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[Code of Federal Regulations]
[Title 49, Volume 7]
[Revised as of October 1, 2003]
[CITE: 49CFR1180]

[Page 252-275]
 

TITLE 49--TRANSPORTATION
CHAPTER X--SURFACE TRANSPORTATION BOARD, DEPARTMENT OF TRANSPORTATION
PART 1180--RAILROAD ACQUISITION, CONTROL, MERGER, CONSOLIDATION PROJECT, TRACKAGE RIGHTS, AND LEASE PROCEDURES



                Subpart A--General Acquisition Procedures

Sec.
1180.0 Scope and purpose.
1180.1 General policy statement for merger or control of at least two 
          Class I railroads.
1180.2 Types of transactions.
1180.3 Definitions.
1180.4 Procedures.
1180.5 [Reserved]
1180.6 Supporting information.
1180.7 Market analyses.
1180.8 Operational data.
1180.9 Financial information.
1180.10 Service assurance plans.
1180.11 Transnational and other informational requirements.

Subpart B--Transfer or Operation of Lines of Railroads in Reorganization

1180.20 Procedures.

    Authority: 5 U.S.C. 553 and 559; 11 U.S.C. 1172; 49 U.S.C. 721, 
10502, 11323-11325.

                Subpart A--General Acquisition Procedures

    Source: 47 FR 9844, Mar. 8, 1982, unless otherwise noted. 
Redesignated at 47 FR 49592, Nov. 1, 1982.

[[Page 253]]

Sec. 1180.0  Scope and purpose.

    (a) General. The regulations in this subpart set out the information 
to be filed and the procedures to be followed in control, merger, 
acquisition, lease, trackage rights, and any other consolidation 
transaction involving more than one railroad that is initiated under 49 
U.S.C. 11323. Section 1180.2 separates these transactions into four 
types: Major, significant, minor, and exempt. The informational 
requirements for these types of transactions differ. Before an 
application is filed, the designation of type of transaction may be 
clarified or certain of the information required may be waived upon 
petition to the Board. This procedure is explained in Sec. 1180.4. The 
required contents of an application are set out in Sec.Sec. 1180.6 
(general information supporting the transaction), 1180.7 (competitive 
and market information), 1180.8 (operational information), 1180.9 
(financial data), 1180.10 (service assurance plans), and 1180.11 
(transnational and other informational requirements). A major 
application must contain the information required in Sec.Sec. 1180.6(a), 
1180.6(b), 1180.7(a), 1180.7(b), 1180.8(a), 1180.8(b), 1180.9, 1180.10, 
and 1180.11. A significant application must contain the information 
required in Sec.Sec. 1180.6(a), 1180.6(c), 1180.7(a), 1180.7(c), and 
1180.8(b). A minor application must contain the information required in 
Sec.Sec. 1180.6(a) and 1180.8(c). Procedures (including time limits, 
filing requirements, participation requirements, and other matters) are 
contained in Sec. 1180.4. All applications must comply with the Board's 
Rules of General Applicability, 49 CFR parts 1100 through 1129, unless 
otherwise specified. These regulations may be cited as the Railroad 
Consolidation Procedures.
    (b) Waiver. We will waive application of the regulations contained 
in this subpart for a consolidation involving The Kansas City Southern 
Railway Company and another Class I railroad and instead will apply the 
regulations in this subpart A in effect before July 11, 2001 and 
contained in the 49 CFR, Parts 1000 to 1199, edition revised as of 
October 1, 2000, unless we are shown why such a waiver should not be 
allowed. Interested parties must file any objections to this waiver 
within 10 days after the applicants' prefiling notification (see 49 CFR 
Sec. 1180.4(b)(1)).

[66 FR 32583, June 15, 2001]

Sec. 1180.1  General policy statement for merger or control of at least 
          two Class I railroads.

    (a) General. To meet the needs of the public and the national 
defense, the Surface Transportation Board (Board) seeks to ensure 
balanced and sustainable competition in the railroad industry. The Board 
recognizes that the railroad industry (including Class II and III 
carriers) is a network of competing and complementary components, which 
in turn is part of a broader transportation infrastructure that also 
embraces the nation's highways, waterways, ports, and airports. The 
Board welcomes private-sector initiatives that enhance the capabilities 
and the competitiveness of this transportation infrastructure. Although 
mergers of Class I railroads may advance our nation's economic growth 
and competitiveness through the provision of more efficient and 
responsive transportation, the Board does not favor consolidations that 
reduce the transportation alternatives available to shippers unless 
there are substantial and demonstrable public benefits to the 
transaction that cannot otherwise be achieved. Such public benefits 
include improved service, enhanced competition, and greater economic 
efficiency. The Board also will look with disfavor on consolidations 
under which the controlling entity does not assume full responsibility 
for carrying out the controlled carrier's common carrier obligation to 
provide adequate service upon reasonable demand.
    (b) Consolidation criteria. The Board's consideration of the merger 
or control of at least two Class I railroads is governed by the public 
interest criteria prescribed in 49 U.S.C. 11324 and the rail 
transportation policy set forth in 49 U.S.C. 10101. In determining the 
public interest, the Board must consider the various goals of effective 
competition, carrier safety and efficiency, adequate service for 
shippers, environmental safeguards, and fair working conditions for 
employees. The Board must ensure that any approved transaction would 
promote a competitive,

[[Page 254]]

efficient, and reliable national rail system.
    (c) Public interest considerations. The Board believes that mergers 
serve the public interest only when substantial and demonstrable gains 
in important public benefits--such as improved service and safety, 
enhanced competition, and greater economic efficiency--outweigh any 
anticompetitive effects, potential service disruptions, or other merger-
related harms. Although further consolidation of the few remaining Class 
I carriers could result in efficiency gains and improved service, the 
Board believes additional consolidation in the industry is also likely 
to result in a number of anticompetitive effects, such as loss of 
geographic competition, that are increasingly difficult to remedy 
directly or proportionately. Additional consolidations could also result 
in service disruptions during the system integration period. 
Accordingly, to assure a balance in favor of the public interest, merger 
applications should include provisions for enhanced competition, and, 
where both carriers are financially sound, the Board is prepared to use 
its conditioning authority as necessary under 49 U.S.C. 11324(c) to 
preserve and/or enhance competition. In addition, when evaluating the 
public interest, the Board will consider whether the benefits claimed by 
applicants could be realized by means other than the proposed 
consolidation. The Board believes that other private-sector initiatives, 
such as joint marketing agreements and interline partnerships, can 
produce many of the efficiencies of a merger while risking less 
potential harm to the public.
    (1) Potential benefits. By eliminating transaction cost barriers 
between firms, increasing the productivity of investment, and enabling 
carriers to lower costs through economies of scale, scope, and density, 
mergers can generate important public benefits such as improved service, 
more competition, and greater economic efficiency. A merger can 
strengthen a carrier's finances and operations. To the extent that a 
merged carrier continues to operate in a competitive environment, its 
new efficiencies would be shared with shippers and consumers. Both the 
public and the consolidated carrier can benefit if the carrier is able 
to increase its marketing opportunities and provide better service. A 
merger transaction can also improve existing competition or provide new 
competitive opportunities, and such enhanced competition will be given 
substantial weight in our analysis. Applicants shall make a good faith 
effort to calculate the net public benefits their proposed merger would 
generate, and the Board will carefully evaluate such evidence. To ensure 
that applicants have no incentive to exaggerate these projected benefits 
to the public, the Board expects applicants to propose additional 
measures that the Board might take if the anticipated public benefits 
fail to materialize in a timely manner. In this regard, the Board 
recognizes, however, that applicants require the flexibility to adapt to 
changing marketplace or other circumstances and that it is inevitable 
that an approved merger may not necessarily be implemented in precisely 
the manner anticipated in the application. Applicants will be held 
accountable, however, if they do not act reasonably in light of changing 
circumstances to achieve promised merger benefits.
    (2) Potential harm. The Board recognizes that consolidation can 
impose costs as well as benefits. It can reduce competition both 
directly and indirectly in particular markets, including product markets 
and geographic markets. Consolidation can also threaten essential 
services and the reliability of the rail network. In analyzing these 
impacts we must consider, but are not limited by, the policies embodied 
in the antitrust laws.
    (i) Reduction of competition. Although in specific markets railroads 
operate in a highly competitive environment with vigorous intermodal 
competition from motor and water carriers, mergers can deprive shippers 
of effective options. Intramodal competition can be reduced when two 
carriers serving the same origins or destinations merge. Competition 
arising from shippers' build-out, transloading, plant siting, and 
production shifting choices can be eliminated or reduced when two 
railroads serving overlapping areas merge. Competition in product and 
geographic markets can

[[Page 255]]

also be eliminated or reduced by mergers, including end-to-end mergers. 
Any railroad combination entails a risk that the merged carrier would 
acquire and exploit increased market power. Applicants shall propose 
remedies to mitigate and offset competitive harms. Applicants shall also 
explain how they would at a minimum preserve competitive and market 
options such as those involving the use of major existing gateways, 
build-outs or build-ins, and the opportunity to enter into contracts for 
one segment of a movement as a means of gaining the right separately to 
pursue rate relief for the remainder of the movement.
    (ii) Harm to essential services. The Board must ensure that 
essential freight, passenger, and commuter rail services are preserved 
wherever feasible. An existing service is essential if there is 
sufficient public need for the service and adequate alternative 
transportation is not available. The Board's focus is on the ability of 
the nation's transportation infrastructure to continue to provide and 
support essential services. Mergers should strengthen, not undermine, 
the ability of the rail network to advance the nation's economic growth 
and competitiveness, both domestically and internationally. The Board 
will consider whether projected shifts in traffic patterns could 
undermine the ability of the various network links (including Class II 
and Class III rail carriers and ports) to sustain essential services.
    (iii) Transitional service problems. Experience shows that 
significant service problems can arise during the transitional period 
when merging firms integrate their operations, even after applicants 
take extraordinary steps to avoid those disruptions. Because service 
disruptions harm the public, the Board, in its determination of the 
public interest, will weigh the likelihood of transitional service 
problems. In addition, under paragraph (h) of this section, the Board 
will require applicants to provide a detailed service assurance plan. 
Applicants also should explain how they would cooperate with other 
carriers in overcoming serious service disruptions on their lines during 
the transitional period and afterwards.
    (iv) Enhanced competition. To offset harms that would not otherwise 
be mitigated, applicants should explain how the transaction and 
conditions they propose would enhance competition.
    (d) Conditions. The Board has broad authority under 49 U.S.C. 
11324(c) to impose conditions on consolidations, including requiring 
divestiture of parallel tracks or the granting of trackage rights and 
access to other facilities. The Board will condition the approval of 
Class I combinations to mitigate or offset harm to the public interest, 
and will carefully consider conditions proposed by applicants in this 
regard. The Board may impose conditions that are operationally feasible 
and produce net public benefits, but will not impose conditions that 
undermine or defeat beneficial transactions by creating unreasonable 
operating, financial, or other problems for the combined carrier. 
Conditions are generally not appropriate to compensate parties who may 
be disadvantaged by increased competition. The Board anticipates that 
mergers of Class I carriers would likely create some anticompetitive 
effects that would be difficult to mitigate through appropriate 
conditions, and that transitional service disruptions might temporarily 
negate any shipper benefits. To offset such potential harms and improve 
the prospect that their proposal would be found to be in the public 
interest, applicants should propose conditions that would not simply 
preserve but also enhance competition. The Board seeks to enhance 
competition in ways that strengthen and sustain the rail network as a 
whole (including that portion of the network operated by Class II and 
III carriers).
    (e) Employee protection. The Board is required to provide a fair 
arrangement for the protection of the rail employees of applicants who 
are affected by a consolidation. The Board supports early notice and 
consultation between management and the various unions, leading to 
negotiated implementing agreements, which the Board strongly favors. 
Otherwise, the Board respects the

[[Page 256]]

sanctity of collective bargaining agreements and will look with extreme 
disfavor on overrides of collective bargaining agreements except to the 
very limited extent necessary to carry out an approved transaction. The 
Board will review negotiated agreements to ensure fair and equitable 
treatment of all affected employees. Absent a negotiated agreement, the 
Board will provide for protection at the level mandated by law (49 
U.S.C. 11326(a)), and if unusual circumstances are shown, more stringent 
protection will be provided to ensure that employees have a fair and 
equitable arrangement.
    (f) Environment and safety. (1) The National Environmental Policy 
Act, 42 U.S.C. 4321 et seq. (NEPA), requires the Board to take 
environmental considerations into account in railroad consolidation 
cases. To meet its responsibilities under NEPA and related environmental 
laws, the Board must consider significant potential beneficial and 
adverse environmental impacts in deciding whether to approve a 
transaction as proposed, deny the proposal, or approve it with 
conditions, including appropriate environmental mitigation conditions 
addressing concerns raised by the parties, including federal, state, and 
local government entities. The Board's Section of Environmental Analysis 
(SEA) ensures that the agency meets its responsibilities under NEPA and 
the implementing regulations at 49 CFR part 1105 by providing the Board 
with an independent environmental review of merger proposals. In 
preparing the necessary environmental documentation, SEA focuses on the 
potential environmental impacts resulting from merger-related changes in 
activity levels on existing rail lines and rail facilities. The Board 
generally will mitigate only those impacts that would result directly 
from an approved transaction, and will not require mitigation for 
existing conditions and existing railroad operations.
    (2) During the environmental review process, railroad applicants 
have negotiated agreements with affected communities, including groups 
of communities and other entities such as state and local agencies. The 
Board encourages voluntary agreements of this nature because they can be 
extremely helpful and effective in addressing specific local and 
regional environmental and safety concerns, including the sharing of 
costs associated with mitigating merger-related environmental impacts. 
Generally, these privately negotiated solutions between an applicant 
railroad and some or all of the communities along particular rail 
corridors or other appropriate entities are more effective, and in some 
cases more far-reaching, than any environmental mitigation options the 
Board could impose unilaterally. Therefore, when such agreements are 
submitted to it, the Board generally will impose these negotiated 
agreements as conditions to approved mergers, and these agreements 
generally will substitute for specific local and site-specific 
environmental mitigation for a community that otherwise would be 
imposed. Moreover, to encourage and give effect to negotiated solutions 
whenever possible, the opportunity to negotiate agreements will remain 
available throughout the oversight process to replace local and site-
specific environmental mitigation imposed by the agency. The Board will 
require compliance with the terms of all negotiated agreements submitted 
to it during oversight by imposing appropriate environmental conditions 
to replace the local and site-specific mitigation previously imposed.
    (3) Applicants will be required to work with the Federal Railroad 
Administration, on a case-by-case basis, to formulate Safety Integration 
Plans (SIPs) to ensure that safe operations are maintained throughout 
the merger implementation process. As part of the environmental review 
process, applicants will be required to submit:
    (i) A SIP and
    (ii) Evidence about potentially blocked grade crossings as a result 
of merger-related traffic increases or operational changes.
    (g) Oversight. As a condition to its approval of any major 
transaction, the Board will establish a formal oversight process. For at 
least the first 5 years following approval, applicants will be required 
to present evidence to the Board, on no less than an annual basis,

[[Page 257]]

to show that the merger conditions imposed by the Board are working as 
intended, that the applicants are adhering to the various 
representations they made on the record during the course of their 
merger proceeding, that no unforeseen harms have arisen that would 
require the Board to alter existing merger conditions or impose new 
ones, and that the merger benefit projections accepted by the Board are 
being realized in a timely fashion. Parties will be given the 
opportunity to comment on applicants' submissions, and applicants will 
be given the opportunity to reply to the parties' comments. During the 
oversight period, the Board will retain jurisdiction to impose any 
additional conditions it determines are necessary to remedy or offset 
adverse consequences of the underlying transaction.
    (h) Service assurance and operational monitoring. (1) The quality of 
service is of vital importance. Accordingly, applicants must file, with 
their initial application and operating plan, a Service Assurance Plan 
identifying the precise steps they would take to ensure adequate service 
and to provide for improved service. This plan must include the specific 
information set forth at Sec. 1180.10 on how shippers, connecting 
railroads (including Class II and III carriers), and ports across the 
new system would be affected and benefitted by the proposed 
consolidation. As part of this plan, applicants will be required to 
provide service benchmarks, describe the extent to which they have 
entered into any arrangements with shippers and shipper groups to 
compensate for service failures, and establish contingency plans that 
would be available to mitigate any unanticipated service disruption.
    (2) The Board will conduct significant post-approval operational 
monitoring to help ensure that service levels after a merger are 
reasonable and adequate.
    (3) The Board also will require applicants to establish problem 
resolution teams and specific procedures for problem resolution to 
ensure that any unanticipated post-merger problems related to service or 
any other transportation matters, including claims, are promptly 
addressed. These teams should include representatives of all appropriate 
employee categories. Also, the Board envisions the establishment of a 
Service Council made up of shippers, railroads, passenger service 
representatives, ports, rail labor, and other interested parties to 
provide an ongoing forum for the discussion of implementation issues.
    (4) Loss and damage claims handling. Shippers or shortlines who have 
freight claims under 49 CFR part 1005 during merger implementation shall 
file such claims, in writing or electronically, with the merged carrier. 
The claimant shall provide supporting documentation regarding the effect 
on the claimant, and the specific damages (in a determinable amount) 
incurred. Pursuant to 49 CFR part 1005, the merged carrier shall 
acknowledge each claim within 30 days and successively number each 
claim. Within 120 days of carrier receipt of the claim, the merged 
carrier shall respond to each claim by paying, declining, or offering a 
compromise settlement. The Board will take notice of these claims and 
their disposition as a matter of oversight. During each annual oversight 
period, the merged carrier shall report on claims received, their type, 
and their disposition for each quarterly period covered by oversight. 
While shippers and shortlines may also contract with the applicants for 
specific remedies with respect to claims, final adjudication of contract 
issues as well as unresolved claims will remain a matter for the courts.
    (5) Service failure claims. Applicants must suggest a protocol for 
handling claims related to failure to provide reasonable service due to 
merger implementation problems. Commitments to submit all such claims to 
arbitration will be favored.
    (6) Alternative rail service. Where shippers and connecting 
railroads require relief from extended periods of inadequate service, 
the procedures at 49 CFR parts 1146 and 1147 are available for the Board 
to review the documented service levels and to consider shipper 
proposals for alternative service relief when other avenues of relief 
have already been explored with the merged carrier in an effort to 
restore adequate service.

[[Page 258]]

    (i) Cumulative impacts and crossover effects. Because there are so 
few remaining Class I carriers and the railroad industry constitutes a 
network of competing and complementary components, the Board cannot 
evaluate the merits of a major transaction in isolation. The Board must 
also consider the cumulative impacts and crossover effects likely to 
occur as rival carriers react to the proposed combination. The Board 
expects applicants to explain how additional Class I mergers would 
affect the eventual structure of the industry and the public interest. 
Applicants should generally discuss the likely impact of such future 
mergers on the anticipated public benefits of their own merger proposal. 
Applicants will be expected to discuss whether and how the type or 
extent of any conditions imposed on their proposed merger would have to 
be altered, or any new conditions imposed, should we approve any future 
consolidation(s).
    (j) Inclusion of other carriers. The Board will consider requiring 
inclusion of another carrier as a condition to approval only where there 
is no other reasonable alternative for providing essential services, the 
facilities fit operationally into the new system, and inclusion can be 
accomplished without endangering the operational or financial success of 
the new company.
    (k) Transnational and other informational issues. (1) All applicants 
must submit ``full system'' competitive analyses and operating plans--
incorporating any operations in Canada or Mexico--from which we can 
determine the competitive, service, employee, safety, and environmental 
impacts of the prospective operations within the United States, and 
explain how cooperation with the Federal Railroad Administration would 
be maintained to address potential impacts on operations within the 
United States of operations or events elsewhere on their systems. All 
applicants must further provide information concerning any restrictions 
or preferences under foreign or domestic law and policies that could 
affect their commercial decisions. Applicants must also address how any 
ownership restrictions might affect our public interest assessment.
    (2) The Board will consult with relevant officials, as appropriate, 
to ensure that any conditions it imposes on an approved transaction are 
consistent with the North American Free Trade Agreement and other 
pertinent international agreements to which the United States is a 
party. In addition, the Board will cooperate with those Canadian and 
Mexican agencies charged with approval and oversight of a proposed 
transnational railroad combination.
    (l) National defense. Rail mergers must not detract from the ability 
of the United States military to rely on rail transportation to meet the 
nation's defense needs. Applicants must discuss and assess the national 
defense ramifications of their proposed merger.
    (m) Public participation. To ensure a fully developed record on the 
effects of a proposed railroad consolidation, the Board encourages 
public participation from federal, state, and local government 
departments and agencies; affected shippers, carriers, and rail labor; 
and other interested parties.

[66 FR 32583, June 15, 2001]

Sec.1180.2  Types of transactions.

    Transactions proposed under 49 U.S.C. 11323 involving more than one 
common carrier by railroad are of four types: Major, significant, minor, 
and exempt.
    (a) A major transaction is a control or merger involving two or more 
class I railroads.
    (b) A significant transaction is a transaction not involving the 
control or merger of two or more class I railroads that is of regional 
or national transportation significance as that phrase is used in 49 
U.S.C. 11325(a)(2) and (c). A transaction not involving the control or 
merger of two or more class I railroads is not significant if a 
determination can be made either:
    (1) That the transaction clearly will not have any anticompetitive 
effects, or
    (2) That any anticompetitive effects of the transaction will clearly 
be outweighed by the transaction's anticipated contribution to the 
public interest in meeting significant transportation needs.

[[Page 259]]

    A transaction not involving the control or merger of two or more 
class I railroads is significant if neither such determination can 
clearly be made.
    (c) A minor transaction is one which involves more than one railroad 
and which is not a major, significant, or exempt transaction.
    (d) A transaction is exempt if it is within one of the eight 
categories described in paragraphs (d)(1) through (8). The Board has 
found that its prior review and approval of these transactions is not 
necessary to carry out the rail transportation policy of 49 U.S.C. 
10101; and is of limited scope or unnecessary to protect shippers from 
market abuse. See 49 U.S.C. 10502. A notice must be filed to use one of 
these class exemptions. The procedures are set out in Sec.1180.4(g). 
These class exemptions do not relieve a carrier of its statutory 
obligation to protect the interests of employees. See 49 U.S.C. 10502(g) 
and 11326. The enumeration of the following categories of transactions 
as exempt does not preclude a carrier from seeking an exemption of 
specific transactions not falling into these categories.
    (1) Acquisition of a line of railroad which would not constitute a 
major market extension where the Board has found that the public 
convenience and necessity permit abandonment.
    (2) Acquisition or continuance in control of a nonconnecting carrier 
or one of its lines where (i) the railroads would not connect with each 
other or any railroads in their corporate family, (ii) the acquisition 
or continuance in control is not part of a series of anticipated 
transactions that would connect the railroads with each other or any 
railroad in their corporate family, and (iii) the transaction does not 
involve a class I carrier.
    (3) Transactions within a corporate family that do not result in 
adverse changes in service levels, significant operational changes, or a 
change in the competitive balance with carriers outside the corporate 
family.
    (4) Renewal of leases and any other matters where the Board has 
previously authorized the transaction, and only an extension in time is 
involved.
    (5) Joint projects involving the relocation of a line of railroad 
which does not disrupt service to shippers.
    (6) Reincorporation in a different State.
    (7) Acquisition of trackage rights and renewal of trackage rights by 
a rail carrier over lines owned or operated by any other rail carrier or 
carriers that are: (i) based on written agreements, and (ii) not filed 
or sought in responsive applications in rail consolidation proceedings.
    (8) Acquisition of temporary trackage rights by a rail carrier over 
lines owned or operated by any other rail carrier or carriers that are: 
(i) based on written agreements, (ii) not filed or sought in responsive 
applications in rail consolidation proceedings, (iii) for overhead 
operations only, and (iv) scheduled to expire on a specific date not to 
exceed 1 year from the effective date of the exemption. If the 
operations contemplated by the exemption will not be concluded within 
the 1-year period, the parties may, prior to expiration of the period, 
file a request for a renewal of the temporary rights for an additional 
period of up to 1 year, including the reason(s) therefor. Rail carriers 
acquiring temporary trackage rights need not seek authority from the 
Board to discontinue the trackage rights as of the expiration date 
specified under 49 CFR 1180.4(g)(2)(iii). All transactions under these 
rules will be subject to applicable statutory labor protective 
conditions.

[47 FR 9844, Mar. 8, 1982. Redesignated at 47 FR 49592, Nov. 1, 1982, 
and amended at 50 FR 15751, Apr. 22, 1985; 51 FR 24669, July 8, 1986; 58 
FR 63104, Nov. 30, 1993; 62 FR 9716, Mar. 4, 1997; 68 FR 28140, May 23, 
2003]

Sec.1180.3  Definitions.

    (a) Applicant. The term applicant means the parties initiating a 
transaction, but does not include a wholly owned direct or indirect 
subsidiary of an applicant if that subsidiary is not a rail carrier. 
Parties who are considered applicants, but for whom the information 
normally required of an applicant need not be submitted, are:
    (1) In minor trackage rights applications, the transferor and
    (2) In responsive applications, a primary applicant.

[[Page 260]]

    (b) Applicant carriers. The term applicant carriers means: any 
applicant that is a rail carrier; any rail carrier operating in the 
United States, Canada, and/or Mexico in which an applicant holds a 
controlling interest; and all other rail carriers involved in the 
transaction. Because the service provided by these commonly controlled 
carriers can be an important competitive aspect of the transactions that 
we approve, applicant carriers are subject to the full range of our 
conditioning power. Carriers that are involved in an application only by 
virtue of an existing trackage rights agreement with applicants are not 
applicant carriers.
    (c) Major market extension. A major market extension is a 
transaction which may significantly increase competition by extending 
service into a new market, expanding service in a currently served 
market when another carrier concurrently contracts its service to that 
market as part of the same transaction, or providing significantly more 
efficient and effective competitive service to a market presently being 
served. Criteria which can be used to determine if a railroad is 
proposing to provide a more competitive service to a currently served 
area include: (1) Creating a shorter route; (2) providing enhanced 
service capabilities (speed is not the only factor); (3) entering an 
interchange or market generating more than 5,000 cars per year or 5 
percent of applicant's traffic; (4) filing the application as a 
condition of relief to a pending proceeding; and (5) permitting a 
carrier to become more competitive (extending its length of haul) See. 
Burlington Northern, Inc.--Control & Merger--St. L., 354 I.C.C. 616, 617 
(1978).
    (d) Petition for clarification. A request that the Board clarify the 
applicability of any part of these regulations to a particular situation 
or explain the type of material needed to comply with these regulations.
    (e) Petition for waiver. A request that the Board either dispense 
with material required by the regulations, or accept material in place 
of that required by these regulations.
    (f) Primary application. A proposal for approval filed under 49 
U.S.C. 11323 which begins a new proceeding and is not proposed either as 
a condition to or as an alternative to Board approval of another pending 
application.
    (g) Railroad. Any common carrier by railroad as defined in 49 U.S.C. 
10102(5)-(6).
    (h) Responsive applications. Applications filed in response to a 
primary application are those seeking affirmative relief either as a 
condition to or in lieu of the approval of the primary application. 
Responsive applications include inconsistent applications, inclusion 
applications, and any other affirmative relief that requires an 
application, petition, notice, or any other filing to be submitted to 
the Board (such as trackage rights, purchases, constructions, operation, 
pooling, terminal operations, abandonments, and other types of 
proceedings not otherwise covered). For fees covering inconsistent 
applications or responsive applications not otherwise covered in the 
Board's fee schedule, see 49 CFR 1002.2(f) (38)-(41) and 
1180.4(d)(4)(ii). The fees for all other responsive applications are set 
forth in 49 CFR 1002.2(f).
    (i) Transferee. The transferee is:
    (1) The acquiring corporation in a control proceeding,
    (2) The surviving corporation in a merger,
    (3) The resulting corporation in a consolidation,
    (4) The leasee in a lease,
    (5) The purchaser in an acquisition, and
    (6) The grantee of trackage rights in a trackage rights proceeding.
    (j) Transferor. The transferor is:
    (1) The corporation acquired in a control proceeding,
    (2) The merging corporation in a merger,
    (3) All corporations to be consolidated in a consolidation,
    (4) The lessor in a lease,
    (5) The seller in an acquisition, and
    (6) The grantor of trackage rights in a trackage rights proceeding.

[47 FR 9844, Mar. 8, 1982. Redesignated at 47 FR 49592, Nov. 1, 1982, as 
amended at 62 FR 9716, Mar. 4, 1997; 62 FR 28376, May 23, 1997; 66 FR 
32586, June 15, 2001]

Sec.1180.4  Procedures.

    (a) General. (1) The original and 25 copies of all documents shall 
be filed in

[[Page 261]]

major proceedings. The original and 10 copies shall be filed in 
significant and minor proceedings.
    (2) Each party to a proceeding shall choose a unique acronym of four 
letters or less for itself. It shall number each document filed in the 
proceeding consecutively, prefixed by its acronym.
    (3) Any document filed with the Board (including applications, 
pleadings, etc.) shall be promptly furnished to interested persons on 
request, unless subject to a protective order. At any time, the Board 
may require the submission of additional copies of any document 
previously filed by any party to the proceeding.
    (b) Prefiling notification. (1) Between 3 to 6 months prior to the 
proposed filing of an application in a major transaction, and 2 to 4 
months prior to the proposed filing of an application in a significant 
transaction, applicant shall file a notice with the Board. The notice 
shall:
    (i) Briefly describe the transaction,
    (ii) Indicate the year to be used for the impact analysis,
    (iii) Indicate the approximate filing date of the application, and
    (iv) Indicate why the transaction is major or significant.
    (2) The Board will publish a notice in the Federal Register within 
30 days of receipt of the applicant's notice. The publication shall 
contain:
    (i) A brief description of the transaction,
    (ii) The year to be used for the impact analysis,
    (iii) The approximate filing date,
    (iv) A determination that the transaction is major, significant, or 
minor, and
    (v) A statement of any additional information which must be filed 
with the application in order for the application to be considered 
complete.
    (3) A prefiling notice may be amended to indicate a change in the 
anticipated filing date.
    (4) Prefiling notification. When filing the notice of intent 
required by paragraph (b)(1) of this section, applicants also must file:
    (i) A proposed procedural schedule. In any proceeding involving 
either a major transaction or a significant transaction, the Board will 
publish a Federal Register notice soliciting comments on the proposed 
procedural schedule, and will, after review of any comments filed in 
response, issue a procedural schedule governing the course of the 
proceeding.
    (ii) A proposed draft protective order. The Board will issue, in 
each proceeding in which such an order is requested, an appropriate 
protective order.
    (iii) A statement of waybill availability for major transactions. 
Applicants must indicate, as soon as practicable after the issuance of a 
protective order, that they will make their 100% traffic tapes available 
(subject to the terms of the protective order) to any interested party 
on written request. The applicants may require that, if the requesting 
party is itself a railroad, applicants will make their 100% traffic 
tapes available to that party only if it agrees, in its written request, 
to make its own 100% traffic tapes available to applicants (subject to 
the terms of the protective order) when it receives access to 
applicants' tapes.
    (iv) Applicants may also propose the use of a voting trust at this 
stage, or at a later stage, if that becomes necessary. In each 
proceeding involving a major transaction, applicants contemplating the 
use of a voting trust must explain how the trust would insulate them 
from an unlawful control violation and why their proposed use of the 
trust, in the context of their impending control application, would be 
consistent with the public interest. Following a brief period of public 
comment and replies by applicants, the Board will issue a decision 
determining whether applicants may establish and use the trust.
    (c) Application. (1) The fees for filing applications, petitions, or 
notices under these procedures are set forth in 49 CFR 1002.2.
    (2) Filing requirements.
    (i) The original of all applications shall be signed in ink by the 
applicant, if an individual; by all partners, if a partnership; and if a 
corporation, association, or other similar form of organization, by its 
president, or such other executive officer having knowledge of the 
matters therein contained and duly

[[Page 262]]

designated for that purpose by the applicant. Applications shall be made 
under oath and shall contain an appropriate certification (if a 
corporation, by its secretary) showing that the affiant is duly 
authorized to verify and file the application. Any person controlling an 
applicant shall also sign the application.
    (ii) The application shall be filed with Secretary, Surface 
Transportation Board, Washington, DC 20423.
    (iii) Each copy of the application shall conform in all respects to 
the original and shall be complete in itself except that the signature 
in the copies may be stamped or typed and the notarial seal may be 
omitted. In like manner, where certified copies of documents are filed 
with the application, conformed copies thereof, showing certification in 
stamped or typewritten form, will be sufficient to accompany the 
additional copies of the application.
    (iv) All applications required to be filed with the Board or served 
on designated persons shall include all exhibits, except as otherwise 
specifically noted. Information from other documents may be incorporated 
by reference in the application. However, the documents must have been 
filed with the Board within three years prior to filing of the 
application, the information must be up to date, and applicant must be 
prepared to supply copies of this information to interested persons on 
specific request.
    (v) The applicant shall submit such additional information to 
support its application as the Board may require.
    (vi) Applicant shall file concurrently all directly related 
applications, e.g., those seeking authority to construct or abandon rail 
lines, obtain terminal operations, acquire trackage rights, etc.
    (vii) The application shall contain a certificate of service 
indicating that all persons designated in Sec.1180.4(c)(5) have been 
served with a copy of the application.
    (3) In a major or significant transaction, and in all responsive 
applications, all of the direct testimony of applicants, in the form of 
verified statements, shall be filed and served with each application.
    (4) The application and all exhibits shall be considered part of the 
evidentiary record upon acceptance. Any portion of an application and 
exhibits will remain subject to motions to strike. However, no motion 
need be made to have the application and exhibits admitted to the 
evidentiary record. If a major or significant transaction is designated 
for oral hearing the presiding Administrative Law Judge shall have 
discretion in extraordinary circumstances to allow for the presentation 
of oral or written direct testimony not previously submitted with the 
application.
    (5) Service. The applicant shall serve a conformed copy of an 
application filed under these procedures by first-class mail upon:
    (i) The Governor (or Executive Officer), Public Service Commission, 
and the Department of Transportation of each State in which any part of 
the properties of the applicant carriers involved in the proposed 
transaction is situated;
    (ii) The Secretary of the United States Department of Transportation 
(Docket Clerk, Office of Chief Counsel, Federal Railroad Administration, 
Room 5101, 400 Seventh Street, SW., Washington, DC 20590).
    (iii) The Attorney General of the United States;
    (iv) The Federal Trade Commission; and
    (v) In major or significant transactions, all persons requesting a 
copy after the prefiling notice is published in the Federal Register.
    (6) Application format. (i) The application shall be in the same 
sequence as the information is requested in these procedures, and shall 
be numbered to correspond to the numbering in the procedures.
    (ii) If any material required in the application would lend itself 
to being placed in an appendix, this should be done. The appendix and 
application shall be tabulated and cross-referenced in an index for ease 
in locating and referring to the information. The appendixes shall be in 
the same sequence as

[[Page 263]]

the information required by these procedures. If certain information 
required in the application is not applicable, provide an explanation. 
The application should be bound, and it may be bound in more than one 
volume. If an application is more than one volume, the cover of each 
volume should be in a different color. The pages in each volume shall 
begin with 1, and be sequentially numbered.
    (iii) The Board's Office of the Secretary will provide informal 
opinions and interpretations, which are not binding on the Board, 
regarding the format of or information to be included in the 
application.
    (iv) All filing, service, or other requirements of these procedures 
must be complied with when filing the application. Copies of the 
application filed with the Board shall be marked in red ``Railroad 
Consolidation Application'' on the transmittal envelope or package.
    (v) The application shall conform to the typographical 
specifications of Sec.1104.2.
    (vi) The information and data required of any applicant may be 
consolidated with the information and data required of the affiliated 
applicant carriers.
    (7) Acceptance or rejection of an application.
    (i) The Board shall accept a complete application no later than 30 
days after the application is filed with the Board by publishing a 
notice in the Federal Register. A complete application contains all 
information for all applicant carriers required by these procedures, 
except as modified by advance waiver. The publication shall indicate the 
applicable time limits for processing the application. (These are the 
time limits of 49 U.S.C. 11325(b) for a major transaction, 49 U.S.C. 
11325(c) for a significant transaction, and 49 U.S.C. 11325(d) for a 
minor transaction.)
    (ii) The Board shall reject an incomplete application by serving a 
decision no later than 30 days after the application is filed with the 
Board. The decision shall explain specifically why the application was 
incomplete. A revised application may be submitted, incorporating 
portions of the prior application by reference. The resubmission or 
refiling of an application shall be considered a de novo filing for the 
purpose of computation of the time periods, provided that the 
resubmitted application is accepted as complete.
    (8) The application must present a prima facie case. Applicants can 
fail to meet their burden of proof and thus not present a prima facie 
case either by (i) disclosing facts that, even if construed in their 
most favorable light, are insufficient to support a finding that the 
proposal is consistent with the public interest, or by (ii) disclosing 
facts that affirmatively demonstrate that the proposal is not in the 
public interest. See Ex Parte No. 282 (Sub-No. 3A), Railroad 
Consolidation Procedures Expedited Processing, 363 I.C.C. 767 (1980).
    (d) Responsive applications. (1) No responsive applications shall be 
permitted to minor transactions.
    (2) An inconsistent application will be classified as a major, 
significant, or minor transaction as provided in Sec. 1180.2(a) through 
(c). The fee for an inconsistent application will be the fee for the 
type of transaction involved. See 49 CFR 1002.2(f)(38) through (41). The 
fee for any other type of responsive application is the fee for the 
particular type of proceeding set forth in 49 CFR 1002.2(f).
    (3) Each responsive application filed and accepted for consideration 
will automatically be consolidated with the primary application for 
consideration.
    (e) Evidentiary proceeding. (1) The Board may order an oral public 
hearing, a hearing by written submissions, or another kind of 
evidentiary proceeding. The determination will generally be made on the 
basis of the needs indicated by the written comments.
    (2) The evidentiary proceeding will be completed:
    (i) Within 1 year after the primary application is accepted for a 
major transaction;
    (ii) Within 180 days for a significant transaction; and
    (iii) Within 105 days for a minor transaction.
    (3) A final decision on the primary application and on all 
consolidated cases will be issued:

[[Page 264]]

    (i) Within 90 days after the conclusion of the evidentiary 
proceeding for a major transaction;
    (ii) Within 90 days for a significant transaction; and
    (iii) Within 45 days for a minor transaction.
    (4) The Secretary of Transportation may propose modifications to any 
transaction and shall have standing to appear before the Board in 
support of any such proposed modification.
    (f) Waiver or clarification. (1) Upon petition of a prospective 
applicant, the Board may waive or clarify a portion of these procedures. 
A petition to waive all of the procedures will not be entertained.
    (2) Except as otherwise provided in the procedural schedule adopted 
by the Board in any particular proceeding, petitions for waiver or 
clarification must be filed at least 45 days before the application is 
filed.
    (3) No replies to a petition for waiver will be permitted, except 
where a proceeding involving the same parties and a related transaction 
is pending before us. \1\ When a reply is permitted, the petition shall 
be served by first-class mail on all parties to the pending proceedings, 
with a reply due within 10 days of service. Replies to a petition for 
clarification shall be permitted within 10 days of the petition's 
filing.
---------------------------------------------------------------------------

    \1\ See Itel Corp.--Control-Green Bay and W. R. Co., 354 I.C.C. 232, 
233 (1978).
---------------------------------------------------------------------------

    (4) A waiver or clarification granted to any applicant in a 
proceeding shall apply to any other party to the proceeding unless 
otherwise indicated.
    (5) All petitions for waiver or clarification must specify the 
sections for which waiver or clarification is sought and give the 
specific reasons why each waiver or clarification is necessary.
    (g) Notice of exemption. (1) To qualify for an exemption under 
Sec.1180.2(d), a railroad must file a verified notice of the transaction 
with the Board at least one week before the transaction is consummated 
indicating the proposed consummation date. Before a notice is filed, the 
railroad shall obtain a docket number from the Board's Office of the 
Secretary.
    (i) The notice shall contain the information required in 
Sec.1180.6(a)(1)(i)-(iii), (a)(5)-(6), and (a)(7)(ii), and indicate the 
level of labor protection to be imposed.
    (ii) The Board shall publish a notice in the Federal Register within 
30 days of the filing of the notice of exemption. The publication will 
indicate the labor protection required. If the notice of exemption 
contains false or misleading information which is brought to the Board's 
attention, the Board shall summarily revoke the exemption for that 
carrier and require divestiture.
    (iii) Other exemptions that may be relevant to a proposal under this 
provision are codified at 49 CFR part 1150, subpart D, which governs 
transactions under 49 U.S.C. 10901.
    (2)(i) To qualify for an exemption under Sec.1180.2(d)(7) 
(acquisition or renewal of trackage rights agreements), in addition to 
the notice, the railroad must file a caption summary suitable for 
publication in the Federal Register. The caption summary must be in the 
following form:

                      Surface Transportation Board

                           Notice of Exemption

                           Finance Docket No.

    (1)--Trackage Rights--(2)
    (2) (3) to grant (4) trackage rights to (1) between (5). The 
trackage rights will be effective on (6).
    This notice is filed under Sec.1180.2(d)(7). Petitions to revoke the 
exemption under 49 U.S.C. 10502(d) may be filed at any time. The filing 
of a petition to revoke will not stay the transaction.
    Dated:
    By the Board.
James H. Bayne,
Secretary.

    The following key identifies the information symbolized in the 
summary.
    (1) Name of the tenant railroad.
    (2) Name of the landlord railroad.
    (3) If an agreement has been entered use ``has agreed'', but if an 
agreement has been reached but not entered use ``will agree.''
    (4) Indicate whether ``overhead'' or ``local'' trackage rights are 
involved.
    (5) Describe the trackage rights.
    (6) State the date the trackage rights agreement is proposed to be 
consummated.

    (ii) The Board will publish the caption summary in the Federal 
Register within 20 days of the date that it is filed with the Board. The 
filing of a petition to revoke under 49 U.S.C.

[[Page 265]]

10502(d) does not stay the effectiveness of an exemption.
    (iii) To qualify for an exemption under Sec. 1180.2(d)(8) 
(acquisition of temporary trackage rights), in addition to the notice, 
the railroad must file a caption summary suitable for publication in the 
Federal Register. The caption summary must be in the following form:

                      Surface Transportation Board

                           Notice of Exemption

                         STB Finance Docket No.

                   (1)--Temporary Trackage Rights--(2)

    (2) (3) to grant overhead temporary trackage rights to (1) between 
(4). The temporary trackage rights will be effective on (5). The 
authorization will expire on (6).
    This notice is filed under Sec. 1180.2(d)(8). Petitions to revoke 
the exemption under 49 U.S.C. 10502(d) may be filed at any time. The 
filing of a petition to revoke will not stay the transaction.

Dated:
By the Board.
[Insert name]
Secretary.

    The following key identifies the information symbolized in the 
summary.
    (1) Name of the tenant railroad.
    (2) Name of the landlord railroad.
    (3) If an agreement has been entered use ``has agreed,'' but if an 
agreement has been reached but not entered use ``will agree.''
    (4) Describe the temporary trackage rights.
    (5) State the date the temporary trackage rights agreement is 
proposed to be consummated.
    (6) State the date the authorization will expire (not to exceed 1 
year from the date the trackage rights will become effective).
    (iv) The Board will publish the caption summary in the Federal 
Register within 20 days of the date that it is filed with the Board. The 
filing of a petition to revoke under 49 U.S.C. 10502(d) does not stay 
the effectiveness of an exemption.
    (3) Some transactions may be subject to environmental review 
pursuant to the Board's environmental rules at 49 CFR part 1105.
    (h) Official notice. In connection with any application or request 
for relief under these procedures, the Board may take official notice of 
any or all of the following information. These data will be presumed 
valid unless discredited by any party. A party relying on information to 
be noticed officially shall list the information. Upon request, the 
party shall make the official notice material available. Any party is 
free to challenge the relevance or application of any such data, or the 
weight that should be accorded it.
    (1) Annual STB Form R-1 Reports submitted by rail carriers.
    (2) Quarterly Commodity Statistics submitted by rail carriers.
    (3) STB Monthly Labor Statistics.
    (4) Quarterly Financial Statements of Rail Carriers.
    (5) All other reports submitted to the STB under oath.
    (6) Annual 1-percent Waybill Sample.
    (7) Federal Reserve Board Production Statistics.
    (8) AAR compilations of bad order ratios, equipment ownership and 
repair statistics, and freight car order figures.

[47 FR 9844, Mar. 8, 1982. Redesignated at 47 FR 49592, Nov. 1, 1982 and 
amended at 49 FR 15088, Apr. 17, 1984; 50 FR 15751, Apr. 22, 1985; 51 FR 
4928, Feb. 10, 1986; 51 FR 25207, July 11, 1986; 52 FR 46484, Dec. 8, 
1987; 56 FR 36111, July 31, 1991; 56 FR 41806, Aug. 23, 1991; 58 FR 
29362, May 20, 1993; 58 FR 63104, Nov. 30, 1993; 62 FR 9717, Mar. 4, 
1997; 64 FR 53269, Oct. 1, 1999; 66 FR 32586, June 15, 2001; 68 FR 
28140, May 23, 2003]

Sec.1180.5  [Reserved]

Sec.1180.6  Supporting information.

    (a) All applications filed under 49 U.S.C. 11323 shall show in the 
title the names of the applicants and the nature of the proposed 
transaction. Beneath the title indicate the name, title, business 
address, and telephone number of the person(s) to whom correspondence 
with respect to the application should be addressed. The following 
information shall be included in all applications:
    (1) A description of the proposed transaction, including appropriate 
references to any supporting exhibits and statements contained in the 
application and discussing the following:
    (i) A brief summary of the proposed transaction, the name of 
applicants, their business address, telephone number, and the name of 
the counsel to whom questions regarding the transaction can be 
addressed.

[[Page 266]]

    (ii) The proposed time schedule for consummation of the proposed 
transaction.
    (iii) The purpose sought to be accomplished by the proposed 
transaction, e.g., operating economies, eliminating excess facilities, 
improving service, or improving the financial viability of the 
applicants.
    (iv) The nature and amount of any new securities or other financial 
arrangements.
    (2) A detailed discussion of the public interest justifications in 
support of the application, indicating how the proposed transaction is 
consistent with the public interest, with particular regard to the 
relevant statutory criteria, including
    (i) The effect of the transaction on inter- and intramodal 
competition, including a description of the relevant markets (see 
Sec.1180.7). Include a discussion of whether, as a result of the 
transaction, there is likely to be any lessening of competition, 
creation of a monopoly, or restraint of trade in freight surface 
transportation in any region of the United States.
    (ii) The financial consideration involved in the proposed 
transaction, and any economies, to be effected in operations, and any 
increase in traffic, revenues, earnings available for fixed charges, and 
net earnings, expected to result from the consummation of the proposed 
transaction.
    (iii) The effect of the increase, if any, of total fixed charges 
resulting from the proposed transaction.
    (iv) The effect of the proposed transaction upon the adequacy of 
transportation service to the public, as measured by the continuation of 
essential transportation services by applicants and other carriers.
    (v) The effect of the proposed transaction upon applicant carriers' 
employees (by class or craft), the geographic points where the impact 
will occur, the time frame of the impact (for at least 3 years after 
consolidation), and whether any employee protection agreements have been 
reached.
    (vi) The effect of inclusion (or lack of inclusion) in the proposed 
transaction of other railroads in the territory, under 49 U.S.C. 11324.
    (3) Any other supporting or descriptive statements applicants deem 
material.
    (4) An opinion of applicants' counsel that the transaction meets the 
requirements of the law and will be legally authorized and valid, if 
approved by the Board. This should include specific references to any 
pertinent provisions of applicants' bylaws or charter or articles of 
incorporation. \2\
---------------------------------------------------------------------------

    \2\ An opinion of counsel is not required in a control transaction 
for the party sought to be controlled, or in a responsive application 
for the party against whom relief is sought.
---------------------------------------------------------------------------

    (5) A list of the State(s) in which any part of the property of each 
applicant carrier is situated.
    (6) Map (exhibit 1). Submit a general or key map indicating clearly, 
in separate colors or otherwise, the line(s) of applicant carriers in 
their true relations to each other, short line connections, other rail 
lines in the territory, and the principal geographic points in the 
region traversed. If a geographically limited transaction is proposed, a 
map detailing the transaction should also be included. In addition to 
the map accompanying each application, 20 unbound copies of the map 
shall be filed with the Board.
    (7) Explanation of the transaction.
    (i) Describe the nature of the transaction (e.g., merger, control, 
purchase, trackage rights), the significant terms and conditions, and 
the consideration to be paid (monetary or otherwise).
    (ii) Agreement (exhibit 2). Submit a copy of any contract or other 
written instrument entered into, or proposed to be entered into, 
pertaining to the proposed transaction. \3\ In addition, parties to 
exempt trackage rights agreements and renewal of agreements described at 
Sec.1180.2(d)(7) must submit one copy of the executed agreement or 
renewal agreement with the notice of exemption, or within 10 days of the 
date that the agreement is executed, whichever is later.
---------------------------------------------------------------------------

    \3\ A final signed contract or agreement need not be filed with a 
responsive application. However, a draft contract or agreement should be 
submitted containing the significant terms proposed.
---------------------------------------------------------------------------

    (iii) If a consolidation or merger is proposed, indicate: (A) The 
name of the

[[Page 267]]

company resulting from the consolidation or merger; (B) the State or 
territory under the laws of which the consolidated company is to be 
formed or the merged company is to file its certificate of amendment; 
(C) the capitalization proposed for the resulting company; and (D) the 
amount and character of capital stock and other securities to be issued.
    (iv) Court order (exhibit 3). If a trustee, receiver, assignee, or 
personal representative of the real party in interest is an applicant, 
submit a certified copy of the order, if any, of the court having 
jurisdiction, authorizing the contemplated action.
    (v) State whether the property involved in the proposed transaction 
includes all the property of the applicant carriers and, if not, 
describe what property is included in the proposed transaction.
    (vi) Briefly describe the principal routes and termini of the lines 
involved, the principal points of interchange on the routes, and the 
amount of main-line mileage and branch line mileage involved.
    (vii) State whether any governmental financial assistance is 
involved in the proposed transaction and, if so, the form, amount, 
source, and application of such financial assistance.
    (8) Environmental data (exhibit 4). Submit information and data with 
respect to environmental matters prepared in accordance with 49 CFR part 
1105. In major and significant transaction, applicants shall, as soon as 
possible, and no later than the filing of a notice of intent, consult 
with the Board's Section of Environmental Analysis for the proper format 
of the environmental report.
    (b) In a major transaction, submit the following information:
    (1) Form 10-K (exhibit 6). Submit: The most recent filing with the 
Securities and Exchange Commission (SEC) under 17 CFR 249.310 made 
within the year prior to the filing of the application by each applicant 
or by any entity that is in control of an applicant. These shall not be 
incorporated by reference, and shall be updated with any Form 10-K 
subsequently filed with the SEC during the pendency of the proceeding.
    (2) Form S-4 (exhibit 7). Submit: The most recent filing with the 
SEC under 17 CFR 239.25 made within the year prior to the filing of the 
application by each applicant or by any entity that is in control of an 
applicant. These shall not be incorporated by reference, and shall be 
updated with any Form S-4 subsequently filed with the SEC during the 
pendency of the proceeding.
    (3) Change in control (exhibit 8). If an applicant carrier submits 
an annual report Form R-1, indicate any change in ownership or control 
of that applicant carrier not indicated in its most recent Form R-1, and 
provide a list of the principal six officers of that applicant carrier 
and of any related applicant, and also of their majority-owned rail 
carrier subsidiaries. If any applicant carrier does not submit an annual 
report Form R-1, list all officers of that applicant carrier, and 
identify the person(s) or entity/entities in control of that applicant 
carrier and all owners of 10% or more of the equity of that applicant 
carrier.
    (4) Annual reports (exhibit 9). Submit: The two most recent annual 
reports to stockholders by each applicant, or by any entity that is in 
control of an applicant, made within 2 years of the date of filing of 
the application. These shall not be incorporated by reference, and shall 
be updated with any annual or quarterly report to stockholders issued 
during the pendency of the proceeding.
    (5) Issues (exhibit 10). Submit a discussion of any other issues 
relevant to the transaction.
    (6) Corporate chart (exhibit 11). Submit a corporate chart 
indicating all relationships between applicant carriers and all 
affiliates and subsidiaries and also companies controlling applicant 
carriers directly, indirectly or through another entity (with each chart 
indicating the percentage ownership of every company on the chart by any 
other company on the chart). For each company: include a statement 
indicating whether that company is a noncarrier or a carrier; and 
identify every officer and/or director of that company who is also an 
officer and/or director of any other company that is part of a different 
corporate family that includes a rail carrier. Such information

[[Page 268]]

may be referenced through notes to the chart.
    (7) If applicant is not a carrier, indicate (i) the type of business 
in which it is engaged, (ii) the length of time so engaged, and (iii) 
its present and prospective activities which have or may have a relation 
to transportation subject to 49 U.S.C. Subtitle IV.
    (8) Intercorporate or financial relationships. Indicate whether 
there are any direct or indirect intercorporate or financial 
relationships at the time the application is filed, not disclosed 
elsewhere in the application, through holding companies, ownership of 
securities, or otherwise, in which applicants or their affiliates own or 
control more than 5% of the stock of a non-affiliated carrier, including 
those relationships in which a group affiliated with applicants owns 
more than 5% of the stock of such a carrier. Indicate the nature and 
extent of any such relationships, and, if an applicant owns securities 
of a carrier subject to 49 U.S.C. Subtitle IV, provide the carrier's 
name, a description of securities, the par value of each class of 
securities held, and the applicant's percentage of total ownership. For 
purposes of this paragraph, ``affiliates'' has the same meaning as 
``affiliated companies'' in Definition 5 of the Uniform System of 
Accounts (49 CFR part 1201, subpart A).
    (9) Employee impact exhibit. The effect of the proposed transaction 
upon applicant carriers' employees (by class or craft), the geographic 
points where the impacts would occur, the time frame of the impacts (for 
at least 3 years after consolidation), and whether any employee 
protection agreements have been reached. This information (except with 
respect to employee protection agreements) may be set forth in the 
following format:

                Effects on Applicant Carriers' Employees
------------------------------------------------------------------------

------------------------------------------------------------------------
Current Location................................................  ......
Jobs Classification.............................................  ......
Jobs Transferred to.............................................  ......
Jobs Abolished..................................................  ......
Jobs Created....................................................  ......
Year............................................................  ......
------------------------------------------------------------------------

    (10) Conditions to mitigate and offset merger-related harms. 
Applicants are expected to propose measures to mitigate and offset 
merger-related harms. These conditions should not simply preserve, but 
also enhance, competition.
    (i) Applicants must explain how they would preserve competitive 
options for shippers and for Class II and III rail carriers. At a 
minimum, applicants must explain how they would preserve the use of 
major existing gateways, the potential for build-outs or build-ins, and 
the opportunity to enter into contracts for one segment of a movement as 
a means of gaining the right separately to pursue rate relief for the 
remainder of the movement.
    (ii) Applicants should explain how the transaction and conditions 
they propose would enhance competition and improve service.
    (11) Calculating public benefits. Applicants must enumerate and, 
where possible, quantify the net public benefits their merger would 
generate (if approved). In making this estimate, applicants should 
identify the benefits that would arise from service improvements, 
enhanced competition, cost savings, and other merger-related public 
interest benefits, and should discuss whether the particular benefits 
they are relying upon could be achieved short of merger. Applicants must 
also identify, discuss, and, where possible, quantify the likely 
negative effects approval would entail, such as losses of competition, 
potential for service disruption, and other merger-related harms. In 
addition, applicants must suggest additional measures that the Board 
might take if it approves the application and the anticipated public 
benefits identified by applicants fail to materialize in a timely 
manner.
    (12) Downstream merger applications. (i) Applicants should 
anticipate whether additional Class I mergers are likely to be proposed 
in response to their own proposal and explain how, taken together, these 
mergers, if approved, could affect the eventual structure of the 
industry and the public interest.
    (ii) Applicants are expected to discuss whether any conditions 
imposed on an approval of their proposed merger would have to be 
altered, or any new conditions imposed, if the Board should approve 
additional future rail mergers.

[[Page 269]]

    (13) Purpose of the proposed transaction. The purpose sought to be 
accomplished by the proposed transaction, such as improving service, 
enhancing competition, strengthening the nation's transportation 
infrastructure, creating operating economies, and ensuring financial 
viability.
    (c) In a significant transaction, submit the information specified 
in paragraphs (b)(3), (b)(5), (b)(6), (b)(7), and (b)(8) of this 
section.

[47 FR 9844, Mar. 8, 1982. Redesignated at 47 FR 49592, Nov. 1, 1982, 
and amended at 50 FR 15751, Apr. 22, 1985; 56 FR 41806, Aug. 3, 1991; 57 
FR 28641, June 26, 1992; 58 FR 63104, Nov. 30, 1993; 62 FR 9717, Mar. 4, 
1997; 64 FR 53269, Oct. 1, 1999; 66 FR 32587, June 15, 2001]

Sec. 1180.7  Market analyses.

    (a) For major and significant transactions, applicants shall submit 
impact analyses (exhibit 12) describing the impacts of the proposed 
transaction--both adverse and beneficial--on inter-and intramodal 
competition with respect to freight surface transportation in the 
regions affected and on the provision of essential services by 
applicants and other carriers. An impact analysis should include 
underlying data, a study of the implications of those data, and a 
description of the resulting likely effects of the proposed transaction 
on the transportation alternatives that would be available to the 
shipping public. Each aspect of the analysis should specifically address 
significant impacts as they relate to the applicable statutory criteria 
(49 U.S.C. 11324(b) or (d)), essential services, and competition. 
Applicants must identify and address relevant markets and issues, and 
provide additional information as requested by the Board on markets and 
issues that warrant further study. Applicants (and any other party 
submitting analyses) must demonstrate both the relevance of the markets 
and issues analyzed and the validity of their methodology. All 
underlying assumptions must be clearly stated. Analyses should reflect 
the consolidated company's marketing plan and existing and potential 
competitive alternatives (inter- as well as intramodal). They can 
address: city pairs, interregional movements, movements through a point, 
or other factors; a particular commodity, group of commodities, or other 
commodity factor that would be significantly affected by the 
transaction; or other effects of the transaction (such as on a 
particular type of service offered).
    (b) For major transactions, applicants shall submit ``full system'' 
impact analyses (incorporating any operations in Canada or Mexico) from 
which they must demonstrate the impacts of the transaction--both adverse 
and beneficial--on competition within regions of the United States and 
this nation as a whole (including inter- and intramodal competition, 
product competition, and geographic competition) and the provision of 
essential services (including freight, passenger, and commuter) by 
applicants and other network links (including Class II and Class III 
rail carriers and ports). Applicants' impact analyses must at least 
provide the following types of information:
    (1) The anticipated effects of the transaction on traffic patterns, 
market concentrations, and/or transportation alternatives available to 
the shipping public. Consistent with Sec. 1180.6(b)(10), these would 
incorporate a detailed examination of any competition-enhancing aspects 
of the transaction and of the specific measures proposed by applicants 
to preserve existing levels of competition and essential services;
    (2) Actual and projected market shares of originated and terminated 
traffic by railroad for each major point on the combined system. 
Applicants may define points as individual stations or as larger areas 
(such as Bureau of Economic Analysis statistical areas or U.S. 
Department of Agriculture Crop Reporting Districts) as relevant and 
indicate the extent of switching access and availability of terminal 
belt railroads. Applicants should list points where the number of 
serving railroads would drop from two to one and from three to two, 
respectively, as a result of the proposed transaction (both before and 
after applying proposed remedies for competitive harm);
    (3) Actual and projected market shares of revenues and traffic 
volumes for major interregional or corridor flows by major commodity 
group. Origin/destination areas should be defined at relevant levels of 
aggregation for

[[Page 270]]

the commodity group in question. The data should be broken down by mode 
and (for the railroad portion) by single-line and interline routings 
(showing gateways used);
    (4) For each major commodity group, an analysis of traffic flows 
indicating patterns of geographic competition or product competition 
across different railroad systems, showing actual and projected revenues 
and traffic volumes;
    (5) Maps and other graphic displays where helpful in illustrating 
the analyses in this section;
    (6) An explicit delineation of the projected impacts of the 
transaction on the ability of various network links (including Class II 
and Class III rail carriers and ports) to participate in the competitive 
process and to sustain essential services; and
    (7) Supporting data for the analyses in this section, such as the 
basis for projections of changes in traffic patterns, including shipper 
surveys and econometric or other statistical analyses. If not made part 
of the application, applicants shall make these data available in a 
repository for inspection by other parties or otherwise supply these 
data on request, for example, electronically. Access to confidential 
information will be subject to protective order. For information drawn 
from publicly available published sources, detailed citations will 
suffice.
    (8) If necessary, an explanation as to how the lack of reliable and 
consistent data has limited applicants' ability to satisfy any of the 
requirements in this paragraph (b).
    (c) For significant transactions, specific regulations on impact 
analyses are not provided so that the parties will have the greatest 
leeway to develop the best evidence on the impacts of each individual 
transaction. As a general guideline, applicants shall provide supporting 
data that may (but need not) include: current and projected traffic 
flows; data underlying sales forecasts or marketing goals; interchange 
data; market share analysis; and/or shipper surveys. It is important to 
note that these types of studies are neither limiting nor all-inclusive. 
The parties must provide supporting data, but are free to choose the 
type(s) and format. If not made part of the application, applicants 
shall make these data available in a repository for inspection by other 
parties or otherwise supply these data on request, for example, 
electronically. Access to confidential information will be subject to 
protective order. For information drawn from publicly available 
published sources, detailed citations will suffice.

[66 FR 32588, June 15, 2001]

Sec.1180.8  Operational data.

    (a) Applications for major transactions must include a full-system 
operating plan--incorporating any prospective operations in Canada and 
Mexico--from which they must demonstrate how the proposed transaction 
would affect operations within regions of the United States and on a 
nationwide basis. As part of the environmental review process, 
applicants shall submit:
    (1) A Safety Integration Plan, prepared in consultation with the 
Federal Railroad Administration, to ensure that safe operations would be 
maintained throughout the merger implementation process.
    (2) Information on what measures they plan to take to address 
potentially blocked crossings as a result of merger-related changes in 
operations or increases in rail traffic.
    (b) For major and significant transactions: Operating plan (exhibit 
13). Submit a summary of the proposed operating plan changes, based on 
the impact analyses, that will result from the transaction, and their 
anticipated timing, allowing for any time required to complete 
rehabilitation, upgrading, yard construction, or other major operational 
changes following consummation of the proposed transaction. The plan 
should make clear the gains in service, operating efficiencies, and 
other benefits anticipated from the merger. The plan should include:
    (1) The patterns of service on the properties, including the 
proposed principal routes, proposed consolidations of main-line 
operations, and the anticipated traffic density and general categories 
of traffic (including numbers of trains) on all main and secondary lines 
in the system. Identify all yards expected to have an increase in 
activity

[[Page 271]]

greater than 20 percent. Changes in operations may be summarized in a 
pro forma density chart.
    (2) If commuter or other passenger services are operated over the 
lines of applicant carriers, detail any impacts anticipated on such 
services, including delays which may be occasioned because a line is 
scheduled to handle increased traffic due to route consolidations.
    (3) The anticipated equipment requirements of the proposed system, 
including locomotives, rolling stock by type, and maintenance-of-way 
equipment; plans for acquisition and retirement of equipment; projected 
improvements in equipment utilization and their relation to operating 
changes; and how these will lead to the financial and service benefits 
described in the summary.
    (4) A description of the effect of any deferred maintenance or 
delayed capital improvements on any road or equipment properties 
involved, the schedule for eliminating such deferrals, details of 
general system rehabilitation including rehabilitation relating to the 
transaction (including proposed yard and terminal modifications), and 
how these activities will lead to the service improvements or operating 
economies anticipated from the transaction.
    (5) Density charts (exhibit 14). Gross ton-mile traffic density 
charts shall be filed for applicant carriers containing a map 
geographically showing those lines handling 1 million gross ton-miles 
per mile road or more per year and respective densities, expressed in 
gross ton-miles per year, in each direction, in segments of such lines 
between major freight yards and terminals, including major intramodal 
and intermodal interchange points, using the corporate or political 
subdivision name of the points shown as well as the railroad station 
name. The mileage of each segment of line shall be provided, and should 
be shown on the chart. Data shown in the density chart shall be for the 
latest available full calendar year preceding the filing of the 
application. At applicants' option data may be shown on the density 
chart or an explanatory list.
    (c) For minor transactions: Operating plan-minor (exhibit 15). 
Discuss any significant changes in patterns or types of service as 
reflected by the operating plan expected to be used after consummation 
of the transaction. Where relevant, submit information related to the 
following:
    (1) Traffic level density on lines proposed for joint operations.
    (2) Impacts on commuter or other passenger service operated over a 
line which is to be downgraded, eliminated, or operated on a 
consolidated basis.
    (3) Operating economies, which include, but are not limited to, 
estimated savings.
    (4) Any anticipated discontinuances or abandonments.

[47 FR 9844, Mar. 8, 1982. Redesignated at 47 FR 49592, Nov. 1, 1982, as 
amended at 66 FR 32589, June 15, 2001]

Sec.1180.9  Financial information.

    The following information shall be provided for major transactions, 
and for carriers shall conform to the Board's Uniform System of 
Accounts, 49 CFR part 1201:
    (a) Pro forma balance sheet (exhibit 16). Where the transaction 
involves a proceeding other than a control, a pro forma balance sheet 
statement giving effect to the proposed transaction commencing for the 
first year of the Impact Analysis in exhibit 12. The data shall be 
presented in columnar form showing:
    (1) In the first column, the balance sheet of transferee on a 
corporate entity basis,
    (2) In the second column, a balance sheet of transferor, on a 
corporate entity basis,
    (3) In the third column, pro forma adjustments and eliminations; and
    (4) In the fourth column, transferee's balance sheet giving effect 
to consumation of the proposed transaction. \4\ 
---------------------------------------------------------------------------

    \4\ Where the purchase of a line or line segment is involved, a 
procedure utilizing three columns should be followed. The first column 
should show transferee's actual balance sheet on a corporate entity 
basis for the latest available 12-month period, the second column should 
show the adjustments necessitated by the purchase, and the third is a 
compilation of the first two columns into a pro forma balance sheet.
    The transferor shall file a balance sheet similar to the one filed 
by the transferee, with the second column reflecting the adjustments 
resulting from the sale.
    If the parent company (if any) of the transferee or transferor is 
affected, a similar balance sheet shall be filed for each.
    All adjustments to these balance sheets shall be supported in 
footnotes to the appropriate balance sheet.

---------------------------------------------------------------------------

[[Page 272]]


Each adjustment and elimination shall be properly footnoted and fully 
explained. A pro forma balance sheet shall be submitted for the number 
of years following consummation necessary to effect the operating plan.
    (b) Pro forma income statement (exhibit 17). Where the transaction 
involves a proceeding other than a control, submit a pro forma income 
statement showing transferee's estimate of revenues, expenses, and net 
income for at least each of the 3 years following consummation of the 
transaction. \5\ The pro forma data shall be presented in columnar form, 
showing
---------------------------------------------------------------------------

    \5\ If the operating plan requires more than 3 years to be put into 
effect, the pro forma income statement shall be prepared for as many 
years as necessary to implement fully the operating plan.
---------------------------------------------------------------------------

    (1) in the first column, transferee's actual income statement on a 
corporate entity basis for the year indicated in the impact analysis in 
exhibit 12;
    (2) in the second column, a similar income statement for the 
transferor;
    (3) in the third column, forecasted adjustments to the combined 
revenues, expenses, and net income to reflect increases or decreases 
anticipated under the unified operations, and
    (4) in the fourth column, a compilation of the first three columns 
into a pro forma income statement. \6\
---------------------------------------------------------------------------

    \6\ Where the purchase of a line or line segment is involved, a 
procedure utilizing three columns should be followed. The first column 
should show transferee's actual income statement on a corporate entity 
basis for the latest available 12-month period, the second column should 
show the adjustment necessitated by the purchase, and the third column 
is a compilation of the first two columns into a pro forma income 
statement.
    The transferor shall file an income statement similar to the one 
filed by the transferee, with the second column reflecting the 
adjustments resulting from the sale.
    If the parent company (if any) of the transferor or transferee is 
affected, a similar statement shall be filed for each.
    All adjustments to these income statements shall be supported in 
footnotes to the appropriate income statements.

The adjustments are to be supported by a statement explaining the basis 
used in determining the estimated changes in revenues, expenses, and net 
income appearing in the third column. Additionally, if the major 
financial advantages to be derived from the proposed transaction will 
not occur within 3 years after consummation, then applicant shall 
furnish additional information to reflect the number of years within 
which the financial advantages will be realized. The basis for all such 
data furnished shall be fully explained and supported.
    (c) Sources and application of funds (exhibit 18). Transferor's and 
transferee's statement of sources and application of funds for the 
current year, and a forecast \7\ of sources and application of funds for 
each carrier (if a merger or consolidation, the surviving or resulting 
corporation) for the year following consummation of the proposed 
transaction, and the years necessary to effectuate the operating plan. 
\8\ The form and content of these statements should be constructed in 
accordance with the schedule: ``Statement of Changes in Financial 
Position'' required in the most recently filed Annual Report R-1 for 
Class I railroads.
---------------------------------------------------------------------------

    \7\ The forecast should reflect only changes anticipated to result 
from the proposed transaction. Forecasts are not required to reflect 
general economic conditions unrelated to the proposed transaction.
    \8\ The pro forma balance sheets (exhibit 16), pro forma income 
statements (exhibit 17), and sources and application of funds (exhibit 
18) shall cover the same years.
---------------------------------------------------------------------------

    (d) Property encumbrance (exhibit 19). If any of the property 
covered by the application is encumbered and applicant has agreed to 
assume obligation or liability in respect thereof, submit:
    (1) A description of the property encumbered.
    (2) Amount of encumbrance and full description thereof, including 
maturity, interest rate, and other terms and conditions.

[[Page 273]]

    (3) Amount of encumbrance assumed or to be assumed by applicant.
    (e) The Board will incorporate by reference the current balance 
sheets and income statements of Class I railroads which are on file with 
the Board. Class II and Class III railroads, and non-carrier entities 
shall submit balance sheets (exhibit 20) and income statements (exhibit 
21) covering a period ending within 6 months before the application is 
filed.

[47 FR 9844, Mar. 8, 1982. Redesignated at 47 FR 49592, Nov. 1, 1982, 
and amended at 58 FR 63104, Nov. 30, 1993; 62 FR 9717, Mar. 4, 1997; 64 
FR 53269, Oct. 1, 1999]

Sec. 1180.10  Service assurance plans.

    For major transactions: Applicants must submit a Service Assurance 
Plan, which, in concert with the operating plan requirements, identifies 
the precise steps to be taken by applicants to ensure that projected 
service levels would be attainable and that key elements of the 
operating plan would improve service. The plan shall describe with 
reasonable precision how operating plan efficiencies would translate 
into present and future benefits for the shipping public. The plan must 
also describe any potential area of service degradation that might 
result due to operational changes and how instances of degraded service 
might be mitigated. Like the Operating Plan on which it is based, the 
Service Assurance Plan must be a full-system plan encompassing:
    (a) Integration of operations. Based on the operating plan, and 
using appropriate benchmarks, applicants must develop a Service 
Assurance Plan describing how the proposed transaction would result in 
improved service levels and how and where service might be degraded. 
This description should be a precise route level review, but not a 
shipper-by-shipper review. Nonetheless, the plan should be sufficient 
for individual shippers to evaluate the projected improvements and 
changes, and respond to the potential areas of service degradation for 
their customary traffic routings. The plan should inform Class II and 
III railroads and other connecting railroads of the operational changes 
or changes in service terms that might affect their operations, 
including operations involving major gateways.
    (b) Coordination of freight and passenger operations. If Amtrak or 
commuter services are operated over the lines of applicant carriers, 
applicants must describe definitively how they would continue to 
facilitate these operations so as to fulfill existing performance 
agreements for those services. Whether or not the passenger services are 
operated over lines of applicants or applicants' operations are on the 
lines of passenger agencies, applicants must establish operating 
protocols ensuring effective communications with Amtrak and/or regional 
rail passenger operators to minimize any potential transaction-related 
negative impacts.
    (c) Yard and terminal operations. The operational fluidity of yards 
and terminals is key to the successful implementation of a transaction 
and effective service to shippers. Applicants must describe how the 
operations of principal classification yards and major terminals would 
be changed or revised and how these revisions would affect service to 
customers. As part of this analysis, applicants must furnish dwell time 
benchmarks for each facility described in this paragraph, and estimate 
what the expected dwell time would be after the revised operations are 
implemented. Also required will be a discussion of on-time performance 
for the principal yards and terminals in the same terms as required for 
dwell time.
    (d) Infrastructure improvements. Applicants must identify potential 
infrastructure impediments (using volume/capacity line and terminal 
forecasts), formulate solutions to those impediments, and develop time 
frames for resolution. Applicants must also develop a capital 
improvement plan (to support the operating plan) for timely funding and 
completion of the improvements critical to transition of operations. 
They should also describe improvements related to future growth, and 
indicate the relationship of the improvements to service delivery.
    (e) Information technology systems. Because the accurate and timely 
integration of applicants' information systems is vitally important to 
service, applicants must identify the process to be

[[Page 274]]

used for systems integration and training of involved personnel. This 
must include identification of the principal operations-related systems, 
operating areas affected, implementation schedules, the realtime 
operations data used to test the systems, and pre-implementation 
training requirements needed to achieve completion dates. If such 
systems will not be integrated and on line prior to implementation of 
the transaction, applicants must describe the interim systems to be used 
and the adequacy of those systems to ensure service delivery.
    (f) Customer service. To achieve and maintain customer confidence in 
the transaction and to ensure the successful integration and 
consolidation of existing customer service functions, applicants must 
identify their plans for the staffing and training of personnel within 
or supporting the customer service centers. This discussion must include 
specific information on the planned steps to familiarize customers with 
any new processes and procedures that they may encounter in using the 
consolidated systems and/or changes in contact locations, telephone 
numbers, or communication mode.
    (g) Labor. Applicants must furnish a plan for reaching necessary 
labor implementing agreements. Applicants must also provide evidence 
that sufficient qualified employees would be available at the proper 
locations to effect implementation.
    (h) Training. Applicants must establish a plan for providing 
necessary training to employees involved with operations, train and 
engine service, operating rules, dispatching, payroll and timekeeping, 
field data entry, safety and hazardous material compliance, and 
contractor support functions (e.g., crew van service), as well as 
training for other employees in functions that would be affected by the 
acquisition.
    (i) Contingency plans for merger-related service disruptions. To 
address potential disruptions of service that could occur, applicants 
must establish contingency plans. Those plans, based upon available 
resources and traffic flows and density, must identify potential areas 
of disruption and the risk of occurrence. Applicants must provide 
evidence that contingency plans would be in place to promptly restore 
adequate service levels. Applicants must also provide for the 
establishment of problem resolution teams and describe the specific 
procedures to be utilized for problem resolution.
    (j) Timetable. Applicants must identify all major functional or 
system changes/consolidations that would occur and the time line for 
successful completion.
    (k) Benchmarking. Specific benchmarking requirements may vary with 
the transaction. The minimum for benchmarking will be the 12 monthly 
periods immediately preceding the filing date of the notice of intent to 
file the application. Benchmarking is intended to provide an historic 
monthly baseline against which actual post-transaction levels of 
performance can be measured. Benchmarking data should be sufficiently 
detailed and encompassing to give a meaningful picture of operational 
performance for the newly merged system. Applicants will report in a 
matrix structure giving the historic monthly (benchmark) data and 
provide for the reporting of actual monthly data during the monitoring 
period. It is important that data reflect uniformly constructed measures 
of historic and post-transaction operations. Minimum benchmark data 
include:
    (1) Corridor performance benchmarking. Benchmarks will consist of 
route level performance information including flow data for traffic 
moving on the applicants' systems. These data will encompass flows to 
and from major points. A major point could be a Bureau of Economic 
Analysis (BEA) statistical area, or it can be a railroad-created point 
based on an operational grouping of stations or interchanges, or it 
could be another similar construction. It will be necessary for 
applicants to define traffic points used to establish benchmarks for 
purposes of monitoring. A sufficient number of corridor flows must be 
reported so as to fully represent system flows, including interchanges 
with short lines and other Class I's, and internal traffic of the 
respective applicants before the transaction. In addition to identifying 
traffic flows by areas, they also must be

[[Page 275]]

identified by commodity sector (for example, merchandise, intermodal, 
automotive, unit coal, unit grain etc.). Data for each flow must 
include: traffic volume in carloads (units), miles (area to area), and 
elapsed time in hours. Only loaded traffic need be included.
    (2) Yard and terminal benchmarking.
    (i) Terminal dwell. Terminal dwell for major yards will be 
calculated in hours for cars handled, not including run-through and 
bypass trains or maintenance of way and bad order cars.
    (ii) On time originations by major yard. On time originations are 
based on the departure of scheduled trains originating at a particular 
yard.
    (3) System benchmarking.
    (i) Cars on line.
    (ii) Average train velocity, by train type.
    (iii) Locomotive fleet size and applicable bad order ratios.
    (iv) Passenger train performance for commuter and intercity 
passenger services.

[66 FR 32589, June 15, 2001]

Sec. 1180.11  Transnational and other informational requirements.

    (a) For applicants whose systems include operations in Canada or 
Mexico, applicants must explain how cooperation with the Federal 
Railroad Administration would be maintained to address potential impacts 
on operations within the United States of operations or events elsewhere 
on their systems.
    (b) All applicants must assess whether any restrictions or 
preferences under foreign or domestic law or policies could affect their 
commercial decisions, and discuss any ownership restrictions applicable 
to them.

[66 FR 32590, June 15, 2001]

Subpart B--Transfer or Operation of Lines of Railroads in Reorganization

Sec.1180.20  Procedures.

    (a) Transactions under 11 U.S.C. 1172, for the transfer or operation 
of lines of bankrupt railroads under a plan of reorganization are 
governed by the following procedures:
    (1) If the buyer or operator is not a carrier, the Notice of 
Exemption procedures in subpart D of part 1150 of this title.
    (2) If the buyer or operator is a carrier, either:
    (i) The application procedures in subpart A of this part; or,
    (ii) The procedures in part 1121 of this title for a petition to 
exempt the transaction from prior approval requirements of 49 U.S.C. 
11323 et seq.
    (b) The Board will establish or modify its existing procedures and 
deadlines as necessary in each proceeding to comply with appropriate 
orders of the Bankruptcy Court.
    (c) Under 11 U.S.C. 1172(c)(1), the Board is required to provide 
affected employees with adequate protection. The Board will impose the 
minimum levels required by 49 U.S.C. 11326, unless a need is shown for 
greater levels of protection.
    (d) All applications, notices, and petitions for exemption within 
the scope of Sec.1180.20(a) shall advise the Board that the proposed 
transaction involves the transfer or operation of lines in 
reorganization.

[57 FR 57112, Dec. 3, 1992; 57 FR 61585, Dec. 28, 1992, as amended at 62 
FR 9717, Mar. 4, 1997]




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