STB Won’t Implement Arbitration Program

A proposed arbitration program by the U.S. Surface Transportation Board to resolve small rate disputes will not be implemented.

The program, which was announced in a rule issued by regulators on Dec. 19, required all seven Class 1 railroads to agree to join the program.

However, four of those carriers asked the Board to stay implementation of the program, saying the Feb. 3 deadline to join or refuse to join the program didn’t give them enough time to review the program’s parameters before having to make a decision.

The STB denied that request on Jan. 24 and the carriers, CSX, Norfolk Southern, Union Pacific and the U.S. operating companies of Canadian National, on Feb. 3 submitted a new request for a stay.

That request was denied by the STB on Feb. 14. In response, three carriers agreed to participate in the program, but four others did not.

Because of the lack of unanimity among the Class 1 carriers, the arbitration program will not be implemented.

CSX told the Board in a filing that although it favored a voluntary arbitration program to settle small rate disputes, it was “concerned about certain aspects of the Arbitration Rule as proposed by the Board.”

STB Won’t Stay Rate Arbitration Proposal

The U.S. Surface Transportation Board has denied a request by four Class 1 railroads to stay implementation of an agency rule issued last month establishing an arbitration mechanism to settle small rate disputes.

The arbitration program would only become effective if all Class 1 railroads agreed to participate.

CSX, Norfolk Southern, Union Pacific, and the U.S. operating subsidiaries of Canadian National asked the board in late December to delay the deadline for Class 1 railroads to agree or disagree to participate in the arbitration program.

The rule establishing the arbitration program is to take effect on Feb. 3.

The STB has described the arbitration program as one of two approaches it is taking to create new “rate reasonableness” proceedings that regulators contend will streamline the process for shippers and railroads to resolve smaller rate disputes.

The STB gave Class 1 railroads 50 days from the publication of the rule in the Federal Register to commit to participating in the arbitration program for five years. The rule was published in early January.

If all seven Class 1 carriers agree to that, they will be exempt from the Final Offer Rate Review rate challenge process.

Smaller rates are defined by the STB as rate disputes worth up to $4 million in relief over two years.

Under the new FORR procedure, if regulators find a rate to be unreasonable, they “will decide the rate by selecting either the complainant’s or the defendant’s final offer, subject to an expedited procedural schedule that adheres to firm deadlines.

Under the arbitration program, Class I rail carriers would commit for a period of five years to arbitrate rate disputes, under a similarly expedited schedule.