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10/31/2007



Rail News: Rail Industry Trends

Board proposes regulations governing 'paper barriers' in rail line transactions



The Surface Transportation Board (STB) has unanimously agreed to examine "paper barrier" provisions on a case-by-case basis. The board recently issued a decision per a request by the Western Coal Traffic League to provide a rulemaking on paper barriers.

A common provision in rail line lease or sale agreements, paper barriers restrict a tenant or purchasing railroad from interchanging traffic with carriers other than the lessor or selling carrier.

"Given the variations in the terms of such contractual provisions and in the circumstances in which they arise ... the board is proposing new disclosure rules to ensure advance regulatory scrutiny of any such provisions involving a new sale or lease," STB officials said in the decision.

The board also plans to issue expedited discovery rules to ensure parties challenging an existing interchange commitment can obtain quick access to the carriers' agreement.

Under the proposed regulations, the STB would require parties to identify any interchange commitment and the affected interchange points when seeking board authorization for the sale or lease of a rail line.

The board is accepting comments on the proposed regulations until Jan. 2. Replies will be due Jan. 22.


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