STB Seeks Comments on New Rail Rate Case Methodology

Transportation Update

Date: September 02, 2016

On August 30, the Surface Transportation Board (STB) issued an Advance Notice of Proposed Rulemaking (ANPR) in Ex Parte No. 665 (Sub-No. 2), Expanding Access to Rate Relief. In it, the STB requests comments regarding the development of a new, more affordable rail rate reasonableness review process for small disputes. The proposed methodology would be accessible to shippers of any commodity, and the STB is considering limiting it to shippers on Class I railroads only. Comments are due by November 14, 2016, and reply comments are due by December 19, 2016. If adopted, this methodology would add another option for challenging rail rates to the three existing methods: Stand-Alone Cost (SAC), Simplified-SAC and Three-Benchmark.

The proposed new methodology is a variation on the Three-Benchmark approach for small cases. Key elements of the proposed methodology include:

  • Restricting eligibility to shippers that are most likely to be captive and subject to rates that are outliers, based on certain objective criteria, such as length of haul and revenue-per-ton-mile.
  • A rate comparison analysis similar to that used in Three-Benchmark cases, but the initial comparison group would be developed by the STB instead of the parties, based on objective criteria such as length of haul, shipment type and commodity identified by the five- or seven-digit STCC. The parties may propose modifications to the comparison group in their evidence. The STB also has proposed expanding the universe of comparison movements to include both contract movements and movements on other, non-defendant railroads.
  • Procedural modifications to expedite and streamline the comparison-based assessment, such as limiting discovery, mandatory disclosures, page limits and employing an evidentiary hearing in lieu of rebuttal evidence.
  • Limiting the relief available under the new method, which the STB presumes should be lower than the current Three-Benchmark relief cap of $4 million over five years.

These proposals respond to criticisms regarding the accessibility of rate regulations to the vast majority of rail shippers, for whom the litigation costs incurred in challenging a rate under existing rate reasonableness methodologies can quickly exceed the value of the case.


For more information, please contact:

Karyn A. Booth

Sandra L. Brown

Jeffrey O. Moreno

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