Surface Transportation Board proposes rule reforms, proceeding to provide captive shippers 'rate relief'

Yesterday, the Surface Transportation Board (STB) announced two initiatives aimed at exploring ways to further protect captive shippers from “unreasonable” rail rates, board members said in a prepared statement.

The STB proposes to reform its rules on resolving rate disputes to ensure all captive shippers have “a meaningful way” to challenge rates, they said. In addition, the board is taking steps to consider a proposal submitted by the National Industrial Transportation League (NITL) to increase rail-to-rail competition.



The rate rules proposal would remove the limitation on relief for cases brought under the Simplified-Stand Alone Cost alternative.

“Our goal is to encourage shippers to use a simplified alternative … that is economically sound, yet provides a less complicated and less expensive way to challenge freight rates by discarding the requirement that shippers design a hypothetical railroad to judge a railroad's real-world rates," STB member said in a decision issued yesterday.

The board also proposes to double the relief available to shippers under its other simplified approach, the “three-benchmark” method; make technical changes to the Full-Stand Alone Cost method and simplified rate procedures; and raise the interest rate that railroads must pay on reparations to shippers if railroads are found to have charged unreasonable rates. The STB is accepting opening comments on the rule reform proposals until Oct. 23. Replies are due Dec. 7 and rebuttals are due Jan. 7, 2013.

The STB also is beginning a proceeding to explore NITL’s competitive-access proposal, under which certain shippers located in terminal areas that lack “effective transportation alternatives” would be granted access to a competing railroad if there is a working interchange located within 30 miles.

“We continue to explore whether there are policy changes the board could adopt that would promote more rail-to-rail competition and thereby allow competition and the demand for services to establish reasonable rates for transportation by rail, and thus minimize the need for federal regulatory control,” STB members said.

The board is seeking public input on the proposal’s impact on rail shippers’ rates and service, including shippers that would not benefit from NITL’s proposal; effects on the rail industry, including its financial condition and network efficiencies; and methodologies for the access price that would be used in conjunction with competitive switching.

“We invite interested commenters to perform a study of the competitive access proposal submitted by NITL, and to submit reports of their studies’ findings or other appropriate information and recommendations,” STB members said.

Opening comments on the proposal are due Nov. 23 and replies are due Feb. 21, 2013.

Meanwhile, the STB also announced it’s been ranked the top small federal agency for innovation by the Partnership for Public Service in its July 2012 “Best Places to Work in the Federal Government® Analysis: Achieving a Culture of Innovation” report. The board attributes the top ranking to the encouragement of employee suggestions during weekly open-door meetings with Chairman Dan Elliott, and recognition of the best staff proposals associated with the STB's “genius" award, which is presented annually.