On September 5, 2013, the Surface Transportation Board issued a decision in docket Ex Parte 714 that expands its disclosure requirements for notices and petitions for exemption where the underlying transaction includes an interchange commitment, also commonly referred to as "paper barriers." Information Required in Notices and Petitions Containing Interchange Commitments, 78 Fed. Reg. 54,589 (Sept. 5, 2012) (to be codified at 49 C.F.R. pts. 1121, 1150, 1180), is available here. Interchange commitments are contractual terms in rail line sale and lease agreements that directly or indirectly restrict the purchaser's or lessee's ability to interchange traffic with a third-party rail carrier. Because interchange commitments typically reduce competition among rail carriers, the Board seeks additional information that would assist the agency in performing case-by-case evaluations of the petition or notice requesting to exempt the transaction.

The expanded disclosure rules help ensure that the Board and other interested parties have sufficient information to judge whether an exemption from its regulations is appropriate for a transaction involving an interchange commitment. Specifically, the expanded rules require the party filing an exemption to affirmatively disclose whether or not the underlying agreement contains an interchange commitment. If an interchange commitment is involved, the party filing the exemption request must notify affected shippers of the proposed transaction and interchange commitment. In addition, it must file information with the Board related to the interchange commitment, including:

  • a list of shippers that use the rail line in question or used the rail line within the last two years;
  • the number of carloads that originate and terminate on the line (to be kept confidential);
  • a certification that notice of the proposed transaction and the interchange commitment was provided to the shippers on the line;
  • a list of third-party railroads that could interchange with the line sought to be acquired or leased; and
  • an estimate of the difference between the sale or lease price with and without the interchange commitment (to be kept confidential).

The new rules do not address the factors applied by the Board to determine the legality or reasonableness of a specific paper barrier.

The expanded disclosure rules become effective October 5, 2013.