Posts Tagged ‘STB rules making’

CSX, CN Seek to Block New STB Rate Rule

January 11, 2023

CSX, Canadian National and Union Pacific have gone to court to try to block implementation of a U.S. Surface Transportation Board rule seeking to streamline the settlement of small rate disputes with shippers.

CSX filed suit in the U.S. Court of Appeals for the 11th Circuit challenging an arbitration process that the STB plans to launch as part of the new rules, which the agency said are designed to make it easier, faster and less expensive for shippers to initiate cases seeking up to $4 million in relief over two years.

The rules were adopted in December as part of a new process called Final Offer Rate Review. The rule drew applause from shippers but was attacked by the Association of American Railroads as unworkable.

UP filed a similar lawsuit in the appeals court for the Eighth Circuit seeking to block the STB rule. CN’s challenge of the rule was filed in the Seventh Circuit appeals court by its U.S. subsidiaries, Illinois Central and Grand Trunk Western.

A sticking point in the small rate case rules is the arbitration component. STB wants all Class 1 railroads to agree to binding arbitration while the railroads have called for voluntary arbitration.

The AAR has argued that the Final Offer Rate Review process exceeds the agency’s legal regulatory authority.

AAR s position is that the effect of the new rule is that regulators will choose and impose the rate proposed by the shipper or the rate offered by the railroad.

The trade association also has been critical of the requirement that all Class 1 railroads must agree to participate.

The STB for its part has sought to frame the new rule as striking a balance between competing interests.

STB Finds 5 Class 1s Revenue Adequate

October 5, 2020

Five Class 1 railroads operating in the United States were revenue adequate in 2019 the U.S. Surface Transportation Board has determined.

The railroads included Norfolk Southern, CSX, BNSF, Canadian Pacific’s Soo Line Corporation and Union Pacific.

To be deemed revenue adequate a railroad must achieve a rate of return on net investment equal to at least the current cost of capital for the railroad industry in a given year.

The STB said that in 2019 the rate of return figure was 9.34 percent. It said all five Class 1 railroads it identified exceeded the agency’s calculation of the industry’s cost of capital.

In another development, the STB said it is seeking public comment on a proposed approach developed by its Office of Economics for use in considering class exemption and revocation issues.

The proposed approach would be used to help the STB evaluate market conditions using a variety of metrics related to rail competition.

In a news release, the agency said the proposal would serve as a way to evaluate market conditions governing a commodity, including changes in conditions over time.

 However, the STB said it would not serve as a mechanical test for determining whether the commodity exemptions at issue should be revoked or whether a new exemption should be issued.

Public comment is due by Dec. 4 and replies to initial comments are due by Jan. 4, 2021.

STB Issues Final Rule Regarding Rate Cases

August 5, 2020

The U.S. Surface Transportation Board this week adopted a rule designed to streamline its approach to cases in which one or more parties is arguing market dominance led to an unreasonable rate.

In a news release, the STB said that market dominance cases can be costly and time-consuming, especially in smaller cases.

The rule adopted this week, which becomes effective Sept. 5, was initially proposed in September 2019 and lays out the factors

that could establish a prima facie showing of market dominance. Those 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 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.

The STB said complainants who provide evidence of one or more of these

would have the option to use the non-streamlined market dominance approach to prove market dominance.

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.

STB Change Reporting Rules for Chemicals, Plastics

May 22, 2020

The Surface Transportation Board has decided to change its railroad performance data reporting rules to include chemical and plastics traffic as a distinct reporting category to the Class I railroads’ weekly reporting for the “cars-held” metric.

In a news release, the STB said the cars-held metric tracks the average number of loaded and empty railcars that have not moved for 48 hours or longer.

Class I railroads already report service performance metrics for a range of commodities on a weekly, semi-annual, and occasional basis.

The STB said the additional data will allow it to be better positioned to monitor chemicals and plastics traffic and detect and mitigate service issues affecting these commodities.

The new reporting rule takes effect on July 20.

AAR Rips Proposed STB Rate Review Rule

November 14, 2019

The Association of American Railroads has characters a proposed rate review rule being advanced by the U.S. Surface Transportation Board as unlawful.

The AAR wants the agency to withdraw the rule because it said it exceeds STB’s authority in determining rate reasonableness.

In a statement, AAR President and Chief Executive Officer Ian Jefferies said the rule “abdicates the agency’s statutory responsibility to judge the reasonableness of rail rates and abandons careful deliberation vital to a balanced regulatory structure.”

AAR contends that the 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.

STB Proposes New Rate Review Rules

September 14, 2019

The U.S. Surface Transportation Board this week has proposed a new set of rules that would govern rate review procedures.

The proposed rules would establish a new rate review option for smaller cases, the final offer rate review, which would use procedural limitations to contain the costs and complexities of a rate case.

The board also has proposed a streamlined market dominance process that could be used in any rate review proceeding.

In a news release, the STB said these changes are designed to make the procedures “more accessible, efficient, and transparent, including for small customers.”

Public comments on the proposed rule changes are due by Nov. 12, and replies are due by Jan. 10, 2020.

The rule changes stem from a Rate Reform Task Force that issued recommendations in April.

The task force raised questions about the STB’s revenue adequacy process that will be addressed at a Dec. 12 hearing.

Among other recommendations, the task force suggested the board establish a definition of long-term revenue adequacy and consider providing different remedies for rate cases involving carriers that are long-term revenue adequate.

Railroads will be given the opportunity to testify during that hearing on the position of the Association of American Railroads that revenue adequacy reflects the industry’s financial soundness and stability under the current regulatory scheme and must not be a trigger for new government intervention and rate regulation.

STB Changing Rules in Certain Cases

December 1, 2017

New procedures announced by the U.S. Surface Transportation Board this week are designed to streamline the process of settling disputes between shippers and carriers in stand-alone rate cases, the agency said.

Among the changes is the implementation of a new “pre-complaint period” to allow parties to mediate their disagreement without litigation and preparation for litigation.

The STB also made changes in discovery and the submission of evidence processes.

The agency cited the Surface Transportation Board Reauthorization Act as authority for revamping its rules.

Rules are also expected to be changed for proceedings that affect a larger number of cases.