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According to STB, the new procedure also may include further streamlining measures such as mandatory initial disclosures by the parties, elimination of discovery or limits on discovery, and limits on the length of evidentiary submissions.
 
WASHINGTON, D.C., U.S. — The U.S. Surface Transportation Board (STB) released an Advance Notice of Proposed Rulemaking (ANPR), which considers a new, streamlined procedure to resolve small rate disputes between shippers of all commodities and Class I railroads.

 

Under the procedures outlined in the advance notice, the board would design a “comparison group” of similar rail shipments against which to judge the reasonableness of the rate being challenged. Having the board design the comparison group, rather than the parties, would streamline this procedure as compared to the board’s existing Three-Benchmark methodology, STB said. And, rather than receiving rebuttal submissions and closing briefs – as in some of the rate case procedures available now – the ANPR envisions a final evidentiary hearing before board staff.

According to STB, the new procedure also may include further streamlining measures such as mandatory initial disclosures by the parties, elimination of discovery or limits on discovery, and limits on the length of evidentiary submissions. These measures also would reduce litigation expenses and improve the pace of the rate challenge.

The board said it is considering a preliminary screen to ensure that the challenged traffic meets threshold criteria for review, which could allow for more streamlined market dominance and rate reasonableness presentations than in other rate case methodologies. Also, due to the abbreviated nature of the process, the board would limit the amount of relief available.

The National Grain and Feed Association (NGFA) said it will "carefully examine" the advance notice of the proposed new rail rate reasonableness methodology unveiled on Aug. 31 by the STB intended to be used by grain and other commodity shippers to challenge unreasonable rail rates.

NGFA president Randy Gordon
Randy Gordon, president of the NGFA.

"We are particularly gratified that the STB recognizes and acknowledges that its three existing rail rate review methodologies present 'accessibility challenges' for grain and other commodity shippers, and that the litigation costs required to bring a rate case under even the most simplified existing method can quickly exceed the value of the damages involved in the case," said Randy Gordon, president of the NGFA. "We appreciate the obvious time and effort that the STB put into developing the concepts contained in its advance rulemaking notice, and the fact that it includes several recommendations made previously by the NGFA. We will be carefully examining these concepts and plan on being fully engaged in providing constructive input to the agency as it proceeds with this rulemaking."

The NGFA said it has been an active participant in a previous STB proceeding that focused on the utility of the agency's existing rate methodologies for grain rate cases — a proceeding that laid the groundwork for the agency's new rulemaking. As part of that previous proceeding, the NGFA in 2015 developed and proposed to the STB a totally new rate methodology, called the "agricultural commodity maximum rate methodology," that would create a more accessible, streamlined, cost-effective and workable process for grain shippers to challenge unreasonable rates, the NGFA said.

According to the NGFA, STB's current rate-reasonableness standards are inappropriate for grain given the nature and characteristics of rail movements of agricultural commodities, the multiple and varying origin-and-destination pairs for agricultural shipments and volumes, and the nature of railroads' pricing practices, under which uniform rates are imposed across-the-board for certain commodities or types of traffic.

“The new approach described in today’s decision is intended to create a cost-effective pathway to resolve small rate disputes,” said Daniel R. Elliott, chairman of the STB. “It has been a key objective of my tenure as chairman to re-invent the rate case process, and today’s decision is a significant part of that effort. I would like to thank the agricultural community for focusing attention on this important issue, and also recognize the contributions of STB staff.”

Opening comments on the STB's advance notice of proposed rulemaking are due Nov. 14, with reply comments due Dec. 19.