Each applicant shall identify classroom and field
courses, lectures, tests, and other educational or instructional forums
designed to ensure the proficiency, qualification, and familiarity with
the operating rules and operating tasks of territory assigned of the
following employees, either when these employees are assigned to a new
territory or the operating rules on a given territory are changed:
(1) Employees who perform train and engine service;
[[Page 11606]]
(2) Employees who inspect and maintain track and bridges;
(3) Employees who inspect, maintain and repair any type of on-track
equipment, including locomotives, passenger cars, and freight cars of
all types;
(4) Dispatchers or operators;
(5) Employees who inspect and maintain signal and train control
devices and systems;
(6) Hazardous materials personnel, including information technology
personnel who affect the transportation of hazardous materials;
(7) Employees who maintain or upgrade communication systems
affecting rail operations; and
(8) Supervisors of employees enumerated in paragraphs (b)(1)
through (7) of this section.
(c) Operating practices.
(1) Operating rules. Each applicant shall identify the operating
rules, timetables, and timetable special instructions to govern
railroad operations, including yard or terminal operations and freight
or passenger service.
(2) Alcohol and drug. Each applicant shall identify the post-
accident toxicological testing, reasonable cause testing, and random
alcohol and drug testing programs as required under 49 CFR part 219.
(3) Qualification and certification of locomotive engineers. Each
applicant shall identify the program for qualifying and certifying
locomotive engineers under 49 CFR part 240.
(4) Hours of service laws. Each applicant shall identify the
procedures for complying with the Federal hours of service laws and
related measures to minimize fatigue of employees covered by 49 U.S.C.
chapter 211.
(d) Motive power and equipment. Each applicant shall identify the
qualification standards for employees who inspect, maintain, or repair
railroad freight or passenger cars and locomotives, and the designated
facilities used, or to be used, to repair such equipment.
(e) Signal and train control. Each applicant shall identify the
signal and train control systems governing railroad operations and
maintenance, and any planned amendments or modifications to capital
improvement and research and development projects for signal and train
control operations.
(f) Track Safety Standards and bridge structures. Each applicant
shall identify the maintenance and inspection programs for track and
bridges, and the qualification standards for roadway workers.
(g) Hazardous Materials. Each applicant shall identify an
inspection program covering the following areas:
(1) Field inspection practices;
(2) Hazardous materials communication standards;
(3) Emergency response procedures; and
(4) Information technology systems and personnel employed for
transmitting or receiving information accompanying hazardous materials
shipments. The inspection program should identify preventive measures
that will be employed to respond to potential information technology
integration and hazardous materials documentation deficiencies.
(h) Dispatching operations. Each applicant shall identify:
(1) The railroad dispatching system to be adopted;
(2) The migration of the existing dispatching systems to the
adopted system, if applicable; and
(3) The criteria used to determine workload and duties performed by
operators or dispatchers employed to execute operations.
(i) Highway-rail grade crossing systems. Each applicant shall
identify a program, including its development and implementation,
covering the following:
(1) Identification of the highway-rail grade crossings at which
there will be an increase in rail traffic resulting from the
transaction;
(2) An applicant's existing grade-crossing programs as they apply
to grade crossings identified in paragraph (i)(1) of this section;
(3) Integration of the grade crossing programs of the railroads
subject to the transaction to the extent the programs may be different;
(4) Emergency response actions;
(5) Avoidance of blocked or obstructed highway-rail crossing
systems by trains, locomotives, railroad cars, or other pieces of
rolling equipment; and
(6) Signs employed for changes in rail traffic patterns.
(j) Personnel staffing. Each applicant shall identify the number of
employees by job category, currently and proposed, to perform each of
the following types of function when there is a projected change of
operations that will impact workforce duties or responsibilities:
(1) Train and engine service;
(2) Yard and terminal service;
(3) Dispatching operations;
(4) Roadway maintenance;
(5) Freight car and locomotive maintenance;
(6) Maintenance of signal and train control systems, devices, and
appliances;
(7) Hazardous materials operations; and
(8) Managers responsible for oversight of safety programs.
(k) Capital investment. Each applicant shall identify the capital
investment program, clearly displaying planned investments in track and
structures, signals and train control, and locomotives and equipment.
The program shall describe any differences from the program currently
in place on each of the railroads involved in the transaction.
(l) Information systems compatibility. Each applicant shall
identify measures providing for a seamless interchange of information
relating to the following subject matters:
(1) Train consists;
(2) Movements and movement history of locomotives and railroad
freight cars;
(3) Dispatching operations;
(4) Emergency termination of operations; and
(5) Transportation of hazardous materials.
Sec. 244.15 Subjects to be addressed in a Safety Integration Plan not
involving an amalgamation of operations.
If an applicant does not propose an amalgamation of operations
conducted on properties subject to the transaction, the applicant shall
not be required to file a Safety Integration Plan unless directed to do
so by FRA.
Sec. 244.17 Procedures.
(a) Each applicant shall file one original of a proposed Safety
Integration Plan with the Associate Administrator for Safety, FRA, 1120
Vermont Avenue, NW., Mail Stop 25, Washington, DC, 20590, no later than
60 days after the date it files its application with the Surface
Transportation Board.
(b) The applicant shall submit such additional information
necessary to support its proposed Safety Integration Plan as FRA may
require to satisfy the requirements of this part.
(c) The applicant shall coordinate with FRA to resolve FRA's
comments on the proposed Safety Integration Plan until such plan is
approved.
(d) FRA will file its findings and conclusions on the proposed
Safety Integration Plan with the Board's Section of Environmental
Analysis at a date sufficiently in advance of the Board's issuance of
its draft environmental documentation in the case to permit
incorporation in the draft environmental document.
(e) Assuming FRA approves the proposed Safety Integration Plan and
the Surface Transportation Board approves the transaction and adopts
the
[[Page 11607]]
Plan, each applicant involved in the transaction shall coordinate with
FRA in implementing the approved Safety Integration Plan.
(f) During implementation of an approved Safety Integration Plan,
FRA expects that an applicant may change and refine its Safety
Integration Plan in response to unforeseen developments. An applicant
shall communicate with FRA about such developments and submit
amendments to its Safety Integration Plan to FRA for approval.
(g) During implementation of an approved Safety Integration Plan,
FRA will inform the Surface Transportation Board about implementation
of the plan at times and in a manner designed to aid the Board's
exercise of its continuing jurisdiction over the approved transaction
in accordance with an agreement that FRA and the Board will enter into
and execute. Pursuant to such agreement, FRA will consult with the
Board at all appropriate stages of implementation, and will advise the
Board on the status of the implementation process:
(1) For a period of no more than five years after the Board
approves the transaction,
(2) For an oversight period for the transaction established by the
Board, or
(3) Until FRA advises the Board in writing that the integration of
operations subject to the transaction is complete, whichever is
shorter.
(h) Request for Confidential Treatment. Each applicant requesting
that advanced drafts of the proposed Safety Integration Plan and
information in support of the proposed and approved plan that are filed
with FRA receive confidential treatment shall comply with the
procedures enumerated at 49 CFR 209.11.
Sec. 244.19 Disposition.
(a) Standard of review. FRA reviews an applicant's Safety
Integration Plan, and any amendments thereto, to determine whether it
provides a reasonable assurance of safety at every step of the
transaction. In making this determination, FRA will consider whether
the plan:
(1) Is thorough, complete, and clear; and
(2) Describes in adequate detail a logical and workable transition
from conditions existing before the transaction to conditions intended
to exist after consummation of the transaction.
(b) Approval of the Safety Integration Plan and Amendments Thereto.
FRA approves a Safety Integration Plan, and any amendments thereto,
that meets the standard set forth in paragraph (a) of this section. The
approval will be conditioned on an applicant's execution of all of the
elements contained in the plan, including any amendments to the plan
approved by FRA.
(c) Amendment.--(1) By the applicant. The applicant may amend its
Safety Integration Plan, from time to time, provided it explains the
need for the amendment. Any amendment is subject to the approval of FRA
as prescribed in paragraph (b) of this section, and shall take effect
within 20 days of approval. The applicant shall communicate with FRA to
resolve any FRA comments on the proposed amendment until it is
approved.
(2) By FRA. FRA may request an applicant to amend its approved
Safety Integration Plan from time to time should circumstances warrant.
Sec. 244.21 Compliance and Enforcement.
(a) After the Surface Transportation Board has approved a
transaction subject to this part, a railroad implementing a transaction
subject to this part shall operate in accordance with the Safety
Implementation Plan approved by FRA until the properties involved in
the transaction are completely integrated into the form contemplated in
the Surface Transportation Board's approval of the transaction.
(b) FRA may exercise any or all of its enforcement remedies
authorized by the Federal railroad safety laws if a railroad fails to
comply with paragraph (a) of this section or to execute any measure
contained in a Safety Implementation Plan approved by FRA.
Appendix A to Part 244--Schedule of Civil Penalties [Reserved]
Issued in Washington, DC, on March 8, 2002.
Allan Rutter,
Federal Railroad Administrator.
Surface Transportation Board 49 CFR Chapter X
List of Subjects in 49 CFR Part 1106
Railroad Safety, Railroads, Safety Integration Plans.
For the reasons set forth in the preamble, in title 49, subtitle
IV, part 1106 is added to read as follows:
PART 1106--PROCEDURES FOR SURFACE TRANSPORTATION BOARD
CONSIDERATION OF SAFETY INTEGRATION PLANS IN CASES INVOLVING
RAILROAD CONSOLIDATIONS, MERGERS, AND ACQUISITIONS OF CONTROL
Sec.
1106.1 Purpose.
1106.2 Definitions.
1106.3 Actions for which Safety Integration Plan is Required.
1106.4 The Safety Integration Plan Process.
1106.5 Waiver.
1106.6 Reservation of jurisdiction.
Authority: 5 U.S.C. 553; 5 U.S.C. 559; 49 U.S.C. 721; 49 U.S.C.
10101; 49 U.S.C. 11323-11325; 42 U.S.C. 4332.
Sec. 1106.1 Purpose.
This part is designed to ensure adequate and coordinated
consideration of safety integration issues, by both the Board and the
Federal Railroad Administration, the agency within the Department of
Transportation responsible for the enforcement of railroad safety, in
the implementation of rail transactions subject to the Board's
jurisdiction. It establishes the procedures by which the Board will
consider safety integration plans in connection with its approval and
authorization of transactions for which the Board has concluded such
consideration is required.
Sec. 1106.2 Definitions.
The following definitions apply to this part:
Act means the ICC Termination Act of 1995, Pub. L. 104-88, 109
Stat. 803 (1995).
Amalgamation of operations, as defined by the Federal Railroad
Administration at 49 CFR 244.9, means the migration, combination, or
unification of one set of railroad operations with another set of
railroad operations, including, but not limited to, the allocation of
resources affecting railroad operations (e.g., changes in personnel,
track, bridges, or communication or signal systems; or use or
deployment of maintenance-of-way equipment, locomotives, or freight or
passenger cars).
Applicant means a Class I railroad or a Class II railroad engaging
in a transaction subject to this part.
Board means the Surface Transportation Board.
Class I or Class II railroad has the meaning assigned by the
Board's regulations (49 CFR part 1201; General Instructions 1-1), as
those regulations may be revised by the Board (including modifications
in class thresholds based on the revenue deflator formula) from time to
time.
Environmental documentation means either an Environmental
Assessment or an Environmental Impact Statement prepared in accordance
with the National Environmental Policy Act and Board's environmental
rules at 49 CFR part 1105.
Federal Railroad Administration (``FRA'') means the agency within
the
[[Page 11608]]
Department of Transportation responsible for railroad safety.
Safety Integration Plan (``SIP'') means a comprehensive written
plan, prepared in accordance with FRA guidelines or regulations,
explaining the process by which Applicants intend to integrate the
operation of the properties involved in a manner that would maintain
safety at every step of the integration process, in the event the Board
approves the transaction that requires a SIP.
Section of Environmental Analysis (``SEA'') means the Section that
prepares the Board's environmental documents and analyses.
Transaction means an application by a Class I railroad that
proposes to consolidate with, merge with, or acquire control under 49
U.S.C. 11323(a) of another Class I railroad, or with a Class II
railroad where there is a proposed amalgamation of operations, as
defined by FRA's regulations at 49 CFR 244.9. ``Transaction'' also
includes a proceeding other than those specified above if the Board
concludes that a SIP is necessary in its proper consideration of the
application or other request for authority.
Sec. 1106.3 Actions for which Safety Integration Plan is required.
A SIP shall be filed by any applicant requesting authority to
undertake a transaction as defined under Sec. 1106.2 of this part.
Sec. 1106.4 The Safety Integration Plan process.
(a) Each applicant in a transaction subject to this part shall file
a proposed SIP in accordance with the informational requirements
prescribed at 49 CFR part 244, or other FRA guidelines or requirements
regarding the contents of a SIP, with SEA and FRA no later than 60 days
from the date the application is filed with the Board.
(b) The proposed SIP shall be made part of the environmental record
in the Board proceeding and dealt with in the ongoing environmental
review process under 49 CFR part 1105. The procedures governing the
process shall be as follows:
(1) In accordance with 49 CFR 244.17, FRA will provide its findings
and conclusions on the adequacy of the proposed SIP (i.e., assess
whether the proposed SIP establishes a process that provides a
reasonable assurance of safety in executing the proposed transaction)
to SEA at a date sufficiently in advance of the Board's issuance of its
draft environmental documentation in the case to permit incorporation
in the draft environmental document.
(2) The draft environmental documentation shall incorporate the
proposed SIP, any revisions or modifications to it based on further
consultations with FRA, and FRA's written comments regarding the SIP.
The public may review and comment on the draft environmental
documentation within the time limits prescribed by SEA.
(3) SEA will independently review each proposed SIP. In its final
environmental documentation, SEA will address written comments on the
proposed SIP received during the time established for submitting
comments on the draft environmental documentation. The Board then will
consider the full environmental record, including the information
concerning the SIP, in arriving at its decision in the case.
(4) If the Board approves the transaction and adopts the SIP, it
will require compliance with the SIP as a condition to its approval.
Each applicant involved in the transaction then shall coordinate with
FRA in implementing the approved SIP, including any amendments thereto.
FRA has provided in its rules at 49 CFR 244.17(g) for submitting
information to the Board during implementation of an approved
transaction that will assist the Board in exercising its continuing
jurisdiction over the transaction. FRA also has agreed to advise the
Board when, in its view, the integration of the applicants' operations
has been safely completed.
(c) If a SIP is required in transactions that would not be subject
to environmental review under the Board's environmental rules at 49 CFR
part 1105, the Board will develop appropriate case-specific SIP
procedures based on the facts and circumstances presented.
Sec. 1106.5 Waiver.
The SIP requirements established by this part may be waived or
modified by the Board where a railroad shows that relief is warranted
or appropriate.
Sec. 1106.6 Reservation of Jurisdiction.
The Board reserves the right to require a SIP in cases other than
those enumerated in this part, or to adopt modified SIP requirements in
individual cases, if it concludes that doing so is necessary in its
proper consideration of the application or other request for authority.
Decided: March 6, 2002.
By the Board, Chairman Morgan and Vice Chairman Burkes.
Vernon A. Williams,
Secretary.
[FR Doc. 02-6046 Filed 3-14-02; 8:45 am]
BILLING CODE 4910-06-P