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STB issues long-awaited rail freight rate recommendations
 

By TIM ALEXANDER

WASHINGTON, D.C. — A potential new slate of freight rail rate and review standards under consideration by the U.S. Surface Transportation Board (STB) has the support of many in agriculture, while drawing the ire of Class 1 railroads.

The STB’s Rate Reform Task Force issued a report recommending possible changes to the board’s rate review methodologies and policies, bringing them more into line with current transportation issues and trends.

Proposals the task force put forth include measures to reduce the cost and complexity of rail rate disputes, encourage legislation that would permit the STB to require arbitration of small rate disputes, and modify the competitive or “reciprocal” switching rule that allows railroads to assess a per-car switching charge when transported commodities must be switched from one shipper to another en route.

“After reviewing years of decisions, filings, and reports, the Task Force reached out to the transportation community through informal meetings with representatives of shippers and carriers, as well as academics, practitioners, and other interested parties,” stated the STB Rate Reform Task Force staff report detailing the recommendations, which were issued April 25.

“Through frank, off-the-record conversations, the Task Force developed a sense of how the diverse components of the transportation community view the board’s administration of the rate review process, and of where it must change.”

The National Grain and Feed Assoc. (NGFA), which has offered rail rate reform recommendations to the STB, said it was clear from the task force’s findings that input made by the NGFA during the STB’s yearlong process of reaching out to rail customers were taken to heart.

The group said it was pleased that the report also contained several innovative concepts that “warrant consideration” as the STB and stakeholders shape the new rules. Rail rate regulation and reform concepts supported by the NGFA and adopted into the STB task force recommendations include:

•Procedural limitations to constrain the cost and complexity of rate cases

•Including a comparison group of similar traffic to demonstrate that a given railroad’s rate is unreasonable

•Allowing all rates for specific types of traffic to be evaluated in a rate challenge

•Imposing strict timelines that could lead to cases being decided within 90 days

•No limit on the number of rate challenges that can be brought by an individual rail customer

•Reversing the STB’s “bottleneck” decisions so rail customers can direct certain revenue-adequate carriers to deliver movements to a feasible interchange of the shipper’s choice

•Significant streamlining of the STB’s most stringent rate-challenge methodology, the Stand Alone Cost (SAC)

The Fertilizer Institute (TFI) President and CEO Chris Jahn also offered praise for the STB task force and its recommendations, noting that half of all U.S. fertilizer moves via rail.

“With rate review cases costing an average of $5 (million) to $10 million and taking three to five years to litigate, the current process clearly does not work. Since 2005, rates for anhydrous ammonia, an essential fertilizer used by farmers, have spiked over 200 percent. Modernizing oversight of rail rates is much needed and long overdue,” said Jahn.

Not so, according to the Competitive Enterprise Institute (CEI), which sent a letter signed by 20 “free market” groups to the STB urging it to withdraw its proposed reciprocal switching modifications, among other recommendations.

“We believe the future of freight rail investment and quality service is at risk from unnecessary, harmful government restrictions,” said the CEI, which is a self-described “libertarian think-tank” promoting the principles of limited government.

STB Chair Ann Begeman established the Rail Rate Reform Task Force in January 2018 to recommend improvements to existing rate review processes and propose new rate-review methodologies. The NGFA commended Begeman, who in the past has cited rail rate reform as her top priority, for her efforts.

As for potential reform, the “only option not on the table is one where we do nothing,” she said.

5/15/2019