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[Code of Federal Regulations]
[Title 49, Volume 7]
[Revised as of October 1, 2003]
[CITE: 49CFR1151]

[Page 192-196]
 

TITLE 49--TRANSPORTATION
CHAPTER X--SURFACE TRANSPORTATION BOARD, DEPARTMENT OF TRANSPORTATION
PART 1151--FEEDER RAILROAD DEVELOPMENT PROGRAM--Table of Contents



Sec.
1151.1 Scope.
1151.2 Procedures.
1151.3 Contents of application.
1151.4 Board determination.

    Authority: 49 U.S.C. 10907.

    Source: 48 FR 9654, Mar. 8, 1983, unless otherwise noted.

Sec.1151.1  Scope.

    This part governs applications filed under 49 U.S.C. 10907. The 
Board can require the sale of a rail line to a financially responsible 
person. A rail line is eligible for a forced sale if it appears in 
category 1 or 2 of the owning railroad's system diagram map (but the 
railroad has not filed an application to abandon the line), or the 
public convenience and necessity, as defined in 49 U.S.C. 10907(c)(1), 
permit or require the sale of the line.

[48 FR 9654, Mar. 8, 1983, as amended at 56 FR 37861, Aug. 9, 1991; 64 
FR 53268, Oct. 1, 1999]

Sec.1151.2  Procedures.

    (a) Service. When an application is filed, applicant must 
concurrently serve a copy of the application by first class mail on:
    (1) The owning railroad;
    (2) All rail patrons who originated and/or received traffic on the 
line during the 12-month period preceding the month in which the 
application is filed;
    (3) The designated State agency in the State(s) where the property 
is located;
    (4) County governments where the line is located;

[[Page 193]]

    (5) The National Railroad Passenger Corporation (Amtrak) (if Amtrak 
operates on the line);
    (6) And the national offices of rail unions with employees on the 
line.
    (b) Acceptance or rejection of an application.
    (1) The Board, through the Director of the Office of Proceedings, 
will accept a complete application no later than 30 days after the 
application is filed by publishing a notice in the Federal Register. An 
application is complete if it has been properly served and contains 
substantially all information required by Sec.1151.3, except as modified 
by advance waiver. The notice will also announce the schedule for filing 
of competing applications and responses.
    (2) The Board, through the Director of the Office of Proceedings, 
will reject an incomplete application by serving a decision no later 
than 30 days after the application is filed. The decision will explain 
specifically why the application was incomplete. A revised application 
may be submitted, incorporating portions of the prior application by 
reference.
    (c) Competing applications.
    (1) Unless otherwise scheduled in the notice, competing applications 
by other parties seeking to acquire all or any portion of the line 
sought in the initial application are due within 30 days after the 
initial application is accepted.
    (2) The Board, through the Director of the Office of Proceedings, 
will issue a decision accepting or rejecting a competing application no 
later than 15 days after it is filed. A competing application will be 
rejected if it does not substantially contain the information required 
by Sec.1151.3, except as modified by advance waiver.
    (d) Incomplete applications.
    (1) If an applicant seeking to file an initial or competing 
application is unable to obtain required information that is primarily 
or exclusively within the personal knowledge of the owning carrier, the 
applicant may file an incomplete application if it files at the same 
time a request for discovery under 49 CFR part 1114 to obtain the needed 
information from the owning carrier.
    (2) The Board, through the Director of the Office of Proceedings, 
will by decision conditionally accept incomplete initial or competing 
applications, if the Director determines that the discovery sought is 
necessary for the application and primarily or exclusively within the 
knowledge of the owning carrier.
    (3) When the information sought through discovery has been filed for 
an initial application, Federal Register notice under paragraph (b) of 
this section will be published.
    (4) When the information sought through discovery has been filed for 
a competing application, a decision will be issued under paragraph (c) 
of this section.
    (e) Comments. Unless otherwise scheduled in the notice, verified 
statements and comments addressing both the initial and competing 
applications must be filed within 60 days after the initial application 
is accepted.
    (f) Replies. Unless otherwise scheduled in the notice, verified 
replies by applicants and other interested parties must be filed within 
80 days after the initial application is accepted.
    (g) Publication. If the Board finds that the public convenience and 
necessity require or permit sale of the line, the Board shall 
concurrently publish this finding in the Federal Register.
    (h) Acceptance or rejection. If the Board concludes that sale of the 
line should be required, the applicant(s) must file a notice with the 
Board and the owning railroad accepting or rejecting the Board's 
determination. The notice must be filed within 10 days of the service 
date of the decision.
    (i) Selection. If two or more applicants timely file notices 
accepting the Board's determination, the owning railroad must select the 
applicant to which it will sell the line and file notice of its 
selection with the Board and serve a copy on the applicants within 15 
days of the service date of the Board decision.
    (j) Waiver. Prior to filing an initial or competing application, an 
applicant may file a petition to waive or clarify specific portions of 
part 1151. A decision by the Director of the Office of Proceedings 
granting or denying a petition for waiver or clarification will be

[[Page 194]]

issued within 30 days of the date the petition is filed. Appeals from 
the Director's decision will be decided by the entire Board.
    (k) Extension. Extensions of filing dates may be granted for good 
cause.

[56 FR 37861, Aug. 9, 1991]

Sec.1151.3  Contents of application.

    (a) The initial application and all competing applications must 
include the following information in the form of verified statements:
    (1) Identification of the line to be purchased including:
    (i) The name of the owning carrier; and
    (ii) The exact location of the line to be purchased including 
milepost designations, origin and termination points, stations located 
on the line, and cities, counties and States traversed by the line.
    (2) Identification of applicant including:
    (i) The applicant's name and address;
    (ii) The name, address, and phone number of the representative to 
receive correspondence concerning this application;
    (iii) A description of applicant's affiliation with any railroad; 
and
    (iv) If the applicant is a corporation, the names and addresses of 
its officers and directors.
    (3) Information sufficient to demonstrate that the applicant is a 
financially responsible person. In this regard, the applicant must 
demonstrate its ability:
    (i) To pay the higher of the net liquidation value (NLV) or going 
concern value (GCV) of the line; and
    (ii) To cover expenses associated with providing services over the 
line (including, but not limited to, operating costs, rents, and taxes) 
for at least the first 3 years after acquisition of the line.
    (4) An estimate of the NLV and the GCV of the line and evidence in 
support of these estimates.
    (5) An offer to purchase the line at the higher of the two estimates 
submitted pursuant to paragraph (a)(4) of this section.
    (6) The dates for the proposed period of operation of the line 
covered by the application.
    (7) An operating plan that identifies the proposed operator; 
attaches any contract that the applicant may have with the proposed 
operator; describes in detail the service that is to be provided over 
the line, including all interline connections; and demonstrates that 
adequate transportation will be provided over the line for at least 3 
years from the date of acquisition.
    (8) A description of the liability insurance coverage carried by 
applicant or any proposed operator. If trackage rights are requested, 
the insurance must be at a level sufficient to indemnify the owning 
railroad against all personal and property damage that may result from 
negligence on the part of the operator in exercising the trackage 
rights.
    (9) Any preconditions (such as assuming a share of any subsidy 
payments) that will be placed on shippers in order for them to receive 
service, and a statement that if the application is approved, no further 
preconditions will be placed on shippers without Board approval. (This 
Statement Will Be Binding Upon Applicant if the Application is 
Approved.)
    (10) The name and address of any person(s) who will subsidize the 
operation of the line.
    (11) A statement that the applicant will seek a finding by the Board 
that the public convenience and necessity permit or require acquisition, 
or a statement that the line is currently in category 1 or 2 of the 
owning railroad's system diagram map.
    (i) If the applicant seeks a finding of public convenience and 
necessity, the application must contain detailed evidence that permits 
the Board to find that:
    (A) The rail carrier operating the line refused within a reasonable 
time to make the necessary efforts to provide adequate service to 
shippers who transport traffic over the line;
    (B) The transportation over the line is inadequate for the majority 
of shippers who transport traffic over the line;
    (C) The sale of the line will not have a significantly adverse 
financial effect on the rail carrier operating the line;

[[Page 195]]

    (D) The sale of the line will not have an adverse effect on the 
overall operational performance of the rail carrier operating the line; 
and
    (E) The sale of the line will be likely to result in improved 
railroad transportation for shippers who transport traffic over the 
line.
    (ii) If the applicant seeks a finding that the line is currently in 
category 1 or 2 of the owning carrier's system diagram map, the relevant 
portion of the current map must be attached to the application.
    (12) A statement detailing applicant's election of exemption from 
the provisions of Title 49, United States Code, and a statement that if 
the application is approved, no further exemptions will be elected. 
(This Statement Will Be Binding Upon the Applicant if the Application is 
Approved.)
    (13) A description of any trackage rights sought over the owning 
railroad that are required to allow reasonable interchange or to move 
power equipment or empty rolling stock between noncontiguous feeder 
lines operated by the applicant, and an estimate of the reasonable 
compensation for such rights, including full explanation of how the 
estimate was reached. The description of the trackage rights shall 
include the following information: Milepost or other identification for 
each segment of track; the need for the trackage rights (interchange of 
traffic, movement of equipment, etc.); frequency of operations; times of 
operation; any alternative to the use of trackage rights; and any other 
pertinent data. Trackage rights that are necessary for the interchange 
of traffic shall be limited to the closest point to the junction with 
the owning railroad's line that allows the efficient interchange of 
traffic. A statement shall be included that the applicant agrees to have 
its train and crew personnel take the operating rules examination of the 
railroad over which the operating rights are exercised.
    (14) If applicant requests Board prescribed joint rates and 
divisions in the feeder line proceeding, a description of any joint rate 
and division agreement that must be established. The description must 
contain the following information:
    (i) The railroad(s) involved;
    (ii) The estimated revenues that will result from the division(s);
    (iii) The total costs of operating the line segment purchased 
(including any trackage rights fees).
    (iv) Information sufficient to allow the Board to determine that the 
line sought to be acquired carried less than 3 million gross ton-miles 
of traffic per mile in the preceding calendar year \1\; and
---------------------------------------------------------------------------

    \1\ Gross ton-miles are calculated by adding the ton-miles of the 
cargo and the ton-miles related to the tare (empty) weight of the 
freight cars used to transport the cargo in the loaded movement. In 
calculating the gross ton-miles, only those related to the portion of 
the segment purchased shall be included.
---------------------------------------------------------------------------

    (v) Any other pertinent information.
    (15) The extent to which the owning railroad's employees who 
normally service the line will be used.
    (16) A certificate stating that the service requirements of 
Sec.1151.2(a) have been met.
    (b) Applicant must make copies of the application available to 
interested parties upon request.

[48 FR 9654, Mar. 8, 1983, as amended at 56 FR 37862, Aug. 9, 1991; 64 
FR 53268, Oct. 1, 1999]

Sec.1151.4  Board determination.

    (a) The Board shall determine whether each applicant is a 
financially responsible person. To be a financially responsible person, 
the Board must find that:
    (1) The applicant is capable of paying the constitutional minimum 
value of the line and able to assure that adequate transportation will 
be provided over the line for at least 3 years;
    (2) The applicant is not a class I or class II railroad or an entity 
affiliated with a class I or class II railroad.
    (b) If the Board finds that one or more applicants are financially 
responsible parties, it shall determine whether the involved line or 
line segment is a qualified line. A line is a qualified line if:
    (1) Either
    (i) The public convenience and necessity require or permit the sale 
of line or line segment; or

[[Page 196]]

    (ii) The line or line segment is classified in category 1 or 2 of 
the owning carrier's system diagram map; and
    (2) The traffic level on the line or line segment sought to be 
acquired was less than 3 million gross ton-miles of traffic per mile in 
the preceding calendar year (Note: This finding will not be required for 
applications filed after October 1, 1983).
    (c) If the Board finds that one or more financially responsible 
parties have offered to buy a qualifying line of railroad, the Board 
shall set the acquisition cost of the line at the higher of NLV or GCV, 
order the owning carrier to sell the rail line to one of the financially 
responsible applicants, and resolve any related issues raised in the 
application. If an applicant and the owning railroad agree on an 
acquisition price, that price shall be the final price.
    (d) If trackage rights are sought in the application, the Board 
shall, based on the evidence of record, set the adequate compensation 
for such rights, if the parties have not agreed.
    (e) If the applicant requests the Board to set joint rates or 
divisions and the line carried less than 3 million gross ton-miles of 
traffic per mile during the preceding calendar year, the Board shall, 
pursuant to 49 U.S.C. 10705(a), establish joint rates and divisions 
based on the evidence of record in the proceeding. Unless specifically 
requested to do so by the selling carrier, the Board will not set the 
rate for the selling railroad's share of the joint rate at less than the 
applicable level (for the year in which the acquisition is made) set by 
49 U.S.C. 10709(d)(2), which limits Board maximum ratemaking 
jurisdiction to rates above certain cost/price ratios.