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.”

AAR Takes STB Small Rate Dispute Rule to Court

The Association of American Railroads is challenging in court a recent U.S. Surface Transportation Board ruling on small rate cases.

The trade association asked the U.S. Court of Appeals for the District of Columbia to review the rule which requires all seven Class 1 railroads to agree to an arbitration process before it can become effective.

The STB recently turned down a request by four Class 1 carriers to stay implementation of the rule.

STB Won’t Reconsider Rate Reasonable Rule

The U.S. Surface Transportation Board last week denied two petitions seeking reconsideration of agency rules that establish a streamlined approach for pleading market dominance in rate reasonableness proceedings.

STB adopted the rules more than two years ago.

At the time, the STB said, “if demonstrated by a complainant, [it] would constitute a prima facie showing of market dominance.”

The factors the STB said it would consider in such cases include 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 truck for 10 percent or less of its volume (by tonnage) subject to the rate at issue over a five-year period; the complainant has no practical build-out alternative due to physical, regulatory, financial, or other issues (or combination of issues).

The petitions for reconsideration were filed by several trade organizations representing railroad shippers.

Their petition claimed the STB “committed material error regarding four aspects of its final rule adopting the streamlined approach.

Also seeking reconsideration was the Association of American Railroads.

In denying the petitions for reconsideration, the STB said the petitioners had “failed to demonstrate material error, but instead merely disagree with the Board’s decision on these issues.”

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.

STB Issues Small Rate Dispute Rules

The U.S Surface Transportation Board adopted this week two rules pertaining to rate reasonableness rate case procedures.

The agency said the rules are designed to provide two streamlined approaches for shippers and railroads to resolve smaller rate disputes.

One procedure is a voluntary arbitration program while the other is a new process for rate challenges known as “final offer rate review.”

The STB said both rules are designed to “substantially improve shippers’ access to rate reasonableness reviews for smaller rate disputes.”

Through the new rate reasonableness procedures, the voluntary arbitration program will take effect only if all seven Class Is commit to participating in the program for five years and do so within 50 days of the date of publication of the final rule in the Federal Register.

The STB said if all carriers do so, they will be exempt from the FORR procedure.

When the rulemaking process began in 2019, five Class I carriers filed a joint petition urging the board to exempt them from the FORR procedure.

In return, the Class Is agreed to resolve rate challenges through binding arbitration, a methodology in which the carriers had previously refused to participate for many years.

In November 2021, the board advanced rulemakings in both FORR and the establishment of a voluntary arbitration program. The most recent decision is the culmination of those actions.

Both review mechanisms are limited to rate disputes worth up to $4 million in relief over two years. Under the new FORR procedure, if the board finds a rate to be unreasonable, it 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.

STB Proposes Making Reporting Data a Rule

The U.S. Surface Transportation Board is proposing making permanent the voluntary practice of data reporting by Class I carriers.

The carriers report the information about tare weight, and loss and damage through the Association of American Railroads. The data is used by the STB’s Uniform Railroad Costing System.

In a news release, the STB said its proposed new rule would give Class I carriers a choice of whether to provide tare weight and L&D data through AAR or file the data individually.

Comments on the proposed rule due by June 13 with replies due by June 2.

STB Mulls Changing Emergency Service Rules

The U.S. Surface Transportation Board is considering amending its emergency service regulations “to provide relief for shippers in situations that require immediate relief.”

The agency said in a proposed rulemaking notice that it will consider changes in how shippers can seek an emergency service order, which is defined as “designed to preserve rail service where there has been a substantial rail service issue or failure that requires immediate relief.”

The rulemaking notice also indicated the STB will consider acting on its own to issue an emergency service order rather than waiting for shippers to seek one.

Other changes in procedure the Board will consider include modifying the informational requirements for parties in emergency service proceedings; shortening the filing deadlines in emergency service proceedings and establishment of a timeframe for Board decisions; and establishing an accelerated process for certain acute service emergencies.

In its rule making notice, the STB said these changes will enable it “to order temporary relief in emergency situations more quickly and effectively, to more rapidly ensure that localized problems do not spread to other parts of the network, and to give parties involved in emergency situations (both rail carriers and shippers) more certainty on the resolution of those issues.”

The STB is taking public comment on the proposed rule changes through May 23. Replies to those comments will be due by June 6.

STB Won’t Extend Reciprocal Switching Proceeding

The U.S. Surface Transportation Board has denied a request by the Association of American Railroads to delay the proceedings in a reciprocal switching inquiry.

The STB said on Friday it would continue its planned schedule for the review, including public hearings that begin on March 15.

AAR had sought to extend the schedule for the proceeding by 75 days.

In its decision, the STB said it found “that the amount of notice and time for preparation provided was sufficient and that AAR’s alternative request for extension of the comment deadline would hinder the ability of the Board and the hearing participants to review parties’ submissions before the hearing.”

STB Denies Bid to Delay Arbitration Rulemaking

The U.S. Surface Transportation Board said this week it will continue a proceeding focused on using voluntary arbitration to resolve small rate cases.

The decision was made in denying a request from various shipper trade groups to delay the rule-making process in the case.

The shipper groups sought to delay the rule-making process until Class 1 railroads “state whether they would participate in the proposed program if arbitrators are permitted to consider revenue adequacy, as has been proposed by the Board.”

The STB said what the shippers are seeking is premature because it seeks to require rail carriers to pledge to participate in the proposed arbitration program based solely on the single issue of revenue adequacy before the record has been fully developed.

The rulemaking process regarding voluntary arbitration was launched in 2020 upon the request of five Class 1 railroads: Canadian National, CSX, Kansas City Southern, Norfolk Southern and Union Pacific.

The shippers groups seeking to delay the rule-making process included the American Chemistry Council, Corn Refiners Association, National Industrial Transportation League, The Chlorine Institute, and The Fertilizer Institute.

The STB said it will continue seeking public comment on the proposed rule through Jan. 14, 2022. It expects railroads to state their position on the revenue adequacy issue in their comments to the Board.

Reply comments will be accepted through April 15, 2022, while ex parte communications regarding the proposed rule will be are allowed until March 28, 2022.

STB Modifies Emergency Trackage Rights Rule

The U.S. Surface Transportation Board this week approved a final rule regarding a new class exemption for emergency temporary trackage rights.

The new rule ends a 30-day notice period in certain circumstances which STB officials said will allow for faster authorization of trackage rights in response to an unforeseen event that closes a rail route.

The rule was sought by the Association of American Railroads, which wanted to end the 30-day waiver in favor of a five-day process.