The Surface Transportation Board is going ahead with two rulemakings aimed at resolving rail rate disputes involving relatively smaller amounts of money.
One is a notice of proposed rulemaking to establish a voluntary arbitration program for small rate disputes, while the other is a supplemental notice for a proposed rulemaking on the final offer rate review (FORR) procedure.
Reviewing the two rulemakings concurrently allows the board and stakeholders to compare them before taking a final action on either, the board said in its Monday decision on the voluntary arbitration program. STB also issued a separate decision regarding the FORR procedure.
The concurrent review will allow the board and stakeholders “to consider the pros and cons of [1] enacting an arbitration process that would effectively exempt participating carriers from FORR challenges, as Petitioners request, or [2] enacting FORR and making it available regardless of whether or not the Board adopts a new arbitration program, as many shipper interests have urged,” the board said in its voluntary arbitration program decision.
The board’s Rate Reform Task Force has been studying this issue to come up with a way to best provide a rate review process for small cases, STB said in a release.
The first rulemaking is in response to a joint petition by the Class I railroads asking STB to modify existing arbitration rules in order to allow the voluntary arbitration program for small rate cases. The existing arbitration program would still be available.
The Class I railroads say their proposed arbitration program would provide meaningful access to rate review for small rate cases because it would be low-cost and consistent with statutory and economic principles, STB summarized in its Monday decision on the issue. But shippers say they are concerned that participating in the voluntary arbitration program would make a Class I railroad exempt from the FORR procedure, according to the board.
The other rulemaking pertains to modifications made to the new rate case procedure that were proposed in a September 2019 notice of proposed rulemaking on the FORR.
The board is proposing a relief cap of $4 million in this rulemaking. Cases involving a relief cap of $4 million or less would be deemed a small rate dispute.
There have been two methodologies that shippers may use to dispute rates: the “three-benchmark” methodology and the simplified stand-alone costs (SAC) methodology. But STB noted that “for smaller disputes, the litigation costs required to bring a case under the Board’s existing rate reasonableness methodologies can quickly exceed the value of the case.”
“As proposed, FORR would allow limited discovery, with no litigation over discovery disputes,” STB said. “FORR could only be used if the complainant elected to use the streamlined market dominance approach” described in another proceeding.
The complainant would bear the burden of proof showing that the defendant carrier has market dominance over the transportation to which the rate applies and that the challenged rate is unreasonable, STB said.
Comments on both rulemakings are due by Jan. 14, with replies due by March 15. Communications on matters related to both rulemakings are allowed until Feb. 23, STB said.
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