STB task force recommends changing rate review policies

The Surface Transportation Board 's (STB) Rate Reform Task Force issued a report that recommends possible changes to the board's rate review methodologies and policies.

The STB established the task force in January 2018 to recommend improvements to the existing process and propose new methodologies that are more up to date with current transportation issues and trends. To complete its report, the task force met with shippers, carriers, academics, practitioners and other interested parties, according to an STB press release.

The task force report includes several key recommendations, including:
• offering proposals the STB could adopt to reduce the cost and complexity of small rate disputes;
• calling for legislation that would permit the STB to require arbitration of small rate disputes;
• simplifying the existing stand-alone cost test;
• proposing a new rate methodology that considers the cost structure of the defendant carrier instead of a hypothetical stand-alone carrier;
• defining long-term revenue adequacy and three structural remedies based on the following: a rate-increase constraint; reversing the board's long-standing 'bottleneck' decisions; and restoring certain simplifications in the existing simplified SAC process;
• increasing the accessibility of the three-benchmark comparison approach;
and
• seeking simplification of the market dominance determination.

The STB intends to solicit public input on the report in the near future.

Meanwhile, the Competitive Enterprise Institute (CEI) sent a letter signed by 20 "free market" groups to the STB urging it to withdraw its proposed competitive or "reciprocal" switching rule.

Competitive switching refers to a situation in which a railroad that has physical access to a specific shipper facility switches rail traffic to the facility for another railroad that does not have physical access. The second railroad pays the railroad that has physical access, typically in the form of a per-car switching charge.

In the letter, the groups urge the board to withdraw its proposed rule.

"We believe the future of freight-rail investment and quality service is at risk from unnecessary, harmful government restrictions," CEI officials said in a statement about the letter.