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Regulatory agency mulls rulemaking option for rail rate methodologies

The Surface Transportation Board (STB) is considering initiating a more formal review of how it  resolves rail rate disputes.

The Board anticipates considering formal actions later this summer, including a rulemaking procedure, that would aim to improve rate review methodologies and processes, according to a June 4 letter to members of the U.S. Senate Committee on Commerce, Science and Transportation.

“As we have each publicly stated, a top priority is reviewing the Board’s rate review and processes in order to make them more accessible, efficient and transparent, including for small rail rate customers who do not currently believe they have sufficient rate review option available to them,” said the STB to Senate Commerce Committee chairman Roger Wicker (R-Mississippi), Transportation and Safety Subcommittee chairman Deb Fischer (R-Nebraska), Transportation and Safety Subcommittee ranking member Tammy Duckworth (D-Illinois), Senator John Thune (R-South Dakota) and Senator Amy Klobuchar (D-Minnesota).

Possible issues that the STB could address in its review later this summer relate to recommendations that board staff made in a report published in April.

The issues include how the STB should use of “final offer” principles in rate cases, which could be used for smaller disputes; how to simplify determining what market dominance looks like; whether to modify the waybill sample to increase the number of observations that can be used in certain rate review methodologies; how to simplify the stand-alone cost test; and how to craft policy that leads to defining long-term revenue adequacy. The STB met in May to discuss these issues and the report’s recommendations. Summaries of what issues the Board discussed are here under “Nonpublic Collaborative Discussions Meeting Summaries in Pre-Docket and Non-Docketed Matters.”

The Board is likely to push forward some issues ahead of others, although for now it appears that many of the report’s recommendations are on the table, an observer said. One question will be whether the STB chooses to draft regulations for some of these issues, including the ones related to final offer arbitration and long-term revenue adequacy.

Shippers generally reacted positively to the recommendations in the April report, while the Association of American Railroads had a more mixed reaction. The trade association supported the report’s treatment of the stand-alone cost test but disagreed with the report’s recommendations on revenue adequacy, which addresses a railroad’s profitability.

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Joanna Marsh

Joanna is a Washington, DC-based writer covering the freight railroad industry. She has worked for Argus Media as a contributing reporter for Argus Rail Business and as a market reporter for Argus Coal Daily. Her transportation background extends to writing about automotive fuels and additives for Hart Energy Publishing and producing summaries on advanced transportation research for a federal government agency. In her spare time, she likes writing travel articles, taking photographs, and singing and dancing. She has a bachelor's degree in music and political science from Barnard College, a master's in journalism from Boston University, and a master's in musical theater from Boston Conservatory.

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