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Surface Transportation Board Rulemaking to Modify Requirements for Offers of Financial Assistance

By: Justin J. Marks

The Surface Transportation Board (“STB” or “Board”) issued an advance notice of proposed rulemaking seeking comments on how it should revise its rules related to offers of financial assistance (“OFA”).  The Board’s goal is to improve the process and protect it against abuse.[1]

An OFA is a process by which a financially responsible party may offer to temporarily subsidize continued rail service over a line on which a carrier seeks to abandon or discontinue service.  Alternatively, a financially responsible party may offer to purchase a line and provide continued rail service that a carrier seeks to abandon.

Financial Responsibility

Under the STB’s regulations, a prospective offeror must demonstrate that it is “financially responsible.”  However the regulations do not define what it means to be financially responsible.  Therefore, the STB is seeking comment on how it should revise the regulations to be more transparent and understandable.

Additionally the STB is seeking comment on what methods may be utilized to ensure an offeror meets the financially responsible definition.  The STB is soliciting comment on the following questions it proposes related to financial responsibility:

  • What documentation should a potential offeror be required to submit to show financial responsibility?
  • Should the STB require that potential offerors file notices of intent to file an OFA in abandonment and discontinuance proceedings by a date certain?
  • Should the STB require potential offerors to make a financial responsibility showing before requiring carriers to provide financial information to those offerors?
  • Should the definition of financial responsibility include the ability, based on the price reflected in an OFA, to purchase and operate for at least two years a line being abandoned or to subsidize for one year service being abandoned or discontinued?
  • Should the STB alter the process for carriers to provide required financial information to potential offerors, and if so, how?
  • Should the STB require potential offerors to make an “earnest money” payment or escrow payment, or to obtain a bond?
  • Should the Board prohibit OFA filings by individuals or entities that have abused the Board's processes or engaged in other deceitful or abusive behavior before the Board, and if so, what standards should the Board establish in making a prohibition determination?[2]

Continuation of Rail Service

The STB seeks comments on how it may revise its regulations to determine whether a party seeking to subsidize or acquire a rail line through an OFA is making an offer based on its genuine interest and ability to preserve rail service on the line.  The STB is seeking comment on the following questions:

  • Should the STB require that an offeror address whether there is a commercial need for rail service as demonstrated by support from shippers or receivers on the line or through other evidence of immediate and significant commercial need;  whether there is community support for rail service; and whether rail service is operationally feasible?
  • Should the STB establish criteria and deadlines for carriers that want to file requests for exemptions to the OFA process?[3]

Identity of the Offeror

The STB is also seeking comments related to ascertaining the appropriate identity of a potential offeror.  Therefore, the STB asks:

  • Should the STB require multiple parties intending to submit a joint OFA to do so through a single legal entity, such as a corporation or partnership, to facilitate the financial responsibility determination and to clarify the party acquiring the common carrier obligation?
  • Should the STB require an individual filing an OFA to provide his or her personal address?
  • Should the STB require a private legal entity filing an OFA to provide the offeror’s exact legal name, the state under whose laws it is organized, and the address of its principal place of business?[4]

The STB is requesting initial comments by February 12, 2016 and reply comments by March 14, 2016.

[1] Offer of Financial Assistance, 80 Fed. Reg. 77311 (Dec. 14, 2015)
[2] Id. at 77311-12.
[3] Id. at 77312.
[4] Id.

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