Grain shippers: STB’s proposed simplified rate guidelines “inadequate”

Grain shippers: STB’s proposed simplified rate guidelines “inadequate”

Grain shippers: STB’s proposed simplified rate guidelines “inadequate”

   A group of American grain shippers said the federal government’s proposed “simplified guidelines” for challenging unreasonable rail freight rates is “woefully inadequate,” and is urging the agricultural industry to comment on the rulemaking by the Sept. 1 deadline.
   The U.S. Surface Transportation Board proposed the regulation on July 28 to address industry concerns with small rate cases.
   The STB uses the so-called “standalone cost methodology” for both large and small rate challenges. It generally costs from $3.5 million to $5 million to defend a rate case through this process, outweighing any potential of financial return for most small rail shippers.
   Grain shippers say the proposed guidelines won’t improve the rate challenge process that much. The STB would still keep the three “benchmarks” for categorizing rate cases under its simplified guidelines, with eligibility criteria determined based on the “maximum value of the case.” Under this process, the maximum value of the case would be equal to the challenged rail rate minus 180 percent of variable costs, multiplied by five years of annual shipment volumes.
   The STB proposal would offer a decision within 270 days to shippers moving less than $200,000 in freight. If the maximum value of the case is between $200,000 and $3.5 million. the shipper would qualify for what the STB calls a “simplified standalone cost” procedure, which would take about 18 months to resolve. Shippers whose maximum case value exceeds $3.5 million would not qualify for the simplified guidelines, but instead are subject to the full standalone cost methodology.
   According to the Washington-based National Grain and Feed Association’s $5,000-per-railcar calculation, the simplified guidelines would only be available to shippers that move less than 67 railcars over a five-year period, or about 13 railcars a year. The association also found that shippers attempting to qualify for cases involving shipments valued at $200,000 to $3.5 million would have to ship 233 railcars or less a year.
   “Existing (STB) rules are vague,” said Kendell W. Keith, president of the National Grain and Feed Association. “But if the STB’s new proposal were adopted, there would be no doubt that rate relief is beyond the grasp of virtually all rail shippers.”
   The NGFA membership comprises 900 grain, feed, processing, exporting and other grain-related companies that operate about 6,000 facilities. The group is responsible for handling more than 70 percent of the country’s grains and oilseeds.