STB Issues Final Rule on Market Dominance Pleadings

Transportation Update

Date: August 05, 2020

On July 31, the Surface Transportation Board (Board) issued a final rule establishing a streamlined approach for pleading market dominance in rate reasonableness proceedings. The final rule, which is part of a broader initiative to reform and streamline the Board’s rate review processes, will be effective on September 5, 2020.

In rate reasonableness proceedings, the Board may determine if a rate is reasonable only after it finds that the rail carrier has market dominance over the transportation to which the rate applies. The final rule provides that a complainant may elect to pursue a streamlined market dominance approach, in which case it must demonstrate that the challenged movement satisfies all the following prima facie factors regarding the traffic subject to the challenged rate (and failure to meet all the factors prevents the complainant from proving market dominance using non-streamlined evidence):

  • An R/VC ratio of 180% or greater. This is a statutory requirement.
  • Movement length greater than 500 highway miles. The Board adopted this threshold based on its finding that 500 highway miles is a reasonable calculation of the maximum distance a truck can travel in a single day, thereby establishing that truck competition does not exist for longer movements. The Board also expressed its intent to initiate a proceeding to determine if different thresholds should apply to some commodities.
  • Absence of intramodal competition. The complainant must submit a verified statement from an appropriate official attesting that the complainant does not have practical access to another railroad.
  • Absence of barge competition. The complainant must submit a verified statement from an appropriate official attesting that the complainant does not have practical access to barge competition. Lack of access to interconnected navigable waterways or lack of barge facilities will be considered by the Board in determining whether the prima facie factor has been met.
  • Ten percent or less of recent movements by truck. The complainant cannot have used trucks for more than 10% of its volume (by tonnage) subject to the rate at issue over a five-year period. A transload shipment should be counted as truck volume when it is for the same origin-destination pair as the challenged rate and involves a railroad other than the defendant.
  • No practical build-out option. The complainant must submit a verified statement from an appropriate official that the complainant has no practical build-out alternative to any other transportation alternative due to physical, regulatory, financial or other issues (or combination of issues).
  • Absence of pipeline competition. A complainant can demonstrate that this factor is met through a verified statement from an appropriate official that the complainant does not have practical physical access to pipeline competition.

In addition to the prima facie factors detailed above, the Board adopted procedural rules to support its streamlined approach. A defendant is permitted to file a reply to a complainant’s streamlined evidence that addresses the prima facie factors and any other issues relevant to market dominance. A complainant may either submit rebuttal evidence on market dominance issues or request that an administrative law judge hold a telephonic evidentiary hearing in lieu of a written rebuttal. Defendants’ replies and complainants’ rebuttal filings are each limited to 50 pages, inclusive of exhibits and verified statements.

FOR MORE INFORMATION

For more information, please contact:

Karyn A. Booth
202.263.4108
Karyn.Booth@ThompsonHine.com

Sandra L. Brown
202.263.4101
Sandra.Brown@ThompsonHine.com

Jeff Moreno
202.263.4107
Jeff.Moreno@ThompsonHine.com

David E. Benz
202.263.4116
David.Benz@ThompsonHine.com

Jason D. Tutrone
202.263.4143
Jason.Tutrone@ThompsonHine.com

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