Federal Register / Vol. 85, No. 152 / Thursday, August 6, 2020 / Rules and Regulations 47675

Effective date Date certain authorization/cancellation of Current effective federal assistance State and location Community No. sale of flood insurance in map date no longer available community in SFHAs

Newton, Township of, 421756 ...... July 2, 1979, Emerg; July 3, ...... do ...... Do. Lackawanna County. 1990, Reg; August 5, 2020, Susp.. North Abington, Township 422460 ...... February 3, 1976, Emerg; Au- ...... do ...... Do. of, Lackawanna County. gust 10, 1979, Reg; August 5, 2020, Susp.. Old Forge, Borough of, 420535 ...... July 25, 1974, Emerg; October ...... do ...... Do. Lackawanna County. 16, 1979, Reg; August 5, 2020, Susp.. Scott, Township of, Lacka- 421757 ...... January 19, 1979, Emerg; May ...... do ...... Do. wanna County. 17, 1990, Reg; August 5, 2020, Susp.. Scranton, City of, Lacka- 420538 ...... January 12, 1973, Emerg; Au- August 5, 2020 ...... August 5, 2020. wanna County. gust 15, 1980, Reg; August 5, 2020, Susp.. South Abington, Township 421758 ...... July 29, 1975, Emerg; Decem- ...... do ...... Do. of, Lackawanna County. ber 15, 1982, Reg; August 5, 2020, Susp.. Taylor, Borough of, Lacka- 420539 ...... March 26, 1974, Emerg; Au- ...... do ...... Do. wanna County. gust 15, 1980, Reg; August 5, 2020, Susp.. Throop, Borough of, 420540 ...... April 5, 1974, Emerg; Sep- ...... do ...... Do. Lackawanna County. tember 28, 1979, Reg; Au- gust 5, 2020, Susp.. Waverly, Township of, 422453 ...... January 14, 1976, Emerg; ...... do ...... Do. Lackawanna County. September 30, 1981, Reg; August 5, 2020, Susp.. Region V Illinois: Prairie du Rocher, 170578 ...... June 25, 1974, Emerg; Sep- ...... do ...... Do. Village of, Randolph tember 4, 1985, Reg; August County. 5, 2020, Susp.. * ...... do = Ditto. Code for reading third column: Emerg.—Emergency; Reg.—Regular; Susp.—Suspension.

Katherine B. Fox, reasonableness of a rail carrier’s W. R.R., 5 I.C.C.2d 751, 754 (1989) Assistant Administrator for Mitigation, common carrier rate by filing a formal (discussing 49 U.S.C. 10709, the Federal Insurance and Mitigation complaint with the Board. See 49 U.S.C. predecessor of the current section Administration—FEMA Resilience, 10701(d); 49 U.S.C. 10702; 49 U.S.C. 10707). In practice, however, the market Department of Homeland Security, Federal 10704(b); 49 CFR pt. 1111. However, dominance inquiry has often become a Emergency Management Agency. before the Board is permitted to costly and time-consuming undertaking, [FR Doc. 2020–16400 Filed 8–5–20; 8:45 am] determine if the rate is reasonable, it resulting in a significant burden on rate BILLING CODE 9110–12–P must first find that the rail carrier has case litigants. In smaller rate cases, in market dominance over the particular, the expense associated with transportation to which the rate applies. the market dominance inquiry may be SURFACE TRANSPORTATION BOARD 49 U.S.C. 10707(b), (c). Market disproportionate to the remedy sought. dominance is defined as ‘‘an absence of Accordingly, in a notice of proposed 49 CFR Parts 1011 and 1111 effective competition from other rail rulemaking issued on September 12, [Docket No. EP 756] carriers or modes of transportation for 2019, the Board proposed a streamlined the transportation to which a rate market dominance inquiry. Market Market Dominance Streamlined applies.’’ 49 U.S.C. 10707(a). It is Dominance Streamlined Approach Approach established Board precedent that the (NPRM), EP 756 (STB served Sept. 12, burden is on the complainant to 2019).1 Specifically, the Board proposed AGENCY: Surface Transportation Board. demonstrate market dominance. See, a set of factors that, if they could be ACTION: Final rule. e.g., Total Petrochems. & Ref. USA, Inc. demonstrated by the complainant, v. CSX Transp., Inc., NOR 42121, slip would establish a prima facie showing SUMMARY: The Surface Transportation op. at 28 (STB served May 31, 2013) of market dominance. Board (STB or Board) is adopting a final (with Board Member Begeman The Board received numerous rule to establish a streamlined approach 2 dissenting on other matters) updated comments on the NPRM. After for pleading market dominance in rate (STB served Aug. 19, 2013.) reasonableness proceedings. 1 The proposed rule was published in the Federal The agency has previously recognized DATES: The rule is effective on Register, 84 FR 48,882 (Sept. 17, 2019). the Congressional intent expressed in 2 The Board received comments and/or reply September 5, 2020. the market dominance statute and its comments from the following entities: The FOR FURTHER INFORMATION CONTACT: legislative history, which ‘‘envision[s] American Chemistry Council, The Fertilizer Sarah Fancher at (202) 245–0355. Institute, the National Industrial Transportation the market dominance determination League, the Chlorine Institute, and the Corn Assistance for the hearing impaired is simply as a practical threshold Refiners Association (collectively, the Coalition available through the Federal Relay jurisdictional determination to be made Associations); the American Fuel & Petrochemical Service at (800) 877–8339. without lengthy litigation or Manufacturers (AFPM); the Association of American Railroads (AAR); BNSF Railway SUPPLEMENTARY INFORMATION: Rail administrative delay.’’ Westmoreland Company (BNSF); Canadian National Railway shippers may challenge the Coal Sales Co. v. Denver & Rio Grande Continued

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considering the comments, the Board providing the service. See 49 U.S.C. approach, the NPRM proposed factors will adopt its proposal with the 10707(d)(1)(A). However, a finding by that, if demonstrated by the modifications discussed below. the Board that a movement’s R/VC ratio complainant, would constitute a prima is 180% or greater does not establish a facie showing of market dominance. The Background presumption that the rail carrier Board reasoned that the presence of In January 2018, the Board established providing the transportation has market these factors would constitute its Rate Reform Task Force (RRTF), with dominance over the movement. See 49 ‘‘significant evidence about the status of the objectives of developing U.S.C. 10707(d)(2)(A). Accordingly, if effective competition,’’ both intramodal recommendations to reform and the quantitative 180% R/VC threshold is and intermodal. NPRM, EP 756, slip op. streamline the Board’s rate review met, the Board moves to the second at 7. However, the Board also explained processes for large cases and component, a qualitative analysis of that, under the proposed streamlined determining how to best provide a rate market dominance. In this analysis, the approach, rail carriers would still be review process for smaller cases. After Board determines whether there are any ‘‘permitted to refute any of the prima holding informal meetings throughout feasible transportation alternatives facie factors of the complainant’s case, 2018, the RRTF issued a report on April sufficient to constrain the railroad’s or otherwise show that effective 25, 2019 (RRTF Report), which rates for the traffic to which the competition exists for the traffic at recommended, among other things, that challenged rates apply (the issue traffic). issue.’’ Id. at 12. The Board concluded the Board develop ‘‘a standard for See, e.g., M&G Polymers 2012, NOR that the proposed approach would pleading market dominance that will 42123, slip op. at 2, 11–18; Consumers ‘‘have the benefit of reducing the reduce the cost and time of bringing a Energy Co. v. CSX Transp., Inc., NOR complexity of market dominance rate case.’’ RRTF Report 53. The RRTF 42142, slip op. at 287–98 (STB served presentations for many complainants concluded that an effort to streamline Jan. 11, 2018). without limiting railroads’ ability to the market dominance inquiry was a As explained in the NPRM, EP 756, mount a thorough defense.’’ Id. necessary part of making rate relief slip op. at 5–6, it is well established that The prima facie factors proposed in available for smaller rate disputes. Id. at the Board has the authority to review the NPRM are as follows: 52. After considering the RRTF Report and modify its rate reasonableness • The movement has an R/VC ratio of and broader market dominance issues, methodologies and processes— 180% or greater; see NPRM, EP 756, slip op. at 3–6, the including its market dominance • The movement would exceed 500 Board issued the NPRM proposing a inquiry—to ensure that they remain highway miles between origin and streamlined approach for pleading accessible to the complainants that are destination; market dominance in rate entitled to use them.4 The NPRM • There is no intramodal competition reasonableness proceedings. described the Board’s underlying from other railroads; The Board’s market dominance reasons for its proposal: The time and • There is no barge competition; • inquiry comprises two components: A cost associated with an evidentiary The complainant has used truck for quantitative threshold and a qualitative process that ‘‘requires the complainant 10% or fewer of its movements subject analysis. The statute establishes a to prove a negative proposition on to the rate at issue over a five-year opening—that intermodal and period; and conclusive presumption that a railroad • does not have market dominance if the intramodal competition are not effective The complainant has no practical rate charged produces revenues that are constraints on rail rates’’; the fact that build-out alternative due to physical, less than 180% of its variable costs 3 of such expense may be particularly out of regulatory, financial, or other issues (or balance with the remedy being sought in combination of issues). Company (CN); CSX Transportation, Inc. (CSXT); smaller rate cases; and that the time and Id. at 6–7. For the factors pertaining Farmers Union of Minnesota, Farmers Union of cost of the market dominance inquiry to intramodal competition, barge Montana, Farmers Union of North Dakota, Farmers could itself be a barrier to rate relief. competition, and build-out alternatives, Union of South Dakota, and Farmers Union of the NPRM proposed that complainants Wisconsin (collectively, Farmers Union); Freight NPRM, EP 756, slip op. at 3–4. The Rail Customer Alliance (FRCA); Indorama Ventures NPRM also described how its proposed could submit a verified statement from (Indorama); Industrial Minerals Association—North streamlined market dominance an appropriate official attesting that the America (IMA–NA); Institute of Scrap Recycling approach would further the rail complainant does not have such Industries, Inc. (ISRI); MillerCoors; National Coal transportation policy (RTP) at 49 U.S.C. competitive options, or could otherwise Transportation Association (NCTA); National Grain and Feed Association (NGFA); National Taxpayers 10101 and would be consistent with demonstrate that those factors are met. Union (NTU); Norfolk Southern Railway Company clear Congressional directives in both Id. at 8, 10–11. (NSR); Olin Corporation (Olin); Portland Cement that statutory provision and also the To further streamline the market Association (PCA); Private Railcar Food and Surface Transportation Board dominance inquiry, the NPRM proposed Beverage Association (PRFBA); Steel Manufacturers that complainants would be allowed to Association (SMA); Union Pacific Railroad Reauthorization Act of 2015, Public Law Company (UP); U.S. Department of Agriculture; and 114–110, 129 Stat. 2228. NPRM, EP 756, request an on-the-record, telephonic Western Coal Traffic League (WCTL). The Board slip op. at 4–5. hearing with an Administrative Law also received a joint comment from several With respect to the proposed Judge (ALJ) at the rebuttal phase of the members of the Committee for a Study of Freight rate proceeding. Id. at 12. The purpose Rail Transportation and Regulation of the streamlined market dominance Transportation Research Board (referred to of the hearing would be to allow the collectively as the TRB Professors), as well an 2012) corrected and updated, (STB served Dec. 7, parties to clarify their market individual comment and reply from one member of 2012) (M&G Polymers 2012). The comparison of dominance positions under oath, and to that committee, Dr. Jerry Ellig (Dr. Ellig). That revenues to variable costs, reflected as a percentage build upon issues presented by the committee issued a report titled Modernizing figure, is known as a revenue-to-variable cost (R/ Freight Rail Regulation (TRB Report) in 2015. See VC) ratio. Id. parties through critical and exacting Nat’l Acads. of Sciences, Eng’g, & Med., 4 See, e.g., Rate Reg. Reforms, EP 715, slip op. at questioning. Id. The NPRM also Modernizing Freight Rail Regulation (2015), http:// 1–2 (STB served Mar. 13, 2015); Simplified proposed a 50-page limit (inclusive of nap.edu/21759. Standards for Rail Rate Cases, EP 646 (Sub-No. 1) exhibits and verified statements) on the 3 Variable costs are those railroad costs of (STB served Sept. 5, 2007), aff’d sub nom. CSX providing service that vary with the level of output. Transp., Inc. v. STB, 568 F.3d 236 (D.C. Cir. 2009), parties’ replies and rebuttals. Id. See M&G Polymers USA, LLC v. CSX Transp., Inc., vacated in part on reh’g, 584 F.3d 1076 (D.C. Cir. The Board did not propose to limit NOR 42123, slip op. at 2 n.4 (STB served Sept. 27, 2009). the types of rate proceedings in which

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complainants could utilize the Part I—Purpose of the Rule service.’’ (BNSF Reply, V.S. Miller 12– streamlined market dominance None of the commenters challenge the 14.) approach.5 Under the proposal, Board’s authority to adopt a streamlined Shippers and shipper groups agree with the NPRM’s conclusion that the complainants would have the option to market dominance approach based on a streamlined market dominance utilize the proposed streamlined market set of prima facie factors, though some approach would reduce burdens on dominance approach or the non- question whether certain aspects of the parties, expedite proceedings, and make streamlined market dominance proposal are consistent with particular the Board’s rate relief procedures more approach. The Board stated that ‘‘[i]f a statutory provisions and the RTP. accessible. (See, e.g., AFPM Comment 1, complainant determines that it is not Some rail interests generally support 3; Coalition Associations Comment 4–5; able to demonstrate one of the required streamlining the market dominance SMA Comment 10; MillerCoors inquiry, but suggest revisions to the factors, it would not choose this Comment 12; Indorama Comment 10; proposal. (AAR Comment 1; CSXT streamlined approach at the beginning IMA–NA Comment 10; Olin Comment Comment 2; NSR Comment 1 (adopting of the case, but would instead need to 4–5.) The Coalition Associations dispute AAR’s comment); CN Comment 1 choose a non-streamlined market UP’s and BNSF’s assertions that (stating support for AAR’s comment).) dominance presentation with additional streamlining would be generally Other rail commenters do not oppose a detailed information about its unnecessary. (Coalition Associations streamlined market dominance transportation options.’’ NPRM, EP 756, Reply 4.) They claim that, even in cases slip op. at 11. approach but argue that its use should where market dominance is clear, be limited to only smaller cases and also railroads’ concessions of market Final Rule suggest revisions. (UP Comment 1–2; dominance are the exception, not the BNSF Comment 2.) rule. (Id. at 8.) They point to Sunbelt After considering the comments, the In addition, UP and BNSF question Chlor Alkali Partnership v. Norfolk Board will adopt the rule proposed in whether such an approach is beneficial the NPRM, with minor modifications. Southern Railway, Docket No. NOR or necessary. UP expresses doubt that 42130, as an example, noting that there Below, the Board addresses the the streamlined approach would prove comments and discusses the the railroad conceded market worthwhile or attractive to shippers, as dominance only after the complainant modifications being adopted in the final the Board anticipated in the NPRM that filed extensive evidence, despite the rule. In Part I, the Board addresses only one additional complaint would be shipper having submitted a request for general comments on the purpose of the filed annually based on adoption of the admission on market dominance before rule. In Part II, the Board addresses streamlined approach. (UP Comment 3.) evidentiary filings were due. (Coalition comments regarding the prima facie UP states that a streamlined approach Associations Reply 8–9; see also Olin factors proposed in the NPRM, would not be useful because, when Comment 4–5 (explaining that the proposals from commenters for other market dominance is clear, railroads do complainant in the Sunbelt proceeding factors, and other suggested approaches not contest market dominance, and included dozens of pages and to streamline the market dominance when market dominance is a close case, statements from three witnesses inquiry. In Part III, the Board addresses shippers would not be able to use the addressing why theoretical alternatives procedural issues. Lastly, in Part IV, the streamlined approach because there would not work on opening, only for the Board addresses other miscellaneous would be some evidence of effective railroad to concede market dominance arguments. The text of the final rule is competition. (Id. at 3–4.) Nonetheless, in a single sentence on reply).) The below. UP recognizes that the Board’s proposal Coalition Associations also assert that could provide shippers in small cases BNSF’s argument that competition is 5 The Board’s general standards for judging the with inexpensive guidance on the likely pervasive in the transportation market, reasonableness of rail freight rates, including the outcome of a market dominance inquiry. even if true, does not diminish the need stand-alone cost test (referred to as Full-SAC), are (Id. at 4.) for a streamlined approach in those set forth in Coal Rate Guidelines, Nationwide, 1 BNSF comments that competition is instances where effective competition is I.C.C.2d 520 (1985), aff’d sub nom. Consol. Rail already pervasive in rail markets and Corp v. United States, 812 F.2d 1444 (3d Cir. 1987), absent. (Coalition Associations Reply as modified in Major Issues in Rail Rate Cases, EP discusses how it competes with multi- 14.) 657 (Sub-No. 1) (STB served Oct. 30, 2006), aff’d modal movements. (BNSF Comment 2– None of the criticisms described sub nom. BNSF Railway v. STB, 526 F.3d 770 (D.C. 8; BNSF Reply, V.S. Miller 2–12.) BNSF above warrant abandonment of the Cir. 2008), and Rate Regulation Reforms, EP 715 also argues that product and geographic (STB served July 18, 2013), petition granted in part proposal. Although BNSF and UP sub nom. CSX Transp., Inc. v. STB, 754 F.3d 1056 competition, even if not considered by contend that the streamlined market (D.C. Cir. 2014). Complainants also have the option the Board, are pervasive in rail markets dominance approach will not have of challenging the rate under one of the Board’s and that ‘‘[g]eographic competition is much benefit and is not necessary, they simplified processes—the Simplified SAC test or particularly strong in agricultural Three Benchmark methodology—as set forth in also state that they do not oppose a Simplified Standards, EP 646 (Sub-No. 1) (STB markets,’’ because farmers must truck streamlined market dominance served Sept. 5, 2007) aff’d sub nom. CSX Transp., their product to elevators, which gives approach (at least in smaller cases). Inc. v. STB, 568 F.3d 236 (D.C. Cir. 2009), and farmers a range of transportation Further, as explained in the NPRM, EP vacated in part on reh’g, CSX Transp., Inc. v. STB, options, and because shippers can 584 F.3d 1076 (D.C. Cir. 2009), as modified in Rate 756, slip op. at 3–4, the market Regulation Reforms, EP 715 (STB served July 18, choose to ship product to different dominance inquiry for rate 2013), remanded in part sub nom. CSX Transp., Inc. export markets. (BNSF Comment 6–7; reasonableness cases is a costly and v. STB, 754 F.3d 1056 (D.C. Cir. 2014). The NPRM BNSF Reply, V.S. Miller 6–9.) BNSF time-consuming undertaking and can was issued concurrently with a separate notice of states that the Board should avoid proposed rulemaking in Final Offer Rate Review, EP limit access to the Board’s processes, 755 et al. (STB served Sept. 12, 2019), in which the interfering with these market-based particularly affecting access in smaller Board proposed an alternative procedure (Final rates, as it could distort the markets of cases. Numerous shippers agree that Offer Rate Review or FORR) for challenging the BNSF’s shippers and affect BNSF’s streamlining the market dominance reasonableness of rates in smaller cases, which capital investments which, it argues, inquiry would make the rate would require complainants to utilize the proposed streamlined market dominance approach. Id. at 9. would adversely impact ‘‘all shippers reasonableness review processes more That proposal remains under review. that rely on efficient rail transportation accessible to shippers by reducing the

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litigation burden in some cases. (See market dominance approach. Rather, it costs for the R/VC ratio 8—is flawed AFPM Comment 1–2; Coalition expects the rule to decrease the burden and, as a result, the R/VC ratios are Associations Comment 2–3; IMA–NA in potentially meritorious cases, unreliable. However, they acknowledge Comment 1; Indorama Comment 1; including the burden concerning a that, because the R/VC calculation is a NGFA Comment 2; MillerCoors demonstration of market dominance statutory requirement that can only be Comment 1; Olin Comment 1–2; PCA that may otherwise unnecessarily limit eliminated through legislative change, Comment 1; SMA Comment 1.) the accessibility of the Board’s rate the Board is required to use an R/VC UP claims that railroads do not review processes and therefore dissuade ratio in the market dominance inquiry. contest market dominance when market shippers from filing cases. As such, (TRB Professors Comment 2–3.) NGFA dominance is clear, but, as the Coalition there is no basis for the suggestion that states that it shares the criticisms of Associations and Olin note, and as the the streamlined approach would result URCS and accordingly urges the Board experience in Sunbelt shows, a in shippers obtaining rate relief that to continue its efforts to improve URCS complainant may nevertheless bear would inappropriately interfere with and/or develop a new and improved significant cost and time burdens market-based rates. means to calculate the statutorily preparing and submitting extensive required R/VC ratio. (NGFA Comment evidence before a railroad concedes For these reasons, the Board finds that 3.) market dominance. A streamlined a streamlined approach would further Use of the R/VC of 180% or greater is market dominance approach would the RTP goal of maintaining reasonable a statutory requirement, and the Board prove beneficial, including in cases rates where there is an absence of will adopt this aspect of the proposal.9 where a railroad ultimately concedes effective competition, see section market dominance, by easing the cost 10101(6), by reducing the burden on B. Movement Length Greater Than 500 and time burdens complainants must complainants in certain rate cases. This Highway Miles bear for the preparation and submission in turn will make the agency’s rate The Board also proposed a prima facie of evidentiary pleadings. As for BNSF’s reasonableness review processes more factor that the movement exceed 500 assertion that competition is already accessible, particularly in smaller cases. highway miles between origin and pervasive in the marketplace due, in Moreover, the streamlined approach destination. NPRM, EP 756, slip op. at part, to product and geographic would continue to ensure that the Board 7. The Board reasoned that movements competition,6 there is no dispute that determines the reasonableness of rates greater than 500 miles are not likely to some shippers lack effective only where there is actual market have competitive trucking options, as competition. The streamlined approach dominance, consistent with section this is approximately the length of haul adopted here should make the Board’s 10101(1) (allowing, to the maximum that a trucking carrier could complete in rate reasonableness review processes extent possible, competition and the one day. Id. (citing Review of more accessible to shippers when demand for services to establish Commodity, Boxcar, & TOFC/COFC market dominance is more readily reasonable transportation rates) and Exemptions, EP 704 (Sub-No. 1), slip op. apparent.7 section 10101(5) (fostering sound at 7 n.12 (STB served Mar. 23, 2016)). The Board also finds unpersuasive economic conditions in transportation Therefore, the Board proposed the 500- BNSF’s argument that the streamlined and ensuring effective competition and mile threshold as indicative of a approach could interfere with market- coordination between rail carriers and movement that is more likely to be based rates. The final rule does not other modes). served by a market dominant rail create a new right or remedy that did carrier. The Board also invited comment Part II—Prima Facie Factors not previously exist but simply offers a on whether the mileage threshold could streamlined way to demonstrate market As discussed below, the Board will be varied by commodity groups and dominance. The final rule does not asked parties to provide detailed impose a new limit on the type of adopt the prima facie factors largely as proposed in the NPRM. The Board will quantitative and qualitative information relevant evidence a rail carrier can in support of any alternative mileage submit on reply to attempt to rebut a add language to the regulations to clarify the term ‘‘appropriate official,’’ threshold. Id. at 8. The Board received complainant’s market dominance case. comments relating to the appropriate Further, the rule does not modify the to clarify the method of measuring the level of truck movements over a five- mileage threshold, varying the threshold Board’s rate reasonableness by commodity, and application to multi- methodologies. Accordingly, the Board year period, and to include a factor to account for intermodal competition rail carrier and transload shipments, does not expect the final rule to change which are addressed in turn below. the outcome that would have been from pipelines. reached under the non-streamlined A. R/VC of 180% or Greater 1. 500-Mile Threshold Several shipper interests contend that 6 Railroad arguments for inclusion of a prima The Board proposed a prima facie the mileage threshold should be facie factor that addresses product and geographic factor that the movement has an R/VC competition are discussed below in Part II (subpart lowered to 250 miles, arguing that this G, section 5, ‘‘Product and Geographic ratio of 180% or greater. NPRM, EP 756, Competition’’). slip op. at 7. The Board proposed this 8 Variable costs are calculated using the URCS 7 UP notes that the agency previously tried to use factor because it is a statutory Phase III movement costing program, which presumptions in the market dominance analysis but requirement, 49 U.S.C. 10707(d), and requires the user to input certain information about eventually abandoned the approach. (UP Comment the particular movement. Although disputes 3.) Here, presumptions are not being utilized as the therefore must be established in any sometimes arise over these inputs that are used to streamlined market dominance approach requires a market dominance inquiry. calculate URCS, these disputes are generally less shipper to put forth an evidentiary showing to make The Board received few comments complicated than disputes regarding the qualitative its prima facie case for market dominance. component of the market dominance inquiry. This Moreover, those presumptions were markedly pertaining to this proposed factor. The is because the inputs relate to objective data different from the factors finalized here and were TRB Professors argue, as they did in the whereas the qualitative portion usually involves the ultimately abandoned because of flaws with the TRB Report, that the Board’s Uniform presentation of more subjective arguments. 9 presumptions themselves. See Mkt. Dominance Railroad Costing System (URCS)— To the extent that the parties raise general Determinations & Consideration of Prod. concerns regarding URCS, such issues are beyond Competition, 365 I.C.C. 118, 120–26 (1981). which is used to calculate the variable the scope of this proceeding.

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is the maximum distance that a truck Comment 12; CN Comment 2.) UP measure of market dominance because driver could travel in a single day, given suggests that ‘‘the Board seek empirical of the difficulty in calculating the the need for a return trip and hours-of- evidence and set higher hurdles, so the appropriate market and because the service regulations mandated by the presumptions better assist shippers in competitive implications of market Federal Motor Carrier Safety identifying situations in which market share vary from case to case. (Coalition Administration (FMCSA). (Coalition dominance is not likely to be Associations Reply 29 (citing Mkt. Associations Comment 12; ISRI contested.’’ (UP Comment 12 (also Dominance Determinations, 365 I.C.C. Comment 7–8; Indorama Comment 11– noting that the Board has found that 118, 123 (1981)); ISRI Reply 2 (same).) 12; see also Olin Comment 7; NGFA trucks provide effective competition for The Coalition Associations and ISRI Reply 6; AFPM Comment 5.) Indorama movements longer than 500 miles.)) CN also argue that the USDOT data shows states that, based on its experience, submitted a verified statement from Dr. that the average distance for truck truck is unable to compete with rail at Michael Tretheway, Chief Economist shipments is 227 miles, compared to distances over 250 miles, in part and Executive Vice President of 805 miles for rail shipments, thus because a railcar can carry four times InterVISTAS, relying on data from the undermining BNSF’s assertion that 500 the amount that a truck can carry and U.S. Census Bureau’s Commodity Flow miles is too low a threshold. (Coalition because per-mile trucking costs are Survey (CFS), which it states ‘‘shows Associations Reply 29; see also ISRI increasing. (Indorama Comment 11–12.) that using 500 miles as a cutoff is too Reply 2.) The Coalition Associations and ISRI conservative’’ and that ‘‘rail and truck The comments have not presented both note that they tried to collect data compete on equal terms’’ in the 500–749 sufficient evidence for either modifying on an appropriate mileage threshold but mileage band. (CN Comment 4, V.S. or eliminating the 500-mile threshold at that it proved too difficult and time- Tretheway 1, 3.) In its reply comment, this time. Any threshold used for this consuming for most of their members. CN submitted an updated verified purpose should strike a proper balance. (Coalition Associations Comment 9 n.9; statement from Dr. Tretheway, On the one the hand, the threshold ISRI Comment 9–10.) The Coalition analyzing the same data but organized should not be too low, thereby allowing Associations argue that in past cases the by commodity groups and distance shippers that are not reasonably likely Board has found that trucks are bands. Based on this data, CN proposes to lack effective competition to use the competitive with rail at a range of 150 either switching to an across-the-board streamlined approach. On the other to 500 miles. (Coalition Associations 750-mile threshold, or using hand, the threshold should not be too Comment 12–13 & n.15.) commodity-group-specific thresholds, high, thereby preventing shippers that Rail interests take varying positions with the thresholds being set at the are reasonably likely to lack effective regarding the 500-mile threshold. AAR distance at which the tonnage shipped competition from using the approach. asserts that the threshold is conservative by truck exceeds or is comparable to the Moreover, it bears noting that the and that AAR ‘‘generally supports the tonnage shipped by rail. (CN Reply 4.) 10 mileage threshold is just one of two Board’s determination that requiring a The Coalition Associations respond prima facie factors that would be used distance greater than 500 highway-miles that ‘‘[s]etting the highway-distance to evaluate trucking competition. The strikes the right balance in today’s threshold high enough to exclude nearly Board considered this factor in tandem competitive environment.’’ (AAR every conceivable movement where a with the trucking volume threshold Comment 8–9.) AAR also notes that the railroad may not have market factor (discussed in more detail in subpart E, ‘‘10% or Fewer of Recent distances traveled by trucks in a single dominance is neither desirable nor day are increasing, due to companies Movements by Truck,’’ below) and necessary,’’ given that railroads would experimenting with platooning, remote intends that the mileage and volume still have an opportunity to present operation, and autonomous trucks, as thresholds together will identify evidence showing that there is effective well as the trucking industry’s efforts to shippers that are reasonably likely to competition. (Coalition Associations increase truck size and weight limits. lack trucking options that provide Reply 31.) In response to AAR’s Accordingly, AAR suggests that the effective competition. argument that daily truck distances are mileage threshold may need to be The Board concludes that using an increasing due to technological increased in the future to accommodate estimate of the maximum distance that advances, the Coalition Associations the increased truck competition at a truck can typically travel in a single and ISRI state that these technologies do greater distances. (Id. at 9.) day is a reasonable measure for a single BNSF argues that the Board should not impact driving speed or time, which mileage threshold, applicable to a wide not consider any threshold less than 500 are the two factors that affect driving range of shippers, and that 500 miles miles for any commodity, but also states distance, and commenters state, in any continues to be a reasonable calculation that it sees ‘‘strong truck competition for event, these changes are not expected to of this distance. Several shippers and movements that significantly exceed be implemented anytime soon. shipper groups argue that the distance 500 miles, which is consistent with (Coalition Associations Reply 30–31; should be cut in half to 250 miles to reported statistics.’’ (BNSF Comment ISRI Reply 2–3.) In addition, the account for FMCSA regulations and a 13.) Accordingly, BNSF suggests 750 Coalition Associations and ISRI argue return trip. However, in basing the miles as a more appropriate threshold, that both CN’s analysis of the CFS data threshold on trucking distance per day, citing to United States Department of and BNSF’s analysis of the USDOT data it is more appropriate to use the Transportation (USDOT) statistics that it are flawed. The Coalition Associations maximum distance that a truck could states show that trucks carry the largest and ISRI note that the CFS data is based travel. While 250 miles may be the share of goods shipped in the U.S. and on market share, but the Interstate practical limit for some shippers remain the primary mode for shipments Commerce Commission (ICC) long ago because of the need for return trips, not moved less than 750 miles. (Id.) recognized that market share is a poor all shippers move traffic back-and-forth UP and CN also argue that the between a single origin and destination threshold should be higher, and that the 10 CN notes that there is a lag with the data but and would not be so constrained. states that it is unavoidable. It argues that if the Board’s proposed 500-mile figure lacks Board decides to rely on this data, it could update Because the streamlined approach is data to support its use as a threshold for the mileage thresholds as new data is released. (CN intended to be used in situations in a prima facie determination. (UP Reply 3 & n.7.) which the lack of alternative

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transportation options is clear on its Unlike rail shipments, LTL involves when considering commodities in face, the Board finds it is better to set transportation of small products that do aggregate. For example, notwithstanding the threshold around the outermost not fill an entire trailer and that are the CFS data issues noted above, the point of a one-day trucking shipment to often combined with other such data shows that rail transports more ensure that only those shippers that are products (or shipments) during tonnage than truck in the 500–749 more likely to be found to lack effective transport. Rail shipments and LTL mileage band, and rail’s share of competition can utilize it. In addition, shipments, which typically have tonnage substantially increases from the although AAR has noted that the different service and product 250–499 mileage band to the 500–749 distance a truck can travel in a single characteristics, are generally not mileage band. As such, the CFS data day may increase due to certain comparable. In addition, the Board has does not undermine the Board’s technological advancements, these identified some significant differences conclusion that 500 miles is a advancements have not been widely in the mileage trends between the CFS reasonable threshold for purposes of implemented. The Board acknowledges data and the Carload Waybill Sample, determining competitiveness of rail that such technological advancements which the Board relies on for many transportation versus truck. may well have competitive regulatory purposes. In particular, the The Board seeks to strike an implications, and the Board can revisit 2012 CFS data shows that 24% of rail appropriate balance. Given its the mileage threshold once those tons moved under 100 miles, but the determination that rail likely has advancements have been more widely 2012 Waybill data shows that only efficiencies and advantages over truck implemented. 11.1% of rail tons move under 100 in certain circumstances once a The Board also finds unconvincing miles. In another example, the 2012 CFS shipment exceeds the distance a truck the Coalition Association’s argument data shows that 53% of rail tons moved can reasonably travel in a single day that a lower threshold that errs on the under 500 miles, but the 2012 Waybill (i.e., 500 miles), the Board concludes side of being too low should not lead to data shows 36% of rail tons moved that a 750-mile threshold would exclude inappropriate market dominance under 500 miles. While these shippers that are reasonably likely to findings, as railroads would still have differences do not necessarily indicate lack competition.13 In addition, the an opportunity to refute the prima facie that the CFS data is inaccurate, and may mileage band is just one of two prima showing on reply. (Coalition be due to the different survey facie factors that would be used to Associations Reply 31.) The streamlined populations and programs used to evaluate trucking competition; the 10% market dominance approach is intended calculate rail mileages, they raise or less trucking volume threshold serves to reduce the litigation burdens on all questions about relying on the CFS data as another constraint that effectively parties in a rate case, and the Coalition here, at least for rail volumes and limits use of the streamlined approach Association’s approach could result in distances.12 to cases where shippers that are railroad defendants needing to make In any event, the CFS data itself does reasonably likely to lack effective truck reply arguments in cases where market not conclusively show that the 500-mile competition. Thus, the 500-mile dominance is not reasonably likely. threshold is too low. Based on 2012 CFS threshold, combined with the 10% or In addition, no party provided the data, in the 250–499 mileage band, truck less trucking volume threshold,14 will Board with sufficient data to has a traffic share (by tonnage) of 55%, serve as a sufficient screen to identify demonstrate that a higher mileage compared to 29% for rail. In the 500– movements that likely lack effective threshold would be more appropriate. 749 mileage band, the traffic share for trucking competition.15 The CFS data that CN relies on shows rail rises to 43% and surpasses the 2. Commodity-Specific Thresholds the share of U.S. freight traffic by traffic share for truck, which falls to transportation mode (by tonnage), 39%. While the 2012 CFS data shows As noted above, the NPRM invited broken out into distance bands. The that rail does not comprise a majority comment on whether the mileage data shows that for the 500–749 mileage share of tonnage until the 750–999 threshold could be varied by commodity band, rail has a 43% share of the traffic, mileage band, the data also shows that groups, and also asked commenters to while truck has a 39% share. CN argues at 500 miles, rail holds certain provide detailed quantitative and that this indicates that rail and truck efficiencies and advantages over truck, qualitative information in support of compete for traffic at these distances. any alternative mileage threshold. BNSF According to CN, the Board should set commodity that made up the greatest percentage of the threshold based on the 750–999 the shipment’s weight.’’ See Bureau of Transp. 13 BNSF’s reliance on the statement from the Statistics, 2012 Commodity Flow Surv., https:// USDOT report that says that trucking ‘‘remain[s] the mileage band, where rail’s share www.bts.gov/archive/publications/commodity_ primary mode for shipments moved less than 750 increases to 57% and truck’s share flow_survey/2012/united_states/survey (last visited miles’’ is also unavailing. (See BNSF Comment 13.) decreases to 28%. As a general matter, July 23, 2020) (see section titled ‘‘Data Collection The report includes a table that shows that rail has the Board has some concerns with Method’’). This appears to indicate that full a smaller share of ton-miles in the 500–749 mileage truckload and LTL shipments are counted the same band compared to truck, but as with the CFS data, relying on the CFS data for purposes of way under the truck category. the Board has some concern about whether this calculating the mileage threshold. 12 In particular, the CFS is based on a survey of information is appropriate for setting the mileage One concern is that the CFS data business establishments with paid employees that threshold. In particular, it appears that the graph appears to combine full truckload and are located in the United States, whereas the may incorporate data from a broad range of Carload Waybill Sample gathers its data from the shipments, including those that normally do not less-than-truckload (LTL) shipments move by rail, and as such, it is difficult to draw a 11 transportation providers. In addition, the CFS uses into the same trucking category. a program called GeoMiler to calculate rail meaningful conclusion about either increasing or mileages, see Bureau of Transportation Statistics, decreasing the mileage threshold. 11 According to the Bureau of Transportation 2012 Commodity Flow Survey, https:// 14 As explained below, the Board clarifies that the Statistics’ explanation of the 2012 CFS data, ‘‘[f]ull www.bts.gov/archive/publications/commodity_ 10% threshold is based on volume rather than or partial truckloads were counted as a single flow_survey/2012/united_states/survey (last visited number of movements. shipment only if all commodities on the truck were July 23, 2020) (see section titled ‘‘Mileage 15 For this reason, the Board rejects ISRI’s destined for the same location. For multiple Calculations’’), while the Board’s 2012 Waybill proposal to combine the trucking volume threshold deliveries on a route, the goods delivered at each Sample used software called PC RailMiler, which and 500-mile threshold into one factor, which a stop were counted as one shipment.... For a is a routing, mileage, and mapping software for the shipper could satisfy by showing that either of these shipment that included more than one commodity, transportation and logistics industry. See DuPont thresholds is met (rather than both). (See ISRI the respondent was instructed to report the 2014, NOR 42125, slip op. at 266 n.1446. Comment 11.)

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generally opposes commodity-specific at distances far below 500 miles. PCA, rail’s share for all freight starts to thresholds, arguing that it would run however, does not propose an alternate increase above 200 miles. The 2010 counter to the goal of simplification. threshold nor does it provide data to chart is for all commodities and is not (BNSF Reply, V.S. Miller 15.) Several support its arguments. Rather, PCA specific to agricultural shipments. commenters argued for commodity- claims that the Board itself Moreover, it shows that for the 250–499- specific thresholds. acknowledged that cement cannot mileage band, truck has a majority share The Board appreciates the comments satisfy a 500-mile threshold in Review of of traffic (based on tonnage). NGFA also submitted. Based on the input received, Commodity, Boxcar, and TOFC/COFC cites to an academic study from 2010 the Board agrees that the concept of Exemptions, EP 704 (Sub-No. 1) (STB conducted in coordination with AAR creating commodity-specific thresholds served Mar. 23, 2016) (with Board that found that ‘‘rail clearly has the has merit and is preferable to a blanket Member Begeman dissenting). (PCA advantage for the bulk movements, even threshold. Several commenters Comment 2–3.) PCA overstates that for the 50- and 200-mile moves.’’ (NGFA presented credible arguments that, for decision. There, the Board merely cited Reply 4–5 (quoting from the study’s some commodities, including, but not PCA’s own assertion that shipments of report 17).) However, the report’s limited to, chlorine and agricultural cement move at a range of 250 to 300 findings were more nuanced than the commodities, trucking becomes less miles while seeking comment on the selected quote suggests. In the same competitive at a distance shorter than possible revocation of the exempt paragraph, the report concludes that 500 miles. Therefore, even though, as commodity status of hydraulic cement. ‘‘[t]he detailed results indicate that the discussed in more detail below, the In citing this assertion from PCA, rail market share increased for lower information submitted in this docket however, the Board did not make any value and longer distance movements.’’ did not contain sufficient quantitative definitive findings regarding the Estimating the Competitive Effects of data to support the adoption of distances of such shipments. Larger Trucks on Rail Freight Traffic, at commodity-specific mileage thresholds Olin argues that the 500-mile 12 (emphasis added). Again, despite not at this time, the Board finds that this threshold is unreasonable for its chlor adopting a lower mileage threshold for issue warrants additional consideration. alkali products and that this factor agricultural commodities or any other Accordingly, while the final rule should be removed entirely for chlorine commodities at this time, the Board adopted here establishes a single and other hazardous materials that intends to further explore in a separate mileage threshold of 500 miles, the cannot readily or feasibly move by proceeding whether various commodity- Board plans to soon initiate a truck. (Olin Comment 6–7.) Although specific thresholds should be created, proceeding to further explore the chlorine, in particular, may rarely move including for agricultural commodities, adoption of various commodity-specific by truck, Olin provides no data to given the Board’s long-standing concern mileage thresholds. support an alternative chlorine-specific that the Board’s rate reasonableness ISRI argues for lowering the threshold threshold.16 However, for chlorine, in review process is not readily accessible to 200 miles for scrap metal shipments. particular, there is a sufficiently strong to many agricultural shippers. (ISRI Comment 5.) Although ISRI cites basis to consider modifying the As noted above, CN suggests, as an a survey it conducted of its members in threshold or eliminating it. The record alternative to its proposed 750-mile support, ISRI did not include the survey here though does not contain enough threshold, using commodity-group- or accompanying data but rather information to determine if the mileage specific thresholds based on CFS data, summarizes its results. ISRI also threshold should be lowered (and, if so, with the thresholds being set at the provides some information regarding to what mileage) or eliminated. As distance at which the tonnage shipped truck shipments, but only from four of discussed above, the Board will institute by truck exceeds or is comparable to the its members. (Id. at 5–7; ISRI Reply 2 a proceeding in the near future to gather tonnage shipped by rail. (CN Reply 4.) n.5.) ISRI also states that there are more information on commodity- However, the CFS data relied on by CN factors unique to the scrap metal specific thresholds for various for its commodity-group threshold is industry that compel ISRI members to commodities, including chlorine. based on data at the two-digit Standard rely on rail for movements significantly NGFA proposes that the mileage Transportation Commodity Code (STCC) less than 500 miles, such as the need for threshold be set at 200 miles for level and is not granular enough to specialized trucking equipment. (ISRI agricultural commodities, asserting that create commodity-specific thresholds Comment 7–8; ISRI Reply 2.) However, trucking generally is effectively (CN itself refers to its categories as the Board would need more competitive with rail for agricultural commodity-group-specific comprehensive and fully supported data 18 movements of only 200 miles or less. thresholds). (CN Reply 4.) In addition, before lowering the threshold for scrap (NGFA Comment 3.) In its reply as explained above, the Board has metal shipments. comment, NGFA cites to a chart from identified issues with relying on the AFPM opposes the 500-mile threshold CFS data for purposes of calculating for fuel and petrochemicals, arguing that the 2010 National Rail Plan produced by the Federal Railroad Administration mileage thresholds. those materials are frequently shipped Finally, several commenters oppose (FRA), which NGFA claims shows that via unit train and that trucking the 500-mile threshold for coal. NCTA substitutions for an entire train are proposes that the Board use a lower 16 In addition, for all other non-toxic-by- likely to become non-competitive at a inhalation hazardous commodities, Olin proposes a lower threshold. (AFPM Comment 5.) ‘‘sliding-scale’’ approach for shipments up to 250 17 Carl D. Martland, Estimating the Competitive AFPM proposes a 250-mile threshold miles, which it states would take into account ‘‘the Effects of Larger Trucks on Rail Freight Traffic but provides no data to support that nature of the product and the involved packaging (2010), https://www.aar.org/wp-content/uploads/ and availability of equipment required for 2017/12/AAR-Estimating-Competitive-Effects- figure. (See id.) Accordingly, the Board trucking.’’ Olin further states that ‘‘[i]n cases where Larger-Trucks-2010-Report-TSW.pdf. will not adopt a lower threshold for fuel the use of truck would require possible terminal 18 See, e.g., Expanding Access to Rate Relief, EP and petrochemicals at this time. storage and transloading, the measured distance for 665, slip op. at 13 (Sub-No. 2) (STB served Aug. 31, PCA states none of its members would meeting the established prima facie should be 2016) (stating that commodities at the five-digit lengthened on the sliding scale, to accommodate STCC level ‘‘would be similar enough’’ for ever be able to satisfy a 500-mile the expense and difficulties of transloading.’’ (Olin inclusion in a comparison group and that certain threshold for cement because shipping Comment 7; see also FRCA Comment 2.) These commodities, such as chemicals, may best be cement by truck becomes impracticable approaches are not fully explained or supported. compared at the seven-digit STCC level).

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mileage, such as 200 miles, for ‘‘high rail carrier only has a short portion of C. Absence of Intramodal Competition volume, heavy commodities’’ such as the overall move, its ‘‘behavior related The Board proposed a prima facie coal. (NCTA Comment 3.) WCTL to rate establishment becomes more factor that complainants demonstrate proposes that the Board eliminate any aggressive and pushes the line of what that there is no effective intramodal mileage threshold for unit train would be considered reasonable.’’ competition (i.e., whether the transportation of coal entirely, arguing (AFPM Comment 5–6.) AFPM also complainant can use another railroad or that it is not subject to competition from indicates that if only an individual other railroads to transport the same truck. (WCTL Comment 9–10.) It states carrier’s portion of the move is commodity between the same points). that it is not aware of any case where examined, it often would not meet the NPRM, EP 756, slip op. at 8. The Board the Board or ICC found that unit trains 500-mile threshold. (Id. at 6.) Similarly, explained that the complainant could of coal were subject to competition from FRCA argues that for short-haul rate satisfy this factor by submitting a truck, even in cases where the origin- cases involving transload shipments verified statement from an appropriate destination was far less than 500 miles. (i.e., shipments that move on rail for official of the complainant attesting that (Id.) 19 FRCA states that coal is seldom, only a portion of a move and are it does not have practical physical if ever, trucked more than 100 miles and access to another railroad. The Board cites to a 2007 research paper from the transferred to another mode of transportation for the remaining portion defined ‘‘practical physical access’’ as National Research Council of the encompassing feasible shipping of the move), the distance threshold National Academies, which states that alternatives on another railroad, should apply from origin to destination, coal is hauled by truck on average only including switching arrangements, 32 miles. FRCA argues that 50 miles rather than from origin to interchange. where ‘‘an alternative is possible from a would be a generous threshold. (FRCA (FRCA Comment 2.) practical standpoint given real-world Comment 2.) It is generally well- For purposes of the 500-mile constraints.’’ Id. (citing Total understood that when coal is shipped in threshold, the Board will treat multi- Petrochems., NOR 42121, slip op. at 4 significant quantities it is unlikely to be carrier movements the same as it does n.9.) shipped by truck. However, even if the for rate reasonableness challenges. See Only a few commenters addressed Board determined that a coal-specific Cent. Power & Light Co. v. S. Pac. this factor. The Coalition Associations threshold was warranted, there is not Transp. Co., 1 S.T.B. 1059 (1996), argue that the Board should abandon the enough information in the record to clarified, 2 S.T.B. 235 (1997), aff’d sub ‘‘practical physical access’’ standard determine what threshold should be set. nom. MidAm. Energy Co. v. STB, 169 and simply require complainants to Again, this is an issue that the Board F.3d 1099 (8th Cir. 1999) (addressing demonstrate that they do not have ‘‘direct’’ physical access. (Coalition may examine further in the proceeding when multi-carrier rates are subject to that it plans to initiate soon. Associations Comment 19–20.) In other challenge). In particular, whether a rate As described above, much of the words, the Coalition Associations argue (or rates) on a multi-carrier move are evidence submitted was either that the factor should not encompass anecdotal or limited to only a few subject to challenge would depend on reciprocal switching because, as shippers and did not include sufficient the type of rate being offered (joint demonstrated by testimony provided in data for the Board to draw a conclusion through rate or proportional rate) and Reciprocal Switching, Docket No. EP with regard to any particular commodity whether the rate (or rates) are subject to 711 (Sub-No. 1), the effectiveness of as whole. In its future consideration of tariff or contract.20 In addition, with reciprocal switching depends on the issue of commodity-specific regard to FRCA’s comment, the Board multiple factors under the railroad’s thresholds, the Board will expect will not make an exception to the way control, as well as the alternative proponents to support their arguments it assesses the 500-mile threshold for carrier’s willingness to compete. with more extensive data, beyond just a short-haul cases involving transload (Coalition Associations Comment 19– few examples, on shipping distances for shipments where the rail portion of the 20.) Along these lines, AFPM argues rail versus truck for that commodity. As move is 500 miles or less. As discussed that even in some situations where a for the CFS data relied on by CN, while further below, looking at market shipper has access to two carriers, some it was not granular enough to draw dominance from origin-to-destination carriers choose not to provide conclusions about the appropriate on transload moves (i.e., both the rail competitive offers. (AFPM Comment 6.) mileage threshold for specific and non-rail portions together) would be Therefore, AFPM seeks clarification of commodities, parties that seek to rely on contrary to statute and established the phrases ‘‘complete absence of it in the future proceeding should Board precedent. See infra Part IV railroad competition’’ and ‘‘feasible address that granularity issue and (subpart B, ‘‘DMIR Precedent’’). shipping alternatives.’’ (Id.) AFPM also whether adjustments could make its use Moreover, if the rail shipment is less seeks clarity and more detail on what is more suitable for this purpose. than 500 miles and can be transloaded, meant by ‘‘an alternative is possible from a practical standpoint given real- that may cast doubt on whether the 3. Multi-Rail Carrier and Transload world constraints,’’ as shippers and shipper lacks transportation options. In Shipments railroads view the terms ‘‘possible’’ and such instances, based on the record AFPM argues that the mileage ‘‘practical’’ differently. (Id.) AFPM also here, the question of market dominance threshold should be from origin to asks the Board to clarify what type of destination for multi-rail carrier moves. would be better determined through the documentation in support of this factor AFPM argues that a single carrier’s non-streamlined approach. would be acceptable and define or list portion of the move (i.e., from origin/ who it deems to be ‘‘appropriate destination to interchange) should not 20 Accordingly, if the rate (or rates) for the entire officials’’ that can submit the supporting origin-destination route are subject to challenge, the 21 be viewed in isolation, because when a mileage threshold would be judged against the verified statement. (Id.) mileage of the whole origin-destination route. 19 WCTL cites Metro Edison Co. v. Conrail, 5 Conversely, if only a part of the rate (or rates) for 21 AFPM and other parties seek similar I.C.C.2d 385, 413 (1989), in which the agency stated the origin-destination route are subject to challenge, clarifications (regarding the contents of verified that ‘‘[i]t is simply impractical to move [large] the mileage threshold would be judged against only statements and the identify of ‘‘appropriate volume[s] of coal by truck.’’ (WCTL Reply 2.) that portion of the route. officials’’) with respect to other prima facie factors

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The Board will adopt this factor as cases, a complainant would satisfy this determination of whether the prima proposed in the NPRM. The Coalition factor by submitting a verified statement facie factor regarding barge competition Associations essentially argue that from an appropriate official attesting has been met.23 Requiring, as proposed complainants should be able to satisfy that the complainant does not have in the NPRM, an attestation that the this factor even if they have access to practical physical access to barge complainant does not have practical another carrier through a reciprocal competition. physical access to barge competition switching arrangement. While the Some shippers and shipper groups (rather than adopting the specific existence of reciprocal switching may argue that the factor as proposed omits criteria proposed by the Coalition not necessarily mean that a shipper has clear evidentiary standards and that Associations) will ensure that a effective competitive options, it strongly requiring the complainant to file only a complainant has accounted for all types suggests a lack of market dominance. verified statement leaves complainants of barge arrangements before proceeding Accordingly, in such situations, a to guess how much evidence is enough under the streamlined market determination of market dominance to satisfy this factor. (Coalition dominance approach. Therefore, the would be better explored through the Associations Comment 14–15; Olin Board will adopt the proposal in the non-streamlined approach, in which the Comment 8; AFPM Comment 7.) The NPRM, under which complainants will shipper can present a full explanation as Coalition Associations argue that the be free to explain in their verified to why it believes there is market factor is indistinguishable from what statements when the situations dominance despite an existing must be shown in a non-streamlined discussed by the Coalition Associations reciprocal switching agreement. The market dominance inquiry. (Coalition exist and how those facts demonstrate same rationale holds for AFPM’s Associations Comment 14.) that this prima facie factor is met.24 assertion regarding a lack of competition Accordingly, these commenters propose that the Board adopt more specific E. 10% or Fewer of Recent Movements when there is direct physical access to by Truck two carriers. criteria regarding barge competition. For In response to the comments, the example, the Coalition Associations The Board proposed a prima facie Board provides the following propose that if the origin, destination, or factor that the complainant must have clarification regarding the application of both, are landlocked,22 this would shipped 10% or fewer of the movements this factor. The most obvious scenarios constitute an ‘‘objective measure[ ]’’ at issue by truck over the last five years. where there would be practical physical demonstrating that there is a lack of NPRM, EP 756, slip op. at 8–10. The access are where multiple carriers can barge competition. (Coalition Board found that if a complainant meets directly serve the complainant’s facility Associations Comment 15.) The this factor, it would be ‘‘reasonably or where the shipper’s facility is open Coalition Associations further propose likely to have persuasive arguments for to reciprocal switching. However, there that the factor would be satisfied if the why trucking does not provide effective could be other arrangements (such as complainant could show that the origin, competition, including customer haulage, terminal trackage rights, or destination, or both do not have barge contracts, product characteristics, and interchange agreements) that would facilities, or that they lack facilities price of the trucking alternative,’’ and allow for multi-carrier access and capable of handling the issue that the factor would therefore assist the therefore would constitute practical commodity. (Id. at 15–16; see also Olin Board in making a market dominance physical access. In some situations, Comment 8 (proposing that barge determination more expeditiously. Id. at practical physical access could also be competition requires an existing barge 9. However, the Board noted that there found despite the absence of any such facility); AFPM Comment 7 (same).) The were past cases in which it had found arrangement. For example, if a shipper Coalition Associations also propose that a lack of market dominance, even when has refused a rail carrier’s bona fide this factor would be met if the trucking volumes were less than 10%. offer to open a facility to reciprocal complainant could show that the origin Accordingly, as with the 500-mile switching but the offer still stands, that and destination are not located on threshold, the Board invited parties to comment on whether an alternative would likely be considered to fall interconnected navigable waterways. truck movement percentage should be within the definition of practical (Coalition Associations Comment 16.) used and to include detailed physical access. As such, the Board The Board will not adopt the quantitative and qualitative information would consider this evidence as part of modifications sought by the Coalition in support. Id. at 9–10. The Board its analysis as to whether this prima Associations and others but instead will received comments addressing the facie factor has been met. Leaving the issue the following guidance. The most necessity of the threshold, how the definition as proposed in the NPRM will obvious scenarios where there would be volume of traffic would be measured, help to ensure that a complainant has practical physical barge access are whether the percentage should be accounted for all types of intramodal where the origin and destination have changed, the appropriate lookback arrangements before deciding whether barge facilities that are capable of period, and routing issues. As discussed to use the streamlined market handling the issue commodity and are below, the Board will adopt this factor dominance approach. located on interconnected navigable waterways. Conversely, if the origin and with a clarification to the measurement D. Absence of Barge Competition destination are not located on of the threshold. The Board proposed a demonstration interconnected navigable waterways, or of the absence of barge competition as if they lack barge facilities capable of 23 In the latter scenario, to the extent that a handling the issue commodity, the practical build-out could create effective barge another prima facie factor. NPRM, EP competition, the Board would consider that option 756, slip op. at 8 (whether barge Board would consider these facts in its under the build-out factor, which, as discussed competition constrains market power). below, continues to be included as prima facie As with the intramodal competition 22 The Coalition Associations indicate that they factors under this final rule. define ‘‘landlocked’’ as ‘‘not located on a navigable 24 For this reason, and because, as discussed factor, the Board stated that, in most waterway.’’ (Coalition Associations Comment 15 below, the Board will not allow partial use of the (‘‘Barges would not be able to service traffic moving streamlined process, the Board will not adopt Olin’s proposed by the Board. All such comments are to or from a landlocked facility, which would proposal to allow a partial non-streamlined market discussed below in Part III (subpart C, ‘‘Disclosures encompass any facility that is not located on a dominance presentation for the barge factor. (See and Verified Statements’’). navigable waterway.’’).) Olin Comment 8–9.)

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1. Whether To Remove the 10% 3. Percentage factors other than competition.’’).) In Threshold Shippers and shipper interests argue addition, the shippers’ arguments seem AFPM and MillerCoors argue that this that the Board should raise the to be premised on the notion that factor undermines the goal of the percentage for this factor from 10% to service issues are inevitable and will streamlined approach and should be up to 25%. (Coalition Associations undoubtedly cause an increase in truck discarded. (AFPM Comment 8; Comment 10 (proposing 20%); ISRI volumes. But that may not always be the MillerCoors 13.) AFPM claims that the Comment 9 (same); Olin Comment 9 case. Raising the threshold to 25% factor is ‘‘redundant and excessive’’ (same); FRCA Comment 2 (same); NCTA could lead to successful prima facie showings of market dominance by because the mileage-threshold factor Comment 3 (same and proposing that shippers who have moved a significant alone serves as a sufficient basis for the Board use a higher percentage for portion of their traffic by truck simply assessing the competitiveness of truck. ‘‘high volume, heavy commodities’’ in the ordinary course of business. (AFPM Comment 8; see also such as coal); NGFA Comment 5 Commenters have not established why a MillerCoors 13.) MillerCoors claims that (proposing 20–25%); PCA Comment 2 threshold greater than 10% is necessary analysis of this factor could be (proposing 25% for all shippers or to account for service problems or other extremely complex, and inclusion of the determined on an industry-by-industry issues that may cause a complainant to factor would negatively affect RTP basis using the unique characteristics use truck in some instances, even goals. (MillerCoors Comment 13, 14– for that industry).) These commenters, though truck does not provide effective as well as USDA, generally argue that a 16.) competition. The Board disagrees. The purpose of 10% threshold is too low because issues The streamlined approach is intended the market dominance analysis is to such as the need for expedited for situations where market dominance assess whether there is effective shipments, rail service delays, and force can be demonstrated without the need competition for the transportation to majeure events may force shippers to for extensive evidence or explanation.25 which the rate applies, 49 U.S.C. use truck, pushing their trucking If a shipper cannot meet the 10% 10707(a), and, therefore, the volume that volume higher despite the existence of threshold due to service problems, high a shipper moves by another mode of market dominance. (Coalition rail rates, or other issues, but believes it transportation is one of the key Associations Comment 10; PCA is subject to market dominance, it may indicators. The 500-mile threshold, Comment 2; USDA Comment 9; NCTA still seek to prove its case through a although also intended to help Comment 3; FRCA Comment 2; PCA non-streamlined market dominance determine whether a movement has Comment 2.) NCTA also suggests that a analysis, which may explore these sorts competitive trucking options, is higher percentage is warranted to of fact-specific issues. The impact of insufficient in and of itself. If a shipper account for situations where shippers service issues, in particular, may not be with movements over 500 miles shipped resort to truck due to high rail rates. clear-cut, as there could be genuine a significant portion of its traffic by (NCTA Comment 3; see also FRCA disputes between a shipper and rail truck, it would not be reasonably likely Comment 2 (arguing that that a shipper carrier as to whether such issues in fact to lack effective competition. Finally, should not be required to meet this existed or, if they did exist, whether although MillerCoors argues that the factor if it can show a diversion they caused a conversion of traffic from factor should be eliminated because it occurred because of rail service rail to truck. These types of disputes are would require complex analysis, inadequacies or high rates).) AAR not appropriate for the streamlined shippers that cannot satisfy the prima disputes that higher trucking approach. facie factors continue to have the option percentages may indicate market UP argues that the 10% threshold is of using the non-streamlined market dominance, calling it ‘‘flawed logic.’’ not supported by empirical evidence. It dominance approach. (AAR Reply 5–6.) suggests that ‘‘the Board seek empirical UP suggests that the NPRM proposed 2. Volume of Traffic evidence and set higher hurdles, so the too high a threshold and argues that the presumptions better assist shippers in A few commenters interpreted the Board did not provide any empirical identifying situations in which market NPRM as proposing that the trucking support for the 10% threshold, and that dominance is not likely to be volume threshold would be measured the Board also acknowledged that it has contested.’’ (UP Comment 12.) As part based on the number of movements. found effective competition where of the NPRM, the Board specifically (NGFA Comment 5; Olin Comment 9; complainants shipped a smaller share of sought evidence to support alternative Coalition Associations Comment 9, ISRI traffic by truck. (UP Comments 12.) UP thresholds. See NPRM, EP 756, slip op. Comment 9.) Those commenters argues that the Board should seek at 9–10 (‘‘The Board invites public correctly point out that volume would empirical evidence and set higher commenters to include detailed be the more appropriate measure. (Id.) hurdles to a showing of streamlined Although the Board used the term market dominance. (Id.) 25 Some commenters propose alternatives to ‘‘movements’’ in the NPRM, it intended The Board will adopt the 10% meeting this threshold under certain circumstances. that this factor would be measured threshold. The Board acknowledges that (See Coalition Associations Comment 11 (proposing based on volume, specifically, overall in certain situations, certain events, a two-tiered threshold in which this factor would such as service issues, may cause truck also be satisfied if trucks are used for 10–20% of tonnage. Volume is indeed the better volume at truck rates that exceed rail rates by more measure, as rail and truck shipments are volumes to increase. However, because than 10%); FRCA Comment 2 (proposing that the not comparable for purposes of volumes would be measured over a five- factor would be satisfied if complainant can show measuring quantity of traffic, given that year period, any short-term spike in a diversion to truck occurred because of rail service truck volumes would likely even out inadequacies or high rates); NGFA Comment 6 one rail shipment is generally equal to (proposing that the factor would be satisfied if multiple truck shipments. The Board over the course of the five-year lookback complainant demonstrates that trucks do not will clarify the final rule in § 1111.12(a) period, a point that the Coalition provide effective competition for a specific by replacing ‘‘10% or fewer of its Associations acknowledge. (Coalition movement).) However, these proposals would be Associations Comment 11 (‘‘This time contrary to the Board’s goal of simplification and movements’’ with ‘‘10% or less of its would be better explored through a non-streamlined volume (by tonnage).’’ See Final Rule frame is essential to smooth out spikes market dominance analysis. See NPRM, EP 756, slip below. in truck volume that occur due to op. at 7.

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quantitative and qualitative information PRFBA argues that five years is too long NGFA also argues that the Board in support of any alternative truck and instead proposes two years. (PRFBA should amend this factor to clarify that movement percentage threshold.’’). Comment 1.) NGFA argues that the the threshold applies to the origin- However, commenters provided Board should use a five-year ‘‘Olympic destination pair of the rate being insufficient evidence to support an average,’’ in which the highest and challenged. (NGFA Comment 5.) For alternate threshold,26 and the Board lowest years are dropped from the reasons discussed in Part IV (subpart B, finds that 10% is an appropriate level at average. It claims that this would ‘‘DMIR Precedent’’), under existing which to set the truck volume threshold. eliminate one-year anomalies that may Board precedent, the Board only The Board explained in the NPRM that skew the average. (NGFA Comment 5– considers the portion of the shipment complainants that meet this factor 6.) As noted, the Coalition Associations moving by rail pursuant to a tariff. As ‘‘despite rates with high R/VC ratios and support using a five-year period. such, the Board would apply this factor the absence of intramodal and barge (Coalition Associations Comment 11.) to the entire origin-destination route competition, are reasonably likely to The Board will adopt the five-year only if the rate (or rates) subject to have persuasive arguments for why period. The two-year period proposed challenge are also for the entire origin- trucking does not provide effective by PRFBA is too short to capture a long- destination route. The Board therefore competition, including customer term trend in truck volumes or allow declines to adopt NGFA’s proposed contracts, product characteristics, and temporary fluctuations in volumes to change. price of the trucking alternative.’’ even out. Although NGFA’s proposal NPRM, EP 756, slip op. at 9. Moreover, would exclude periods where service F. No Practical Build-Out Option even shippers in a highly uncompetitive issues may have caused a complainant The Board proposed that a situation may, at times, need to rely on to rely more heavily on truck, as noted, complainant would have to satisfy a truck moves, so the threshold must use of a five-year period based on a prima facie factor that there is no allow some truck movement. UP does simple average of tonnage would be practical build-out option. As explained not call either of these premises into sufficient to reduce the impact that any in the NPRM, the term ‘‘build-out’’ has question. Setting the truck volume such periods could have on trucking been used by the agency to refer to threshold lower than 10% would likely volume percentage. possible competitive alternatives that render the streamlined market could be accessed if the complainant 5. Routing Issues dominance approach unavailable to makes certain infrastructure shippers that are reasonably likely to The Coalition Associations also investments. NPRM, EP 756, slip op. at lack effective competitive options but propose that transload shipments count 10. This would again be demonstrated must resort to truck on rare occasions. toward truck volume only if the by a short plain statement in a verified On the other hand, setting the threshold defendant railroad does not participate statement from an appropriate official, higher than 10% could permit a shipper in the route. They argue that if the or other means, that the complainant that chooses to ship a significant portion defendant railroad participates in the has no practical build-out option due to of its freight by truck in the ordinary route, then that transload shipment is physical, regulatory, financial, or other course of business, and is therefore not serving as a potential constraint on issues (or combination of issues). much less likely to lack effective the defendant railroad. (Coalition Some shippers and shipper groups competitive options, to nevertheless Associations Comment 11.) The Board argue that the build-out factor is too make a prima facie showing of market finds that transload shipments should complicated and should be eliminated dominance. In addition, the Board be included as part of the trucking entirely. Citing several cases,30 SMA, reiterates that the truck volume volume calculation, as long as the MillerCoors, Indorama, and IMA–NA all threshold is just one of two prima facie transload shipment is serving the same argue that, in the past, these factors, along with the 500-mile origin-destination pair as the rate that is hypothetical build-out options have threshold, that would be used to being challenged and involves a railroad become overly burdensome to shippers evaluate trucking competition. The two other than the defendant. For example, and have been extremely difficult to prima facie factors in tandem will serve if the rate at issue is for origin A to resolve. (SMA Comment 11; MillerCoors as a sufficient screen to identify destination B, but there is a transload Comment 12–13; Indorama Comment movements that are reasonably likely to option where another railroad moves 11; IMA–NA Comment 11.) They argue lack effective trucking competition. traffic from A to interchange X and the traffic is then trucked from X to B, that by rail from origin A to interchange B, and then by 4. Lookback Period trucking volume should be included,28 truck from interchange B to destination C. Suppose also that there is an alternate routing in which the As noted, the Board proposed in the because the transload option would be traffic could move by rail from origin A to NPRM that volumes would be directly competing with the railroad- interchange X, and then by truck from interchange considered over the previous five only option, even if the defendant X to destination C. In that scenario, the alternate years.27 Only a few commenters address railroad itself is part of the transload transload routing (A–X–C) would not match the rate at issue (A–B) and therefore should not be included whether this is a sufficient period. routing. Conversely, the trucking in the truck volume. Although the alternate volume from a transload routing should transload option (A–X–C) might be serving as a 26 ISRI was able to obtain some data from three not be included if the origin-destination competitive alternative to the whole-route (A–B–C), of its members for a three-year period. For their top pair does not match the route of the rate for reasons explained in Part IV (subpart B, ‘‘DMIR volume lanes, these shippers state that they used 29 Precedent’’), the Board’s current precedent is to not trucks for 15%, 22%, and 29% of their shipping at issue. consider such whole-route options in the market volume, respectively. ISRI acknowledges that this is dominance analysis and whether to overturn such a small sample. (ISRI Comment 9–10.) 28 The same would be true if the routing were precedent is outside the scope of this proceeding. 27 The Board notes that volume for purposes of reversed, in that the traffic is trucked from origin 30 Consumers Energy, NOR 42142, slip op. at 295– this factor would be based on the cumulative A to interchange X, and then railed from X to 96; Seminole Elec. Coop. v. CSX Transp., Inc., NOR tonnage over the five-year period. Although not destination B. 42110 (STB served May 19, 2010); Tex. Mun. Power specifically addressed in the NPRM, no party raised 29 This would include instances in which the rate Agency v. Burlington N. & Santa Fe Ry., 6 S.T.B. any concern in the comments over how the measure at issue is part of a broader transload routing and 573, 584 (2003); W. Tex. Utils. Co. v. Burlington N. over the five-year period would be calculated. The there is an alternate whole-route option. For R.R., 1 S.T.B. 638, 651 (1996), aff’d sub nom. Board will therefore adopt this clarification as part example, suppose the rate at issue is part of a Burlington N. R.R. v. STB, 114 F.3d 206 (D.C. Cir. of the final rules. broader transload routing in which the traffic moves 1997).

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that a rate that is competitive due to a Associations are that a build-out would was effective competition through a potential build-out is unlikely to be be physically or economically infeasible barge/build-out combination, where the challenged and, even if challenged, is if it: (a) Would be longer than two complainant would have needed to unlikely to be disturbed. (SMA miles; 32 (b) would require the construct an unloading dock and a Comment 13; MillerCoors Comment 14; acquisition or condemnation of conveyor belt build-out to transport coal Indorama Comment 13; IMA–NA developed property in residential, from the dock to its facility. (CSXT Comment 13.) They further argue that industrial, or commercial areas; 33 or (c) Reply, II–24 to II–33, Seminole Elec., eliminating the build-out factor would would traverse waters of the U.S. that Jan. 19, 2010, NOR 42110.) Although the be consistent with provisions of the are under the jurisdiction of the United parties in that proceeding settled before 34 RTP, as well as the Congressional States Army Corps of Engineers. the Board could issue a decision, the In response, UP contends that the directive in the Railroad Revitalization Board held an oral argument specifically Coalition Associations are seeking more & Regulatory Reform Act of 1976, Public on the issue of market dominance in the Law 94–210, section 202(d), 90 Stat. 31, than clarifications, and instead asking rate proceeding, suggesting that the 36, that the market dominance the Board to ‘‘adopt presumptions for build-out issue required close procedures be easily administrable. resolving factual disputes about the examination. Oral Argument, EP 693, (SMA Comment 12–14; MillerCoors existence of effective competitive Comment 14–16; Indorama Comment alternatives.’’ (UP Reply 3.) It states that slip op. at 1–2 (STB served May 19, 12–14; IMA–NA Comment 12–14.) ‘‘the mere satisfaction of a prima facie 2010). Additionally, in merger cases, AFPM states shippers and railroads will factor should not itself be sufficient shippers often ask for conditions to have very different ideas of what where a railroad offers actual evidence preserve the competition that they claim constitutes ‘‘physical, regulatory, that a competitive alternative provides exists due to their potential to build out financial, or other issues’’ that could effective competition.’’ (Id. at 3–4.) to a competing carrier. See, e.g., Norfolk serve as obstacles to resolving whether BNSF notes that in some instances its S. Ry.—Acquis. & Operation—Certain a build-out option exists.31 (AFPM rates have been constrained by the Rail Lines of Del. & Hudson Ry., FD Comment 8; see also PRFBA Comment potential for a build-out. (BNSF Reply, 35873 et al., slip op. at 33–35 (STB 2.) Although they do not advocate V.S. Miller 17.) served May 15, 2015); Genesee & Wyo. eliminating this factor, the Coalition In rate cases, railroad arguments that Inc.—Control—RailAmerica, Inc., FD Associations note that the Board has potential build-outs are available can 35654, slip op. at 5–6 (STB served Dec. never found that a potential build-out significantly complicate market 20, 2012); Canadian Nat’l Ry.— constitutes effective competition. They dominance presentations. NPRM, EP Control—EJ&E W. Co., FD 35087 et al., further claim that any feasible build-out 756, slip op. at 10. However, here the slip op. at 13–14 (STB served Dec. 24, opportunity in a given case likely will Board seeks to increase simplicity, 2008). have been the subject of a feasibility expediency, and efficiency in rate cases Shippers also argue that if the study or communicated to the railroad (see 49 U.S.C. 10101(2) and (15)) while railroad’s rate is effectively competitive in rate negotiations in any event. at the same time allowing competition due to a build-out, a shipper is unlikely (Coalition Associations Comment 17.) and the demand for services to establish to challenge the rate. But a shipper and Some shipper groups also take issue reasonable rates for rail transportation railroad may have different views of the with aspects of the build-out factor. The (see 49 U.S.C. 10101(1)). Build-out practicality of a build-out option and Coalition Associations argue that it is options can serve, and sometimes have therefore whether the rate is effectively ‘‘confusing and appears to do little to served, as a constraint on railroad competitive. See Oral Argument Tr. reduce a complainant’s burden’’ and pricing. For example, in Seminole 10:12–15, June 30, 2010, Seminole Elec., that the ‘‘scope of evidence necessary to Electric Cooperative v. CSX NOR 42110 (complainant asserting that demonstrate the factor is unclear.’’ (Id. Transportation, Inc., Docket No. NOR at 16.) In particular, they assert that it 42110, the defendant argued that there threat of build-out option did not affect is not clear if the complainant can defendant carrier’s pricing); id. at satisfy the factor simply by making an 32 The Coalition Associations argue that build- 57:15–20 (defendant carrier asserting assertion in the verified statement, or outs exceeding two miles are generally cost- that potential build-out option had whether the complainant must also prohibitive. They base this claim on an analysis of caused it to offer a lower rate); see also Road Property Investment (RPI) costs from some of Tex. Mun. Power Agency v. Burlington submit some explanation and the Board’s Full-SAC rate cases. According to the supporting evidence. (Coalition Coalition Associations, their analysis shows that a N. & Santa Fe Ry., 6 S.T.B. 573, 583– Associations Comment 16–17; see also two-mile build-out would cost over $4 million, 84 (2003), recon. granted in part, 7 AFPM Comment 9.) The Coalition which would be greater than the relief in small rate S.T.B. 803 (making minor adjustments cases or the litigation costs of large rate cases. to rate prescription). Because the Board Associations point out that if a (Coalition Associations Comment 17–18.) Similarly, complainant does have to submit FRCA supports the idea of a dollar limit on the cost already considers whether build-outs evidence, then this factor is really no of the build-out. (FRCA Comment 2.) In addition, are an effective form of competition, different than what must be shown in a USDA states that the Board could be more explicit they should remain part of the market non-streamlined market dominance about delineating at what distance a build-out is a practical, effective constraint. (USDA Comment 10.) dominance analysis in the streamlined presentation. (Coalition Associations 33 The Coalition Associations claim the high cost approach. Comment 17.) Accordingly, the for land acquisition in such areas is supported by The streamlined approach should Coalition Associations again propose data provided by the RRTF Report. (Coalition help eliminate overly costly and ‘‘objective standards’’ that could be used Associations Comment 18–19.) AFPM agrees that a shipper’s ability to access land and obtain required complex litigation in cases where build- to satisfy the build-out factor. The permits for a build-out introduces too much out options are clearly impractical. In standards proposed by the Coalition uncertainty, though it supports simply eliminating cases where a railroad argues that there this factor entirely rather than creating a more 31 In addition, NTU offers a general suggestion specific criterion. (AFPM Comment 9.) are practical build-out options, the that the Board work with other governmental 34 The Coalition Associations argue that such procedural constraints that are part of agencies to reduce regulatory barriers to build-outs. build-outs would go through wetlands and thus the streamlined approach—including (NTU Comment 4–5.) NTU does not, however, require expensive infrastructure and be subject to page limits on filings and the propose any modification to the proposed costly environmental review and mitigation. regulations. (Coalition Associations Comment 19.) complainant’s option to utilize a hearing

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before an ALJ 35—should help ensure shipper submit a verified statement G. Other Proposed Factors and that the complexity and cost of litigating explaining why build-outs are not Approaches the practicality of those options remains practical is the better course. In addition to the prima facie factors reasonable. The ALJ hearing option Commenters have raised concerns could be particularly useful in cases proposed by the Board, some over the level of detail about potential commenters proposed additional where a railroad challenges whether build-outs that must be included in the there are physical, regulatory, financial, factors. Some commenters also offered verified statement. In the NPRM, the variations of the streamlined market or other issues (or a combination of Board stated that the verified statement issues) preventing a build-out, as the dominance approach. should explain in a ‘‘short plain ALJ could directly question those statement’’ that it has no build-out 1. Absence of Pipeline Competition assertions and challenge any potentially options due to ‘‘physical, regulatory, frivolous claims. In this way, the Board financial, or other issues (or AAR, UP, and BNSF state that the intends to achieve an appropriate combination of issues).’’ NPRM, EP 756, Board should include lack of pipeline balance between the competing RTP competition as a prima facie factor. factors of allowing, to the maximum slip op. at 11. As noted, because this factor is intended to ‘‘limit the (AAR Comment 10; UP Comment 12 extent possible, competition and the n.4; BNSF Comment 14–15). BNSF demand for services to establish evidentiary burden and simplify the requirement for complainants,’’ id., argues that pipelines can be a constraint reasonable transportation rates, see 49 on its rates and states that products such U.S.C. 10101(1), while still maintaining complainants need not provide supporting evidence, such as any as crude oil, propane, and other refined reasonable rates where there is an petroleum products often move by rail absence of effective competition, see 49 studies undertaken or other documentation, as part of their or pipeline. (BNSF Comment 14.) The U.S.C. 10101(6). Coalition Associations state that they do As an initial matter, the Board submission to the Board. However, the not object to adding a pipeline factor. clarifies that the practical build-out complainant must provide more than a (Coalition Associations Reply 28.) No factor is not limited only to potential conclusory statement that a build-out is other party addressed this issue. rail expansions, as the Coalition not practical by simply citing to one of Associations seem to imply. (See the barriers listed by the Board without The Board agrees that there may be Coalition Associations Comment 17–18 further explanation. In requiring a short circumstances where pipelines could (proposing a presumption that build- plain statement, the Board anticipates serve as a competitive transportation outs longer than two miles are infeasible that the complainant’s official would alternative to rail. Adding a factor to based on costs per track mile).) In the describe, in a page or two, what the account for pipeline competition should NPRM, the Board stated that build-outs physical, regulatory, financial, or other not be burdensome: Only certain ‘‘refer to possible competitive issues are that make a build out commodities can move by pipeline and, alternatives that could be accessed if the impractical. For example, in an in most cases, it should not be difficult complainant makes certain especially obvious scenario, if a shipper to determine whether a facility has infrastructure investments.’’ NPRM, EP satisfies the other factors and is located practical physical access to pipeline 756, slip op. at 10. As such, any 50 miles from the nearest waterway, rail competition. Moreover, no commenter alternative option that would require an line, or pipeline,36 an official might has objected to inclusion of pipeline infrastructure investment should be explain that, because of the physical competition as a consideration in the considered as part of this factor, location of the complainant’s facility streamlined approach. regardless of the transportation mode, as and the disproportionately high costs to Accordingly, the Board will adopt an it is in a non-streamlined market construct infrastructure to cover this additional prima facie factor stating that dominance analysis. For example, any distance, build-out options are not the complainant must demonstrate that potential barge alternative that requires practical. there is no pipeline competition as part infrastructure investment should be Under the streamlined approach, a of its prima facie showing under addressed by the complainant under the more detailed explanation should not be § 1111.12(a).38 See Final Rule below. As build-out factor, not the barge necessary, as the impracticality of the with intramodal, barge, and build-out competition factor. options, a complainant can demonstrate The Board finds that it would be build-out options should be clear from that this factor is met through a verified inappropriate to presume that a build- the verified statement. However, statement from an appropriate official out option is not practical in the specific complainants must remember that if the that the complainant does not have scenarios suggested by the Coalition practicality of a build-out option is not practical physical access to pipeline Associations; instead, those scenarios clear and it elects to use the streamlined competition. When addressing why must be evaluated on a case-by-case approach, it runs the risk that the there is no practical physical access to basis. While the Coalition Associations railroad may challenge whether the pipeline competition in the verified argue that a build-out option that build-out factor has been satisfied on statement, the complainant must ensure exceeds two miles in length would cost reply. In that instance, the complainant it has accounted for all types of pipeline at least $4 million and therefore be cost- would have to defend why that build- 37 access. In addition, because pipelines prohibitive, there may be situations out option is not practical on rebuttal. will be considered part of the market where the cost of a two-mile build-out 36 dominance analysis, a shipper must would be viable given the amount in As discussed below, the Board is adding the absence of pipeline competition as an additional address whether it has practical dispute. For example, if the shipper is prima facie factor. pipeline build-out options as part of the seeking rate relief of $200 million over 37 AAR asks the Board to clarify what information build-out factor. a 10-year period, then a $4 million must be contained in the proposed verified build-out may not be a cost-prohibitive statement from shippers and specifically requests that complainants be required to disclose what 38 As the Board has stated with respect to the alternative. Accordingly, having the steps it has taken to evaluate build-out options and intramodal and barge competition factors, submit all studies it has undertaken. (AAR consistent with 49 U.S.C. 10707(a), the pipeline 35 Page limits and the ALJ hearing are discussed Comment 11.) This request is addressed in Part III competition factor also relates to the absence of below, in Part III. (subpart C, ‘‘Disclosures and Verified Statements’’). effective competition.

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2. Rate Benchmarking account for various alternative modes of 4. ‘‘A` la Carte’’ Approach As discussed above, the TRB transportation and would be strong The Coalition Associations propose a Professors contend that R/VC ratios are indicators where market dominance is variation on the streamlined approach, unreliable due to flaws in URCS but reasonably likely. Adopting a which they refer to as an ‘‘a` la carte’’ acknowledge that the Board cannot benchmarking factor, which would approach. (Coalition Associations replace that requirement because it is require significant resources to develop, Comment 7–8.) According to the mandated by statute. As a result, they would therefore not add sufficient value Coalition Associations, each of the recommend that the Board supplement in this instance. The Board will proposed prima facie factors ‘‘falls the R/VC ratio requirement by adding a therefore not incorporate benchmarking neatly within one of the three modal prima facie factor that uses rate into the streamlined market dominance elements of qualitative market benchmarking, similar to a concept that approach. dominance: The 500-mile and 10% they recommended in the TRB Report.39 3. R/VC Ratio Approach trucking factors address only the truck They claim that using rate competition element; the intramodal benchmarking would provide an A few commenters propose that, and build-out factors address only the indicator of railroad market power rather than rely on the proposed factors, intramodal competition element; the superior to R/VC ratios derived from the Board adopt a streamlined market barge factor addresses only the barge URCS. (TRB Professors Comment 4.) dominance approach in which a competition element.’’ (Id. at 8.) USDA also advocates use of a complainant may make a prima facie Therefore, the Coalition Associations competitive benchmarking factor, showing by establishing that a argue that a complainant should not be though it goes further by proposing that movement has an R/VC ratio over a prevented from using a prima facie the Board replace all the prima facie certain level. (PRFBA Comment 1 factor related to one modal element due factors with benchmarking (except for (proposing an R/VC ratio greater than to its inability to satisfy a prima facie the R/VC of 180%-or-greater factor, the Board’s annual Revenue Shortfall factor related to a different modal which is statutorily required).40 (USDA Allocation Methodology (RSAM) element. (Id.) Instead, the Coalition Comment 10–11; see also Farmers calculation as floor to show market Associations propose that complainants Union Reply 4–5 (supporting USDA dominance); AFPM Comment 5 be permitted to demonstrate the prima proposal).) Dr. Ellig opposes USDA’s (proposing either 280% or RSAM as facie factors for as many modal elements proposal to replace the prima facie floor); USDA Comment 11 (proposing as possible and submit more extensive factors with benchmarking, arguing that 200% as floor); see also Farmers Union evidence to demonstrate market it could lead to findings of market Reply 4, 5.) AFPM argues that this dominance for any remaining modal dominance where shippers do in fact process would quickly and clearly show elements. (Id.) UP contends that the ‘‘a` have competitive options. (Ellig Reply whether a rail carrier is market la carte’’ streamlined approach is not a 4.) Dr. Ellig instead proposes that the dominant. (AFPM Comment 5; see also logical outgrowth of the NPRM. It also Board first determine if rates are above USDA Comment 11 (arguing the process argues that the approach is no different a benchmark threshold (which would would be accessible and than what happens in practice today, in need to be determined by the Board). If straightforward).) 41 that parties generally focus their the rate is above that benchmark The Board will reject proposals to use evidence on realistic competitive threshold, the Board could then conduct an R/VC ratio in lieu of specific factors. alternatives. (UP Reply 3.) a streamlined or non-streamlined These commenters do not provide The Board declines to adopt the ‘‘a` la market dominance inquiry. (Id. at 4.) support for the R/VC ratios that they carte’’ approach at this time. The The Board declines to adopt a have selected as threshold R/VC levels. Coalition Associations’ proposal does benchmarking approach similar to that Moreover, an R/VC ratio above 180%, not explain the procedural rules that it proposed by the TRB for purposes of the by itself does not indicate clearly believes would apply to the ‘‘a` la carte’’ streamlined market dominance whether the complainant lacks effective approach and regardless, the Board has approach. The Board finds that the competition from other modes of concerns about how this proposal prima facie factors that it is adopting transportation. The Board also finds that would work in practice. Moreover, this it would not be reasonable to base a approach could add complexity to the 39 The TRB Professors state that ‘‘[m]any rail rates market dominance finding on a single market dominance analysis, with some are now competitively determined, and those rates can be used as benchmarks in rate review factor. See McCarty Farms v. Burlington factors being presented under the proceedings.’’ (TRB Professors Comment 2.) A more N. Inc., 3 I.C.C.2d 822, 832 (1987) streamlined approach and others being detailed discussion of rate benchmarking as (‘‘[E]vidence that rail revenues presented under the non-streamlined proposed by the TRB Professors is available in substantially exceed costs by itself does approach. For these reasons, the ‘‘a` la Chapter 3 of the TRB Report. not indicate market dominance. . . .’’). carte’’ approach will not be adopted 40 USDA further argues that the prima facie factors are flawed because the ‘‘fact that a shipper here. has alternative options at a given rail price does not 41 USDA notes while this process might be overly mean that the railroad has no market power in inclusive, it is better for the Board to err on the side 5. Product and Geographic Competition setting that price. A market dominant railroad will of ‘‘false positives,’’ which it describes as an AAR, UP, and BNSF all argue that the set its price just below the price of the alternative instance in which a railroad is found to be market option, say trucking, but the price of trucking may dominant when it is not, while a ‘‘false negative’’ streamlined approach should include a still be significantly above the railroad’s cost of the is when a railroad is found not be market dominant factor that would take into account move. Thus, even though trucking is a substitute for when it is. (USDA Comment 11.) USDA states that, product and geographic competition. rail at the railroad’s set price, the railroad could still in cases of false positives, the merits case on rate (AAR Comment 10; UP Comment 13; be market dominant.’’ (USDA Comment 10.) The reasonableness still serves as a safeguard against the prima facie factors are intended to identify those railroad having to pay rate relief. (USDA Comment BNSF Comment 12–13.) AAR argues cases where market dominance is clear on its face. 8, 11.) But the availability of the non-streamlined that the Board should add a factor to In the cases identified by USDA, where rail is market dominance approach for a shipper that has limit the streamlined approach to priced just below the non-competitive trucking rate, the potential of getting a false negative (i.e., a instances where the shipper has the shipper still has the option of utilizing the non- shipper who is ineligible to use the streamlined streamlined market dominance approach, in which market dominance approach) eliminates the shipped more than a significant it can explain why trucking may not be competitive concern associated with quantitative false positives percentage (e.g., 75%) of the commodity with rail. and false negatives. at issue to the destination in the case.

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(AAR Comment 10.) BNSF proposes that (‘‘[A]nalyzing and adjudicating a Comment 13.) UP also claims that the shippers would submit a certification contested allegation of indirect Board cites no evidence that any that there is no product or geographic competition is rarely straightforward shipper who might file a Full-SAC case competition by a knowledgeable shipper and would require a substantial amount has been dissuaded by the cost of business representative and that of the Board’s resources to examine addressing market dominance. (UP railroads would submit evidence of matters far removed from its Comment 14.) UP also disagrees with product or geographic competition on transportation expertise and to the Board’s conclusion that shippers are reply. (BNSF Comment 13.) The TRB determine if indirect competition at a disadvantage in addressing market Professors also recommend, as they did effectively constrains rates to reasonable dominance on opening, noting that the in the TRB Report, that the Board allow levels. . . .’’).42 shipper knows more about its evidence on product and geographic transportation alternatives than the competition. They state that excluding Part III—Procedural Issues railroad. UP claims the streamlined potentially relevant evidence puts A. Applicability to Different Rate approach would also encourage fairness and accuracy at risk. (TRB Reasonableness Methodologies wasteful litigation by allowing shippers Professors Comment 3–4.) to file cases with low up-front costs and The Coalition Associations, ISRI, and AAR, BNSF, and UP argue that the impose the costs of developing market WCTL oppose including product and streamlined approach should be limited dominance evidence on railroads. (UP geographic competition as part of the to only smaller rate cases. AAR would Comment 14.) streamlined approach and argue that the limit the streamlined approach to Shipper interests disagree with proposals to do so do not address the smaller-value cases challenged under requests to limit the applicability of the difficulties that led the Board to the simplified procedures and cases streamlined approach. NGFA argues eliminate these factors, as noted below. with fewer than 10 origin/destination there is no basis for the limitation on the (Coalition Associations Reply 31–34; pairs, arguing that, consistent with the streamlined approach proposed by ISRI Reply 3–4; WCTL Reply 2–3.) The Board’s stated goals, the Board should AAR. NGFA asserts that the streamlined Coalition Associations also argue that implement the streamlined market market dominance approach should be there is no need to add product and dominance procedures only in cases available for use by any complainant geographic competition because a where the cost of a full presentation is filing a rate case. (NGFA Reply 9.) The ‘‘shipper is unlikely to challenge a rate not warranted due to the value or Coalition Associations dispute BNSF’s that is effectively constrained by complexity of the case. (AAR Comment claim that large shippers can leverage product and geographic competition 7.) BNSF expresses concern that the competitive movements to protect because the cost of challenging the rate streamlined approach would against unreasonable rates and argue is high compared to the potential oversimplify the market dominance that the streamlined approach should be relief.’’ (Coalition Associations Reply analysis of a complex case involving a available to large shippers. (Coalition 34.) large shipper, and therefore proposes a Associations Reply 12–14 (arguing that The Board will reject the proposals to 1,000 carloads-per-year cap for shippers railroads are usually willing to lose add a product and geographic to be able to use the streamlined competitive traffic rather than lower the competition component to the approach, though it notes that other rate on their non-competitive traffic).) streamlined approach. The Board has caps based on revenue or market share The Coalition Associations also found that ‘‘the time and resources could work as well. (BNSF Comment challenge UP’s assertion that shippers required for the parties to develop, and 10–11, BNSF Reply, V.S. Miller 16–17.) are not dissuaded from bringing Full- for [the Board] to analyze, whether it BNSF claims that, in its experience, SAC cases because of the costs would be feasible for a shipper to ‘‘[o]nce a shipper’s volume exceeds associated with the market dominance change its business operations (by 1,000 carloads, the shipper’s leverage inquiry. (Coalition Associations Reply changing its suppliers, customers, or with a rail carrier changes’’ and that 10–12.) They argue that unnecessary industrial processes) so as to avoid such shippers have ‘‘multiple ways to litigation burdens are a problem in Full- paying the challenged rail rate can be exercise market power,’’ such as SAC cases because the high cost of a inordinate.’’ Mkt. Dominance through commercial discussions and non-streamlined analysis reduces any Determinations—Prod. & Geographic negotiations. (BNSF Reply, V.S. Miller relief the complainant might win. Competition (Mkt. Dominance 1998), 3 16–17.) UP states that it does not object Conversely, ‘‘[w]hen complainants lose, S.T.B. 937, 948 (1998) remanded sub to use of the streamlined approach for it is a multimillion-dollar penalty for nom. Ass’n of Am. R.Rs. v. STB, 237 Simplified-SAC or Three-Benchmark making a good-faith claim.’’ (Id. at 11 F.3d 676 (D.C. Cir. 2001), pet. for review cases, but it does object to its use in (footnote omitted).) The Coalition denied sub nom. Ass’n of Am. R.Rs. v. Full-SAC cases.43 (UP Comment 1–2.) Associations also dispute UP’s claim STB, 306 F.3d 1108 (D.C. Cir. 2002). The UP argues that the streamlined approach that the cost to shippers of preparing goal of the streamlined market would not save time in Full-SAC cases, initial market-dominance evidence will dominance approach is to reduce the as market dominance and rate be lower than the cost to railroads. burden on parties and expedite reasonableness would still be litigated (Coalition Associations Reply 10–11.) proceedings, a goal that would not be simultaneously, not sequentially. (UP The Board is not persuaded that it met by reintroducing a requirement that should limit the streamlined market the agency has repeatedly found to be 42 UP also proposes that the Board ‘‘develop[ ] dominance approach to smaller rate too burdensome as part of the non- factors a shipper must overcome with evidence disputes. BNSF argues that the streamlined approach. See, e.g., Pet. of before railroads are even required to respond to streamlined approach should be limited complaints.’’ (UP Comment 12–13.) However, the the Ass’n of Am. R.Rs. to Inst. a streamlined approach adopted here is intended to to small cases to ‘‘avoid inappropriate Rulemaking Proceeding to Reintroduce adequately ensure that only proceedings in which interference in rail markets.’’ (BNSF Indirect Competition as a Factor market dominance has been shown proceed to a Comment 2.) However, as discussed in Considered in Mkt. Dominance determination of rate reasonableness. Part I, the streamlined approach is not 43 UP also objects to using the streamlined Determinations for Coal Transported to approach in FORR cases. Because FORR remains less accurate than the non-streamlined Util. Generation Facilities, EP 717, slip pending before the Board in Docket No. EP 755, the approach, and therefore does not risk op. at 9 (STB served Mar. 19, 2013) Board will not address those comments here. the negative market impacts raised by

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BNSF. Rather, the Board is simply will encourage ‘‘wasteful’’ litigation that Polymers USA, LLC v. CSX Transp., reducing the litigation burden on may be intended to force settlements Inc., NOR 42123 (STB served May 6, complainants when they can show that from railroads. If a case brought under 2011).45 market dominance is more readily the streamlined approach is not valid, Finally, some commenters suggest apparent and therefore does not require railroads should easily be able to defend that the Board adopt procedural time as extensive an evidentiary showing. themselves against such claims. If the limits for pleading the streamlined The railroad still has a full opportunity railroad does refute any of the factors or market dominance approach. (TRB to refute the complainant’s showing otherwise shows that effective Professors Comment 3; PRFBA under the streamlined market competition exists, the shipper would Comment 2.) The NPRM proposed to dominance approach. Accordingly, a be precluded from challenging the same incorporate the streamlined market finding of market dominance under the rate again for several years, as discussed dominance proposal into the standard streamlined approach is no less valid in more detail in Part IV (subpart C, procedural schedules governing rate than a finding of market dominance ‘‘Preclusive Effect of Dismissal’’). A rate cases. The Board finds that it is not under the non-streamlined approach. case is a significant undertaking, not necessary to establish separate BNSF also asserts that larger shippers just in terms of costs and resources, but procedural time limits for pleading the generally have greater leverage in rate in the way that it can negatively affect streamlined approach. Parties are free to negotiations. (BNSF Reply, V.S. Miller the business relationship between a request alternate procedural schedules, 16–17.) However, even if true, that in shipper and rail carrier. Accordingly, just as they may do under the non- and of itself does not justify limiting the Board is not convinced that shippers streamlined approach currently. large shippers from using the are likely to file cases that they do not Moreover, the page limits the Board is streamlined approach if they can satisfy believe have merit, even when the costs adopting for streamlined market the prima facie factors. The same holds of doing so are reduced.44 dominance filings is intended to true for AAR’s argument that the encourage efficiency by the parties. See streamlined approach should be limited B. Schedule NPRM, EP 756, slip op. at 12 (stating to cases where the amount at stake is too NGFA requests that the Board clarify that page limits will encourage parties low to justify the cost of a non- at what point the Board will ‘‘make the to focus their arguments on the most streamlined presentation, (AAR determination that a complainant has important issues.) Comment 7), and UP’s argument that met the requirements for a prima facie C. Disclosures and Verified Statements shippers are not dissuaded from showing of market dominance and may bringing Full-SAC cases because of the proceed under the streamlined Under the Board’s existing costs of addressing market dominance approach, as opposed to the final regulations, complainants in Simplified- (UP Comment 14). The litigation costs determination that the complainant has SAC and Three-Benchmark cases must associated with a non-streamlined met its burden of demonstrating market provide to the defendant, with their market dominance presentation could dominance[.]’’ (NGFA Comment 7.) The complaints, the URCS Phase III inputs act as a barrier to bringing a rate Board does not anticipate issuing an used in preparing the complaint, ‘‘[a] proceeding for any shipper; while the intermediate decision addressing the narrative addressing whether there is streamlined approach may be sufficiency of a complainant’s prima any feasible transportation alternative particularly useful for shippers with facie market dominance case as a matter for the challenged movements,’’ and ‘‘all fewer resources, the streamlined of course in each proceeding. After the documents relied upon in formulating approach would enhance the close of the record, the Board would its assessment of a feasible accessibility of the Board’s rate review issue a decision on market dominance transportation alternative and all procedures more broadly. Even for as part of its final decision. The Board documents relied upon to determine the shippers with greater resources, if the may issue a decision earlier if its finds inputs to the URCS Phase III program.’’ costs of pursuing a complaint would that the case should be dismissed for 49 CFR 1111.2(a), (b). In the NPRM, the consume most or all of the expected lack of market dominance. Board proposed expanding the recovery, then the remedy would be a The Coalition Associations propose applicability of these disclosure hollow one for the complainant. A Full- that complainants have the option of requirements to include any case in SAC presentation would not be cost- litigating market dominance on an which a complainant utilizes the effective unless the value of the expedited, bifurcated procedural streamlined market dominance expected remedy, at a minimum, schedule, rather than simultaneously approach. See NPRM, EP 756, slip op. exceeds the expected cost of obtaining with the rate reasonableness portion of at 11. the remedy. If the streamlined approach the case (though under the Coalition WCTL objects to the Board’s proposal can reduce litigation costs in Full-SAC Associations’ proposal, market to require complainants to make these cases just as effectively and dominance and rate reasonableness disclosures in large rate cases where the appropriately as in smaller cases, there would still be decided in a single final streamlined approach is used. WCTL is no reason not to allow use of the decision). (Coalition Associations argues that, in such cases, issues approach just because the shipper may Comment 20–23.) Parties may already regarding the URCS inputs are best be able to bear the cost of the non- request bifurcation in individual rate addressed and resolved through streamlined approach. case proceedings, and they may technical conferences. (WCTL Comment UP’s additional arguments that the continue to do so if using the 11.) WCTL also objects to requiring streamlined approach should not be streamlined approach. See, e.g., M&G disclosure in large rate cases of all the used in Full-SAC cases lack merit for market dominance evidence that the the same reasons. Even if the 44 When the filing fee for a Full-SAC case was complainant relied upon, as this will streamlined approach does not reduce reduced from $178,200 to $350 and for a Simplified the length of the procedural schedule, SAC case from $10,600 to $350 in 2008, there was 45 If requesting bifurcation, parties need to the approach should have the benefit of no noticeable increase in the number of rate cases address how the bifurcated schedule would impact filed at the Board. See Regulations Governing Fees the procedural timelines set out by statute, see 49 reducing litigation costs for both parties. for Servs. Performed in Connection with Licensing U.S.C. 10704, and the applicable Board regulations Finally, the Board disagrees with UP’s & Related Servs.—2007 Update, EP 542 (Sub-No. for the rate review process involved, see, e.g., 49 claim that the streamlined approach 14) (STB served Jan. 25, 2008). CFR 1111.9, 1111.10.

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add a substantial new burden on purposes of submitting the verified CFR 1111.2(a) or (b) that set forth the complainants that may discourage them statement. (AFPM Comment 6.) disclosure requirements in such cases. from using the streamlined approach. The Coalition Associations state that Accordingly, the language of § 1111.2— WCTL claims that the disclosures are they do not object to the concept of even when read in conjunction with also unnecessary, as defendants can still different disclosure requirements for the § 1111.12 establishing the prima facie obtain relevant evidence through streamlined approach, but they believe factors—would still require discovery. (Id. at 12.) Lastly, WCTL that the proposals made by UP and AAR complainants to disclose documents asserts that a shipper in a large rate case are too broad. (Coalition Associations pertaining to any feasible transportation may not decide whether to use the Reply 23–24.) Accordingly, the alternative, even ones that are not streamlined approach until it completes Coalition Associations offer modified specific to the prima facie factors. As a versions of the disclosure requirements its market dominance discovery from result, the information that must be suggested by UP. (Id. at 24.) 47 the defendant carrier. (Id. at 13.) disclosed in simplified standards cases UP argues that these disclosure After reviewing the comments and requirements should be modified for upon further consideration, the Board will remain the same, regardless of cases in which the complainant elects to will not amend its regulations to extend which market dominance approach is use the streamlined market dominance the existing disclosure requirements of used. approach. (UP Comment 7–9.) UP 49 CFR 1111.2(a) and (b) to all cases in The Board also will not adopt AAR’s argues that shippers using the which the streamlined approach is used, suggestion to require complainants to streamlined approach will produce a as it proposed to do in the NPRM.48 The disclose the steps they have taken to narrower selection of documents than Board recently considered adding a evaluate potential intramodal, barge, or under the non-streamlined approach, disclosure requirement in Full-SAC build out options and submit all studies because, according to UP, the proposed cases but, after receiving input from they have undertaken. As noted, regulation reduces the transportation stakeholders, concluded that allowing complainants in Simplified-SAC and alternatives the shipper must initially parties to engage in discovery would be Three-Benchmark cases are already consider. (Id. at 8.) UP claims that this more beneficial. See Expediting Rate required to make certain disclosures could prevent railroads from obtaining Cases, EP 733, slip op. at 6 (STB served regarding feasible transportation relevant documents, to which UP states Mar. 30, 2017). The Board similarly alternatives. Contrary to UP’s assertion, they are entitled, concerning effective finds that allowing for discovery in the Board finds that, in Simplified-SAC competition. Accordingly, UP proposes other non-simplified cases would be and Three-Benchmark cases, these different disclosure requirements.46 It more effective. Moreover, the Board requirements are sufficient. For cases claims that its proposed disclosure agrees with WCTL that shippers may not brought under those simplified requirements would be easy for a not be able to decide whether to pursue shipper to comply with, as they involve a streamlined market dominance standards, a defendant can obtain access producing evidence that the approach until discovery has been to any relevant evidence through complainant has likely already reviewed completed. Accordingly, the Board will discovery. In addition, the Board finds in deciding whether to bring a rate case. maintain the separate evidentiary it is not necessary for a complainant to UP also claims that these requirements processes for simplified and non- provide documentation with the would expedite proceedings and reduce simplified cases.49 verified statement. As explained in the litigation. (Id. at 8.) The Board also declines to modify the Board’s discussion of the build-out AAR also suggests that the shipper disclosure requirements as they pertain factor (supra, Part II, subpart F ‘‘No disclose all supporting information for to simplified standards cases (i.e., Practical Build-Out Option’’), the its assertions of market dominance Simplified-SAC and Three-Benchmark) statement itself should be sufficient to along with the filing of its complaint. In in which the streamlined market demonstrate that the factors it supports particular, AAR argues that dominance approach is used, as have been met. While the Board will not complainants should be required to suggested by UP and the Coalition preclude a complainant from submitting disclose what steps they have taken to Associations. The Board has not documentation if it wishes, the purpose evaluate the intramodal, barge, build- proposed to change the language of 49 of the streamlined approach is to reduce out, and pipeline options, including any the litigation burden on complainants studies they have undertaken, as part of 47 Specifically, the Coalition Associations where a lack of effective competition is propose that a complainant be required to disclose: the verified statement that they may rely reasonably likely. on to demonstrate that these factors (1) All shipments of the issue commodity by any mode made with any transportation provider other Lastly, in response to the AFPM’s have been met. (AAR Comment 11; see than the defendant railroad during the previous five also UP Comment 9 (arguing for broader years; (2) any transportation contracts that the comment, the Board will add language disclosure requirements, including complainant or its affiliates could have used to to the regulation to clarify who transport the issue traffic between the issue origin constitutes an ‘‘appropriate official’’ to shipper studies of transportation and issue destination and intermediate transloading alternatives, in streamlined approach points during the previous five years; and (3) all submit the verified statement. The cases).) AFPM asks the Board to clarify available studies or email correspondence in official submitting the verified what type of documentation would be complainant’s possession concerning transportation statement should be an individual who alternatives for movements of the issue commodity has either direct or supervisory acceptable and define or list who it or commodities from each issue origin to the deems to be ‘‘appropriate officials’’ for corresponding issue destination during the previous responsibility for, or otherwise has five years. (Coalition Associations Reply 24.) knowledge or understanding of, the 46 Specifically, UP proposes that a complainant 48 Accordingly, the NPRM’s proposed regulation complainant’s transportation needs and disclose the following: (1) Information regarding at 49 CFR 1111.12(c) will not be adopted. options. In the verified statement, the any use by the shipper of transportation alternatives 49 In Expediting Rate Cases, EP 733 (STB served during the previous five years; (2) information Nov. 30, 2017), the Board adopted regulations that official should provide his or her title regarding any studies or consideration of require complainants and defendants in non- and a short description of his or her transportation alternatives during the previous five simplified standards cases to certify in their duties. These revisions will be made to years; and (3) any transportation contracts that complaints and answers, respectively, that they could have been used for the issue traffic during the have served their initial discovery requests on the § 1111.12(b), as set forth in the text of previous five years. (UP Comment 7–8.) opposing party. 49 CFR 1111.2(f) and 1111.5(f). the final rule below.

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D. Rebuttal Evidence and Burden of benefit.’’ (Coalition Associations Reply E. Rebuttal Hearing Proof 21.) The Board proposed in the NPRM Several commenters raise concerns As an initial matter, the Board that, as part of the streamlined market reiterates that the ‘‘streamlined market regarding what evidence would be dominance process, a complainant dominance approach would not result permissible on rebuttal under the would have the option to request an in a shifting of the burden for market streamlined approach. The Coalition evidentiary hearing conducted by an dominance’’ and that the ‘‘burden for Associations request that the Board ALJ. NPRM, EP 756, slip op. at 12. The establishing market dominance remains clarify that, under the streamlined hearing would be on-the-record and on the complainant.’’ NPRM, EP 756, approach, a complainant may submit could be conducted telephonically.51 slip op. at 11. In addition, there is no ‘‘any evidence on rebuttal that is The purpose would be to ‘‘allow the limitation on what relevant evidence the responsive to a defendant’s reply parties to clarify their market railroad may submit on reply to make its evidence on the same factors regardless dominance positions under oath, and to market dominance case. Id. at 12 of whether such evidence was available build upon issues presented by the (‘‘Carriers would be permitted to refute to the complainant on opening.’’ parties through critical and exacting any of the prima facie factors of the (Coalition Associations Comment 23– questioning.’’ Id. The Board received complainant’s case, or otherwise show 24.) several comments relating to the ALJ that effective competition exists for the AAR argues that the Board should not hearing process. allow shippers to produce new evidence traffic at issue.’’). In a non-streamlined market 1. Clarification on rebuttal or at the ALJ hearing when dominance inquiry, a complainant is the shipper has elected to use the UP asks the Board to clarify certain free to rebut the railroad’s reply streamlined approach. (AAR Comment language in the NPRM describing the argument and evidence with its own 14–15.) It states, however, that ‘‘[o]f ALJ hearing and written rebuttal. (UP counterevidence, so long as it meets the course, if a defendant railroad Comment 11.) The NPRM at one point Board’s standard for proper rebuttal introduces evidence unrelated to the stated that, if the complainant requested evidence in rate cases. See Consumers prima facie factors in its market the hearing, it would be conducted Energy Co. v. CSX Transp., Inc., NOR dominance submission, complainants ‘‘within seven days after the due date of 42142, slip op. at 4–5 (STB served Dec. should be allowed to provide complainant’s rebuttal,’’ 52 NPRM, EP 9, 2016) (holding that the complainant appropriate rebuttal evidence.’’ (Id. at 756, slip op. at 12, which perhaps could was entitled to offer corrective evidence 15.) be read to suggest that complainants to demonstrate that the defendant UP asserts that the Board should would be required to submit a written carrier’s reply evidence on market clarify its statement in the NPRM that rebuttal and then would also have the dominance issues was unsupported, the ‘‘burden for establishing market option to request the ALJ hearing. infeasible, or unrealistic). This standard dominance remains on the However, later, the NPRM stated that, would likewise apply to complainants complainant.’’ (Id. at 4 (quoting NPRM, ‘‘[g]iven this hearing, the complainant using the streamlined approach. If the EP 756, slip op. at 11.) UP argues that may elect whether to file rebuttal railroad submits evidence to show that the prima facie factors should not be evidence on market dominance issues one of the prima facie factors has not evidentiary presumptions and that if the ... or to rely on the ALJ hearing to been satisfied or that there is otherwise railroad offers other evidence of rebut the defendant’s reply evidence.’’ effective competition, the complainant effective competition on reply, and the Id. (emphasis added). UP asks the Board may provide evidence on rebuttal shipper does not convincingly rebut that to clarify and states that ‘‘if refuting the railroad’s reply evidence, evidence with its own evidence beyond complainants must choose one or the including evidence that was available to the prima facie factors, the railroad other, we have no objection to giving the complainant on opening. As in a should prevail on market dominance. them that choice.’’ (UP Comment 11.) non-streamlined market dominance (UP Comment 6; UP Reply 4.) UP also The Board clarifies that a complainant case, the Board may strike argument or requests that the Board clarify that, if a must choose whether to file a written evidence as improper either upon its railroad offers evidence of effective rebuttal or request the ALJ hearing. An own motion or upon motion by the competition (e.g., the issue commodity evidentiary hearing following written parties. rebuttal is not required even under the can be trucked more than 500 miles or As explained in the NPRM, EP 756, a transload option exists), the shipper non-streamlined approach and would slip op. at 11, a complainant that meets increase the litigation costs for both the can only submit evidence regarding the each of the required factors will have existence of this factor (e.g., the shipper made a prima facie showing of market be instances where the complainant has evidence could submit evidence showing that 500 dominance. On reply, a defendant miles or transloading is not practical, available to it that is properly responsive to the railroad can refute the prima facie defendant’s reply argument but that was not sought but the shipper could not submit showing by presenting evidence of, for in discovery (though the Board does not anticipate evidence that truck or transload pricing that there will likely be many instances where this example, effective competition from occurs, particularly if the defendant has made is not practical). (UP Comment 6; see other transportation providers and, in also UP Reply 4.) sufficient discovery requests). Of course, if the doing so, might rely on evidence that complainant relies on evidence on rebuttal that was The Coalition Associations object to the complainant itself would have not produced in discovery, but which should have UP’s argument that complainants been, the defendant can file a motion to strike that provided in a non-streamlined market should be precluded from offering evidence. See Total Petrochems., NOR 42121, slip dominance inquiry. But contrary to UP’s rebuttal evidence in response to a op. at 14 (granting defendant’s motion to strike assertion, the fact the railroad might rely evidence on inventory carrying costs that railroad’s reply arguments on effective on such evidence in support of its own complainant should have produced in discovery). competition. They argue that ‘‘[i]f a 51 argument does not amount to a shifting As part of the NPRM, the Board proposed complainant who uses the factors would modifying its regulation that sets forth delegations of the burden of proof.50 lose its ability to submit evidence on of Board authority, 49 CFR 1011.6, to allow an ALJ to conduct such hearings. rebuttal in response to a railroad 50 Additionally, the Board will not limit the 52 This language was similarly restated in the argument that effective competition complainant on rebuttal from relying only on proposed rule of the NPRM, which included the exists, the factors would have no evidence that it produced in discovery. There may proposed changes to the text of the regulations.

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complainant and defendant. In contrast, Board. (UP Comment 11.) AAR and proposes ‘‘a 50-page limit of allowing the complainant to utilize an expresses concern about which ALJs the narrative, excluding exhibits, for a one- ALJ hearing in lieu of a written rebuttal Board would use and whether they have lane case, with the limit increasing by would give the complainant an any substantive expertise in market 10 pages for each additional lane, up to additional means to potentially limit dominance issues. Finally, AAR a maximum of 100 pages.’’ (AAR litigation costs while still allowing full requests that the Board clarify that the Comment 15.) UP argues that the Board development of the record. To the ALJ will not rule on any market should not impose any page limits on extent some parties expressed concern dominance issues and that the ALJ’s the railroad’s reply. UP contends that that the Board’s proposal unfairly role would be limited to presiding over the railroad replies will still need to excludes defendants from requesting an examination of witnesses. (AAR contain all the same arguments and ALJ hearing,53 such concerns may have Comment 14.) Shipper interests did not evidence as under the current market been attributed to the ambiguity in the comment on these issues. dominance approach or more given the NPRM as to whether the ALJ hearing Based on the comments, the Board need to address all of the prima facie was in addition to rebuttal or taking the will make minor modifications to what factors. (UP Comment 10.) UP suggests place of complainant’s written rebuttal. was proposed in the NPRM concerning that the Board’s reference in the NPRM, The Board further finds that the the ALJ hearing. It has been the Board’s EP 756, slip op. at 12 n.15, to limitations complainant, as the party with the recent practice to participate in the the Board has previously placed on burden of proof, should have the final federal ALJ Loan program to employ the petitions for reconsideration and briefs evidentiary presentation (as it does in services of ALJs from other federal is misplaced because those filings are other aspects of the rate case process) agencies (currently the Federal Mine made only after parties have filed and therefore it is not inappropriate for Safety and Health Review Commission) evidentiary submissions. (UP Comment the complainant to be the party that can on a case-by-case basis to perform 10; see also AAR Comment 15.) request an ALJ hearing in lieu of filing discrete, Board-assigned functions. In The Coalition Associations oppose written rebuttal. response to the comments received, the AAR’s and UP’s requests to expand the Given the clarification above that the Board notes that it may, at its discretion, page limits. The Coalition Associations ALJ hearing may be sought in lieu of assign a member (or members) of Board dispute UP’s argument that a railroad submitting a written rebuttal, the Board staff to assist the ALJ. would need to present the same will adopt as part of the final rule a With respect to the structure or format arguments and evidence on reply as it requirement that the hearing be held on of the hearing, such matters will be left does in a non-streamlined case. or about the same day that the written to the ALJ’s discretion. However, the (Coalition Associations Reply 27.) FRCA rebuttal on the merits of rate Board clarifies that the ALJ’s role in the expresses concern that 50 pages will not reasonableness is due. The complainant streamlined approach will be to preside be sufficient for rebuttal filings, stating will be required to inform the Board in over the evidentiary hearing (helping to that a defendant may raise a multitude writing within 10 days after the reply is gather information and evidence), while of issues and posit hypothetical and filed if it intends to utilize the ALJ the ultimate market dominance theoretical questions in its 50 pages that hearing. This will give the complainant determination will be made by the will require more than 50 pages for the sufficient time to review the railroad’s Board. The ALJ may, however, express complainant to rebut. (FRCA Comment reply arguments on market dominance his or her views of certain arguments or 2; see also NCTA Comment 3.) In and assess whether it believes the evidence. contrast, some shipper interests propose written rebuttal or hearing is preferable, Lastly, in response to UP’s concern that the Board lower the page limit for while still leaving the complainant about the production of the hearing replies and rebuttals to 25 pages. Their sufficient time to draft its rebuttal filing transcript, the Board will make a slight view is that a 50-page limit would leave if that is the option it chooses. This will revision to the final rules. Specifically, too much room for overly burdensome also give the Board enough time to the Board will increase the period of arguments, whereas 25 pages would schedule the ALJ hearing, if necessary. time by which it must provide the eliminate that abuse but still provide The full text of the revised hearing transcript (either in draft or adequate opportunity to raise § 1111.12(d),54 discussing the final form) from four days to five days.55 straightforward arguments. (SMA evidentiary hearing process, is set forth The full text of the revised Comment 12–14; Indorama Comment below. § 1111.12(d), discussing the evidentiary 12–14; IMA–NA Comment 12–14.) AFPM states that it supports the 50-page 2. Hearing Logistics hearing process, is set forth in below. limit. (AFPM Comment 10.) UP argues that the hearing proposal is F. Page Limits A 50-page limit (including exhibits too underdeveloped. Specifically, UP The Board proposed in the NPRM that and verified statements) strikes the states that the NPRM does not identify if a complainant opted to use the proper balance between narrowing the who must participate in the hearing to streamlined market dominance focus of the parties’ arguments and provide testimony and does not address approach, reply and rebuttal providing sufficient opportunity for important issues of procedural fairness submissions would be limited to 50 parties to address the substantive issues. (e.g., whether parties will conduct direct pages, inclusive of exhibits and verified Despite AAR’s and UP’s arguments, 50 and cross-examination of witnesses, or statements. NPRM, EP 756, slip op. at pages should be sufficient to allow the whether only the ALJ will question 12. railroad to address whether the prima witnesses). UP also questions if the ALJ AAR suggests that the Board ‘‘more facie factors are met and whether there hearing transcript can be produced carefully tailor the limitations on is effective competition. Under the within four days, as proposed by the evidence to the complexity of the case’’ streamlined approach, the complainant is essentially making an opening 53 AAR and BNSF argue that defendants should 55 The Board typically receives a draft version of presentation that market dominance is also be afforded an opportunity to request an ALJ the hearing transcript and then reviews it for errors. readily apparent. If that is not the case, hearing. (AAR Comment 14; BNSF Comment 15.). The Board will endeavor to complete its review and 54 Section 1111.12(d) was proposed in the NPRM provide the final transcript within the five-day then it should not require extensive as paragraph (e) but is designated as paragraph (d) period, but there may be occasions when it must argument and evidence for the railroad in the final rule. provide the draft version pending its review. to refute this assertion. In response to

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AAR’s concern that including exhibits limit price test and point out that arguments go beyond the scope of this in the 50-page would be problematic interested parties have not had a full proceeding and the Board will not because such exhibits often include opportunity to comment on the issue. address the issue here. studies that approach or exceed 50 (Coalition Reply 35.) C. Preclusive Effect of Dismissal pages, the Board notes that parties can The NPRM did not discuss the limit include excerpts from a study or request price test but merely cited to a prior Olin and FRCA state that they a waiver of the 50-page limit.56 proceeding for the general proposition ‘‘disagree’’ with the statement in the The Board will also not adopt AAR’s that a qualitative market dominance NPRM, EP 756, slip op. at 11, that if the suggestion of expanding the page limit analysis involves the determination of Board finds that market dominance has for cases with multiple lanes. The Board ‘‘any feasible transportation alternatives not been shown by a complainant that will respond to requests for a page limit sufficient to constrain the railroad’s has used the streamlined approach, the extension in individual matters on a rates for the traffic to which the complainant may not submit a new rate case-by-case basis. challenged rates apply.’’ NPRM, EP 756, case involving the same traffic using the As for FRCA’s argument that more slip op. at 2. The limit price test’s non-streamlined market dominance pages would be needed for the applicability to market dominance presentation unless there are changed complainant’s rebuttal, the purpose of analyses in future cases is not under circumstances (or other factors under 49 the streamlined approach is to reduce consideration as part of this proceeding, U.S.C. 1322(c)). (Olin Comment 9–10, the litigation costs for shippers. In and as such the Board will not address FRCA Comment 3.) Railroad interests deciding whether to use the streamlined this issue. did not comment on this issue. Board approach, a shipper will have to weigh and court precedent hold that a B. DMIR Precedent the risks and benefits of using the complainant seeking to challenge the streamlined approach (including the 50- AAR argues that, for the streamlined same rates at issue in a prior proceeding page limit on rebuttals).57 market dominance approach, the Board can do so only upon a showing of Finally, the Board rejects the should not apply its DMIR precedent 58 changed circumstance, new evidence, or argument from some shippers to lower in the same manner that the agency did material error. See Burlington N. & the page limit to 25 pages. That limit in DuPont 2014, NOR 42125, slip op. at Santa Fe Ry. v. STB, 403 F.3d 771, 778 would likely restrict a railroad’s ability 25–29. (AAR Comment 12–14.) The (D.C. Cir. 2005); Intermountain Power to present its arguments in sufficient DMIR precedent addressed how the Agency v. Union Pac. R.R., NOR 42127, detail and include the necessary agency should consider market slip op. 4 (STB served Nov. 2, 2012). supporting evidence, as well as the dominance when the rate at issue is for Therefore, it is appropriate that a complainant’s ability to rebut those a segment of a larger movement (a complainant cannot file a new arguments. bottleneck segment). In DuPont 2014, complaint to challenge the same traffic the Board held that, under the DMIR Part IV—Miscellaneous Issues where the Board has previously found precedent, the agency cannot consider, no market dominance, absent a showing A. Limit Price Test as part of the market dominance that one of these criteria are met. inquiry, transportation alternatives that AAR and CSXT argue that the Board D. Regulatory Impact Analysis should affirmatively state that it will not cover the whole route when only the apply the ‘‘limit price test’’ in any future bottleneck segment rate is being In his comment, Dr. Ellig proposes rate case. (AAR Comment 16–17 (stating challenged. DuPont 2014, NOR 42125, that the Board conduct a ‘‘regulatory concern that the NPRM, by citing to a slip op. at 26–29 (also stating that this impact analysis’’ (RIA), which is a form prior proceeding, implicitly endorsed conclusion is consistent with a of a cost-benefit analysis, in this legislative directive to process rate proceeding and in Final Offer Rate the limit price methodology); CSXT 59 Comment 3.) AAR and CSXT reiterate complaints more expeditiously and the Review, Docket No. EP 755. (Ellig various arguments that railroads have long-standing Congressional intent that Comment 3–4.) Dr. Ellig explains how raised in the past as to why the limit market dominance be a practical the Board could apply the RIA price methodology should be determination made without delay; and framework to the rules proposed in eliminated. (AAR Comment 16–17; stating the conclusion is consistent with these two proceedings. Other parties did CSXT Comment 3–4.) In response, the the Board’s statutory directives.) The not comment on the proposal. The Coalition Associations state that the Coalition Associations argue that the Board is considering whether and how Board should not use this proceeding to Board’s decision in DuPont 2014 was particular cost-benefit analysis either abandon or endorse the use of the correct and that AAR is simply approaches might be more formally repeating many of the same arguments integrated into its rulemaking 60 56 See E.I. DuPont de Nemours & Co. v. Norfolk that were raised and rejected by the processes. While the Board need not S. Ry., NOR 42125, slip op. at 2 (STB served June Board in DuPont 2014. (Coalition conduct a formal RIA, the Board has, as 11, 2014) (granting waiver of page limits on Associations Reply 17–20.) described throughout this decision, petitions for reconsiderations due to complexity of The Board did not seek comment on carefully weighed the benefits and the case). the DMIR and DuPont 2014 precedent as burdens associated with particular 57 NCTA argues that a defendant could require a complainant to provide more evidence than the part of the NPRM. Moreover, AAR’s complainant can provide within the limited scope objections to the DMIR and DuPont 2014 59 Dr. Ellig submitted his comment in this docket, of a 50-page rebuttal and therefore requests that precedent are not specifically tied to the Final Offer Rate Review, Docket No. EP 755, and ‘‘restrictions also be placed on the amount of streamlined approach, but to that Expanding Access to Rate Relief, Docket No. EP 665 information that a defendant can request in its (Sub-No. 2), as well as in Association of American response to a complainant.’’ (NCTA Comment 3.) precedent in general. As such, AAR’s Railroads—Petition for Rulemaking, Docket No. EP To the extent that NCTA is proposing that 752. restrictions be placed on the evidence that a 58 AAR refers to ‘‘the DMIR case.’’ (See, e.g., AAR 60 See Assoc. of Am. R.Rs.—Pet. for Rulemaking, defendant can obtain through discovery, the Board Comment 12.) What the Board refers to here as ‘‘the EP 752, slip op. at 1 (STB served Nov. 4, 2019); see will deny this request and finds that the standards DMIR precedent’’ is actually two decisions: also Village of Barrington, Ill. v. STB, 636 F.3d 650, for discovery that would apply under the non- Minnesota Power, Inc. v. Duluth, Missabe & Iron 670–71 (D.C. Cir. 2011) (stating that ‘‘neither the streamlined approach should continue to apply Range Railway, 4 S.T.B. 64 (1999) and Minnesota Board’s authorizing legislation nor the here, and that discovery disputes can be addressed Power, Inc. v. Duluth, Missabe & Iron Range Administrative Procedure Act requires the Board to on a case-by-case basis. Railway, 4 S.T.B. 288 (1999). conduct formal cost-benefit analysis.’’).

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aspects of the streamlined market its regulations would not mandate or proper performance of the functions of dominance approach, which as noted circumscribe the conduct of small the Board, including whether the below, has been designated as non- entities. Indeed, the proposal requires collection has practical utility; (2) the major. See, e.g., supra, at 3–4, 7–8, 10– no additional recordkeeping by small accuracy of the Board’s burden 11, 13, 22, 26–27. Further, in this railroads or any reporting of additional estimates; (3) ways to enhance the proceeding, the Board is not creating a information. Nor do these proposed quality, utility, and clarity of the new right or remedy but is merely rules circumscribe or mandate any information collected; and (4) ways to streamlining an existing process. As conduct by small railroads that is not minimize the burden of the collection of noted above, the Board does not expect already required by statute: the information on the respondents, the streamlined approach to change the establishment of reasonable including the use of automated outcome that would have been reached transportation rates when a carrier is collection techniques or other forms of under the non-streamlined market found to be market dominant. As the information technology, when dominance approach. Rather, it expects Board noted, small railroads have appropriate. One comment was the rule to decrease the burden in always been subject to rate received, as discussed below. potentially meritorious cases, including reasonableness complaints and their In the only comment relating to the the burden that may have unnecessarily associated litigation costs, including PRA burden analysis, Dr. Ellig questions limited the accessibility of the Board’s addressing whether they have market the factual basis for the Board’s estimate rate review processes and therefore dominance over traffic. that there would be one additional dissuaded shippers from filing a case. Additionally, the Board concluded (as complaint per year due to the new it has in past proceedings) that the streamlined market dominance Regulatory Flexibility Act majority of railroads involved in these procedures. (Ellig Comment 12.) The The Regulatory Flexibility Act of 1980 rate proceedings are not small entities Board appreciates Dr. Ellig’s comment (RFA), 5 U.S.C. 601–612, generally within the meaning of the Regulatory on this point. For most collection requires a description and analysis of Flexibility Act. NPRM, EP 756, slip op. renewals, the Board uses the actual new rules that would have a significant at 13 (citing Simplified Standards, EP number of filings with the Board over economic impact on a substantial 646 (Sub-No. 1), slip op. at 33–34. Since the previous three years and averages number of small entities. In drafting a the inception of the Board in 1996, only them to get an estimated annual number rule, an agency is required to: (1) Assess three of the 51 cases filed challenging of those filings to use in its PRA burden the effect that its regulation will have on the reasonableness of freight rail rates analysis. For new rules, however, the small entities; (2) analyze effective have involved a Class III rail carrier as Board may not have historical data that alternatives that may minimize a a defendant. Those three cases involved allows for such averages, so it must regulation’s impact; and (3) make the a total of 13 Class III rail carriers. The estimate based on its experience, often analysis available for public comment. Board estimated that there are considering analogous regulatory sections 601–604. In its final rule, the approximately 656 Class III rail carriers. changes made in the past. Here, while agency must either include a final Therefore, the Board certified under 5 the streamlined market dominance regulatory flexibility analysis, section U.S.C. 605(b) that the proposed rule, if procedures are new, market dominance 604(a), or certify that the proposed rule promulgated, would not have a has long been a litigated issue in rate would not have a ‘‘significant impact on significant economic impact on a reasonableness cases. Based on its a substantial number of small entities,’’ substantial number of small entities substantial experience with the section 605(b). The impact must be a within the meaning of the RFA. complexities of prior market dominance direct impact on small entities ‘‘whose The final rule adopted here revises litigation, and how such complexities conduct is circumscribed or mandated’’ the rules proposed in the NPRM; had impacted the number of rate by the proposed rule. White Eagle Coop. however, the same basis for the Board’s reasonableness complaints filed each v. Conner, 553 F.3d 467, 480 (7th Cir. certification in the proposed rule year, the Board estimated that it would 2009). applies to the final rule. Thus, the Board receive approximately one additional In the NPRM, the Board certified certifies under 5 U.S.C. 605(b) that the complaint due to the streamlined under 5 U.S.C. 605(b) that the proposed final rule will not have a significant market dominance approach. As no rule would not have a significant economic impact on a substantial party submitted any specific economic impact on a substantial number of small entities within the information that would lead to a more number of small entities within the meaning of the RFA. A copy of this precise estimate, the Board continues to meaning of the RFA.61 The Board decision will be served upon the Chief find that the streamlined approach to explained that its proposed changes to Counsel for Advocacy, Office of market dominance will likely lead to Advocacy, U.S. Small Business approximately one additional case per 61 For the purpose of RFA analysis for rail carriers Administration, Washington, DC 20416. year. subject to Board jurisdiction, the Board defines a Dr. Ellig also comments that the Board ‘‘small business’’ as only including those rail Paperwork Reduction Act carriers classified as Class III rail carriers under 49 did not provide a source for its CFR 1201.1–1. See Small Entity Size Standards In this proceeding, the Board is estimated PRA burden hours or non- Under the Regulatory Flexibility Act, EP 719 (STB modifying an existing collection of burden costs (i.e., printing, copying, served June 30, 2016) (with Board Member information that was approved by the mailing and messenger costs) for the Begeman dissenting). Class III carriers have annual operating revenues of $20 million or less in 1991 Office of Management and Budget existing types of complaints and the one dollars, or $40,384,263 or less when adjusted for (OMB) under the collection of additional complaint expected to be inflation using 2019 data. Class II rail carriers have Complaints (OMB Control No. 2140– filed due to the new streamlined market annual operating revenues of less than $250 million 0029). In the NPRM, the Board sought dominance procedures. (Id.) These but in excess of $20 million in 1991 dollars, or $504,803,294 and $40,384,263, respectively, when comments pursuant to the Paperwork burden hours and non-burden costs adjusted for inflation using 2019 data. The Board Reduction Act (PRA), 44 U.S.C. 3501– were derived from the burden hours and calculates the revenue deflator factor annually and 3549, and OMB regulations at 5 CFR non-burden costs the Board estimated publishes the railroad revenue thresholds in 1320.8(d)(3) regarding: (1) Whether the for existing complaints in its 2017 decisions and on its website. 49 CFR 1201.1–1; Indexing the Annual Operating Revenues of R.Rs., collection of information, as modified in request to OMB for an extension of its EP 748 (STB served June 10, 2020). the proposed rule, is necessary for the collection of complaints. See STB,

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Supporting Statement for Modification Authority: 5 U.S.C. 553; 31 U.S.C. 9701; 49 ■ 5. Amend § 1111.10 by revising & OMB Approval Under the Paperwork U.S.C. 1301, 1321, 11123, 11124, 11144, paragraph (a) to read as follows: Reduction Act & 5 CFR pt. 1320, OMB 14122, and 15722. Control No. 2140–0029 (Mar. 2017), ■ 2. Amend § 1011.6 by adding § 1111.10 Procedural schedule in cases using simplified standards. https://www.reginfo.gov/public/do/ paragraph (i) to read as follows: DownloadDocument?objectID= (a) Procedural schedule. Absent a § 1011.6 Delegations of authority by the specific order by the Board, the 72159101. In its supporting statement Chairman. for that request, which OMB approved, following general procedural schedules the Board explained that its burden * * * * * will apply in cases using the simplified (i) In matters involving the estimates were ‘‘based on informal standards: streamlined market dominance feedback previously provided by a small (1)(i) In cases relying upon the approach, authority to hold a telephonic sampling (less than five) of Simplified-SAC methodology: evidentiary hearing on market respondents.’’ (Id. at 2, 3.) The Board (A) Day 0—Complaint filed (including dominance issues is delegated to has been provided no other data upon complainant’s disclosure). administrative law judges, as described which it could adjust its estimate. (B) Day 10—Mediation begins. in § 1111.12(d) of this chapter. This modification and extension (C) Day 20—Defendant’s answer to request of an existing, approved PART 1111—COMPLAINT AND complaint (including defendant’s initial collection will be submitted to OMB for INVESTIGATION PROCEDURES disclosure). review as required under the PRA, 44 (D) Day 30—Mediation ends; U.S.C. 3507(d), and 5 CFR 1320.11. The ■ 3. The authority citation for part 1111 discovery begins. request will address the comments is revised to read as follows: (E) Day 140—Defendant’s second discussed above as part of the PRA Authority: 49 U.S.C. 10701, 10702, 10704, disclosure. approval process. 10707, 11701, and 1321. (F) Day 150—Discovery closes. (G) Day 220—Opening evidence. Congressional Review Act ■ 4. Amend § 1111.9 by revising (H) Day 280—Reply evidence. paragraph (a) to read as follows: Pursuant to the Congressional Review (I) Day 310—Rebuttal evidence. In Act, 5 U.S.C. 801–808, the Office of § 1111.9 Procedural schedule in stand- cases using the streamlined market Information and Regulatory Affairs has alone cost cases. dominance approach, a telephonic designated this rule as non-major, as (a) Procedural schedule. Absent a evidentiary hearing before an defined by 5 U.S.C. 804(2). specific order by the Board, the administrative law judge, as described It is ordered: following general procedural schedule in § 1111.12(d) of this chapter, will be 1. The Board adopts the final rule as will apply in stand-alone cost cases after held at the discretion of the set forth in this decision. Notice of the the pre-complaint period initiated by complainant in lieu of the submission of adopted rule will be published in the the pre-filing notice: a written rebuttal on market dominance Federal Register. (1) Day 0—Complaint filed, discovery issues. The hearing will be held on or 2. A copy of this decision will be period begins. about the date that the complainant’s served upon the Chief Counsel for (2) Day 7 or before—Conference of the rebuttal evidence on rate reasonableness Advocacy, Office of Advocacy, U.S. parties convened pursuant to is due. Small Business Administration. § 1111.11(b). (J) Day 320—Technical conference 3. This decision is effective (3) Day 20—Defendant’s answer to (market dominance and merits, except September 5, 2020. complaint due. for cases using the streamlined market (4) Day 150—Discovery completed. dominance approach, in which the List of Subjects (5) Day 210—Complainant files technical conference will be limited to opening evidence on absence of 49 CFR Part 1011 merits issues). intermodal and intramodal competition, Administrative practice and (K) Day 330—Final briefs. variable cost, and stand-alone cost procedure; Authority delegations (ii) In addition, the Board will appoint issues. (government agencies); Organization (6) Day 270—Defendant files reply a liaison within 10 business days of the and functions (government agencies). evidence to complainant’s opening filing of the complaint. 49 CFR Part 1111 evidence. (2)(i) In cases relying upon the Three- (7) Day 305—Complainant files Benchmark methodology: Administrative practice and rebuttal evidence to defendant’s reply (A) Day 0—Complaint filed (including procedure; Investigations. evidence. In cases using the streamlined complainant’s disclosure). Decided: July 31, 2020. market dominance approach, a (B) Day 10—Mediation begins. (STB By the Board, Board Members Begeman, telephonic evidentiary hearing before an production of unmasked Waybill Fuchs, and Oberman. administrative law judge, as described Sample.) Jeffrey Herzig, in § 1111.12(d) of this chapter, will be (C) Day 20—Defendant’s answer to Clearance Clerk. held at the discretion of the complaint (including defendant’s initial disclosure). For the reasons set forth in the complainant in lieu of the submission of (D) Day 30—Mediation ends; preamble, the Surface Transportation a written rebuttal on market dominance discovery begins. Board amends parts 1011 and 1111 of issues. The hearing will be held on or about the date that the complainant’s (E) Day 60—Discovery closes. title 49, chapter X, of the Code of rebuttal evidence on rate reasonableness (F) Day 90—Complainant’s opening Federal Regulations as follows: is due. (initial tender of comparison group and PART 1011—BOARD ORGANIZATION; (8) Day 335—Complainant and opening evidence on market DELEGATIONS OF AUTHORITY defendant file final briefs. dominance). Defendant’s opening (9) Day 485 or before—The Board (initial tender of comparison group). ■ 1. The authority citation for part 1011 issues its decision. (G) Day 95—Technical conference on continues to read as follows: * * * * * comparison group.

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(H) Day 120—Parties’ final tenders on (1) The movement has an R/VC ratio factors in paragraph (a) of this section comparison group. Defendant’s reply on of 180% or greater; and any other issues relevant to market market dominance. (2) The movement would exceed 500 dominance. A complainant may elect to (I) Day 150—Parties’ replies to final highway miles between origin and submit rebuttal evidence on market tenders. Complainant’s rebuttal on destination; dominance issues. Reply and rebuttal (3) There is no intramodal market dominance. In cases using the filings under the streamlined market competition from other railroads; dominance approach are each limited to streamlined market dominance (4) There is no barge competition; approach, a telephonic evidentiary 50 pages, inclusive of exhibits and (5) There is no pipeline competition; verified statements. hearing before an administrative law (6) The complainant has used truck judge, as described in § 1111.12(d) of (d)(1) Pursuant to the authority under for 10% or less of its volume (by § 1011.6 of this chapter, an this chapter, will be held at the tonnage) subject to the rate at issue over administrative law judge will hold a discretion of the complainant in lieu of a five-year period; and telephonic evidentiary hearing on the the submission of a written rebuttal on (7) The complainant has no practical market dominance issues at the market dominance issues. The hearing build-out alternative due to physical, discretion of the complainant in lieu of will be held on or about the date that regulatory, financial, or other issues (or the submission of a written rebuttal on the complainant’s rebuttal evidence on combination of issues). rate reasonableness is due. (b) A complainant may rely on any market dominance issues. competent evidence, including a (2) The hearing will be held on or (ii) In addition, the Board will appoint about the date that the complainant’s a liaison within 10 business days of the verified statement from an appropriate official(s) with knowledge of the facts, rebuttal evidence on rate reasonableness filing of the complaint. is due. The complainant shall inform * * * * * in demonstrating the factors set out in paragraph (a) of this section. An the Board by letter submitted in the ■ 6. Add § 1111.12 to read as follows: appropriate official is any individual docket, no later than 10 days after defendant’s reply is due, whether it § 1111.12 Streamlined market dominance. who has either direct or supervisory responsibility for, or otherwise has elects an evidentiary hearing of lieu of (a) A complainant may elect to pursue knowledge or understanding of, the the submission of a written rebuttal on the streamlined market dominance complainant’s transportation needs and market dominance issues. approach to market dominance if the options. The official(s) should provide (3) The Board will provide an challenged movement satisfies the his or her title and a short description unofficial copy of the hearing transcript factors listed in paragraphs (a)(1) of his or her duties in the verified no later than 5 days after the conclusion through (7) of this section. The Board statement. In demonstrating the revenue of the hearing. The Board will provide will find a complainant has made a to variable cost ratio, a complainant the official hearing transcript shortly prima facie showing on market must show its quantitative calculations. thereafter. The hearing transcript will be dominance when it can demonstrate the (c) A defendant’s reply evidence part of the docket in the proceeding. following with regard to the traffic under the streamlined market [FR Doc. 2020–17115 Filed 8–5–20; 8:45 am] subject to the challenged rate: dominance approach may address the BILLING CODE 4915–01–P

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