On May 12 and 16, the Surface Transportation Board (STB or Board) issued separate Notices of Proposed Rulemaking (NPRM) to implement the arbitration and investigation provisions of the STB Reauthorization Act of 2015 (the Act). In the Act, Congress modified the STB’s authority with respect to arbitration of certain disputes and the agency’s authority to initiate its own investigations of railroad practices.

Arbitration

The Act directed the STB to “promulgate regulations to establish a voluntary and binding arbitration process to resolve rail rate and practice complaints” subject to the Board’s jurisdiction. The Arbitration NPRM concludes that a majority of the STB’s existing arbitration rules are consistent with the Act. Therefore, the NPRM focuses on the following additions or modifications required to conform existing rules to the Act:

  • Rate Cases. The NPRM adds rate cases to the subjects that are eligible for arbitration. Because the threshold jurisdictional issue of “market dominance” is not eligible for arbitration, however, the STB offers proposals and solicits comments on how it should address market dominance procedurally to avoid significant delays in the arbitration process.
  • Arbitration Commencement Procedures. The NPRM offers an alternative process for initiating arbitration through a joint notice, containing a statement of issues, a willingness to voluntarily arbitrate, the choice of a single arbitrator or a three-member panel, and the requested relief.
  • Relief Caps. The NPRM replaces the current $200,000 relief cap with the statutory caps of $25 million for rate disputes and $2 million for practice disputes, but provides for the parties to agree to lower amounts.
  • Arbitrator Selection. The NPRM proposes rules for creating and maintaining a roster of arbitrators, arbitrator qualifications, and a process for arbitrator selection.
  • Standard of Review. The NPRM adopts the Act’s provisions for appealing arbitrator decisions.
  • Arbitration Timeline. The NPRM sets deadlines for various aspects of the arbitration process, including 14 days to select the arbitrator(s), 90 days to submit evidence, and 30 days for the arbitrator’s decision.

Opening comments on the NPRM are due June 13 and reply comments are due by July 1, 2016.

Investigations

The Act restores to the STB a limited amount of authority to initiate investigations on the agency’s own initiative, thereby partially reversing Congress’ revocation of similar investigative authority in 1995 when the STB was created to replace the now-defunct Interstate Commerce Commission. The NPRM proposes regulations to implement the agency’s new investigative authority consistent with the Act.

The NPRM proposes a three-stage process, consisting of (1) Preliminary Fact-Finding, (2) Board-Initiated Investigations, and (3) Formal Board Proceedings. For all three stages, the investigation must be related to matters of regional or national significance and must be subject to the Board’s jurisdiction.

  • Preliminary Fact-Finding. At this stage, STB staff would conduct a nonpublic, confidential inquiry to determine whether there is sufficient basis for opening a formal investigation to determine if a violation of the statute has occurred that is within the agency’s investigative authority. The staff would recommend whether or not to open a formal investigation. This stage would not be included within the one-year time frame for concluding investigations.
  • Board-Initiated Investigation. The NPRM permits the STB to commence an investigation with or without a Preliminary Fact-Finding. The STB would notify the parties subject to investigation within 30 days of initiating the investigation. The investigation itself would remain nonpublic and confidential. Parties not subject to the investigation would not have any rights to participate in the investigation. The goal of this stage is for the Investigating Officer to recommend whether the Board should dismiss the investigation or open a proceeding to determine if a violation of the statute has occurred. The Investigating Officer would have the authority to interview or depose witnesses, inspect property, conduct discovery, and issue subpoenas. The Investigating Officer also could engage in settlement discussions with the parties under investigation and include a negotiated settlement agreement in the recommendation to the STB. The NPRM allots up to 275 days for the Investigating Officer to submit a recommendation, which would allow the STB at least 90 days to decide whether to initiate a formal proceeding in stage three.
  • Formal Board Proceeding. The third stage begins if and when the STB decides to open a formal public proceeding by issuing a public Order to Show Cause, stating the basis for the proceeding and setting a procedural schedule. This would be the first opportunity for participation by the general public.

Opening comments are due by June 15 and reply comments are due by July 15, 2016.