STB issues final rule on market dominance

The Surface Transportation Board (STB) yesterday announced it adopted a final rule to establish a streamlined approach for pleading market dominance in rate reasonableness proceedings.

The final rule provides an option for simplifying the market dominance inquiry, which can be costly and time-consuming especially in smaller cases.

The STB in September 2019 issued a notice of proposed rulemaking that laid out factors that could establish a prima facie showing of market dominance. After receiving numerous comments on the proposed rule, the board adopted the rule with modifications, STB officials said in a press release.

The final rule sets for the following seven factors that a complainant must demonstrate:
• The movement has a revenue-to-variable cost ratio of 180 percent or greater;
• The movement would exceed 500 highway miles between origin and destination;
• There is no intramodal competition from other railroads;
• There is no barge competition;
• There is no pipeline competition;
• The complainant has used trucks for 10 percent or less of its volume (by tonnage) subject to the rate at issue over a five-year period; and
• The complainant has no practice buildout alternative (regardless of transportation mode) due to physical, regulatory, financial or other issues.

Complainants who can't make the showing under those factors still would have the option to use the non-streamlined market dominance approach to prove market dominance, STB officials said.

Under either approach, defendant railroads would continue to have the opportunity to rebut a complainant's evidence, they added.

The STB also announced that it would soon initiate a proceeding to further explore the adoption of various commodity-specific thresholds, including for chlorine and agricultural products.

The final rule, which can be read here, will go into effect Sept. 5.