STB Retains $4 Million Relief Cap for Small Rate Cases

Transportation Update

Date: December 04, 2014

On December 3, 2014, the Surface Transportation Board (STB) issued a decision requesting comment by December 23 on its proposal for a $4 million relief cap under the simplified rate regulation procedure known as the Three-Benchmark Test. If the STB does not receive any comments, it will adopt its proposal without revision.

In 2012, the STB adopted multiple rules to improve the rate review process, one of which was to increase the limit for relief under the Three-Benchmark methodology for small rate cases. The STB’s request for comment pertains specifically to small rate cases and how much a shipper should be entitled to recover using the Three-Benchmark Test. The STB determines the small rate case relief cap based on the cost to litigate a medium rate case under the Simplified SAC methodology. Through its 2012 rulemaking, the STB determined the cost to litigate a medium rate case to be $4 million, leading it to set the small rate case limit at that amount.

Two railroads appealed to the D.C. Circuit Court disputing the STB’s methodology for deciding that a medium rate case costs $4 million to litigate. They argued that the STB erroneously double-counted certain Simplified SAC inputs in its calculation. The court agreed, but did not vacate the STB’s limit. Instead, the court offered the STB an opportunity to justify its $4 million figure. This decision is the STB’s response.

In its decision requesting comment, the STB agreed that it erred by double-counting certain Simplified SAC costs, but justified retaining the $4 million cap because the amount of money attributable to the double count falls within the STB’s practice of rounding to the nearest million dollars. In other words, the STB believes the amount of money it double-counted was so low that rounding the result causes the relief cap to remain at $4 million. In addition, the STB stated that its goal under this rulemaking is to improve its “rate review process to ensure that it is as fair and accessible as possible to all shippers, even those with relatively smaller cases.”


For more information, please contact:

Karyn A. Booth

Sandra L. Brown

Jeffrey O. Moreno

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