AAR: STB's proposed rate review rule is 'unlawful'

The Association of American Railroads (AAR) yesterday called on the Surface Transportation Board (STB) to withdraw its "fatally flawed" proposed rate review rule.

In comments filed with the board, AAR officials said the proposed rule is unlawful.

"The STB's Final Offer Rate Review proposed rule is fatally flawed and exceeds the agency’s authority in determining rate reasonableness,” said AAR President and Chief Executive Officer Ian Jefferies in a press release.

As proposed, the final offer proposals "abdicates the agency’s statutory responsibility to judge the reasonableness of rail rates and abandons careful deliberation vital to a balanced regulatory structure," Jefferies said.

The proposed rule would establish a new rate review procedure that would deny shippers and railroads alike their right to a full hearing as required by law and represents a radical departure from the market-based, economic principles that have traditionally guided the Board’s maximum rate determinations, AAR officials said.

The model is a winner-take-all approach that disregards due process rights and undermines the important principle of regulatory predictability, they added.

Also yesterday, AAR officials filed comments in the STB's streamlined market dominance approach proceeding. On Dec. 12, the industry will make its case on the board's methodology for determining revenue adequacy, which the STB uses to assess the financial health of individual railroads.