| [Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index] |
-----------------------------***-----------------------------
>From the Surface Transportation Board, Washington, D.C.
-----------------------------***-----------------------------
The Surface Transportation Board (Board) today issued a final decision
creating new procedures designed to ensure that small and medium-sized
freight rail rate disputes can be resolved in a simplified, expedited and
affordable manner.
The Board's decision allows freight rail customers with small shipments to
obtain an award of up to $1 million in relief within eight months of
filing a complaint. The filing fee for this simplified "Three Benchmark"
process is $150. The Board's decision also creates a separate new rate
dispute resolution process aimed at rate disputes involving mid-sized rail
shipments. Pursuant to this alternative "Simplified Stand Alone Cost"
process, freight rail customers can obtain an award of up to $5 million in
relief within 17 months of filing a complaint. The Board's decision
allows freight rail customers to choose which rate dispute resolution
process they would like to use. In an effort to minimize litigation, the
Board will require mediation in all rail rate disputes.
In announcing the decision, Board Chairman Charles D. Nottingham stated:
"These two new dispute resolution procedures open our doors to the more
than 70% of rail traffic that until now has been effectively blocked from
Board review due to the complexity and resulting high costs of the Board's
previous procedures. This decision marks a major step forward in the
Board's ongoing efforts to deliver meaningful reforms aimed at making the
STB more accessible, transparent, and efficient."
The Board's unanimous, bipartisan decision marks a milestone in a 12-year
controversy regarding smaller rail rate case dispute resolution
procedures. In 1995, Congress directed the Board to establish a
simplified and expedited method for resolving smaller rail rate disputes.
As a result, the Board adopted procedures in 1996 that were criticized as
overly vague and expensive for rail customers to use. The Board held
hearings aimed at improving the smaller rate dispute resolution process in
2003, 2004 and 2007, before arriving at today's decision.
The STB's decision in Simplified Standards For Rail Rate Cases, STB Ex
Parte No. 646 (Sub-No. 1)(
http://www.stb.dot.gov/decisions/readingroom.nsf/WebDecisionID/38326?OpenDocument
)
, is available for viewing and downloading via the Board's Web site at
http://www.stb.dot.gov, under "E-Library," then under "Decisions &
Notices," beneath the date "9/5/07." A printed copy of the Board's
decision also is available for a fee by contacting ASAP Document
Solutions, 9332 Annapolis Rd., Suite 103, Lanham, MD 20706, telephone
(202) 306-4004 or via asapdc@xxxxxxxxxxxx A fact sheet is attached.
###
_______________________________
STB DECISION SIMPLIFYING THE PROCESS FOR RESOLVING SMALL AND MEDIUM-SIZE
RAIL RATE DISPUTES
STB Ex Parte No. 646 (Sub-No. 1)
FACT SHEET
· Provides access to the rate reasonableness process for all sizes of
rail rate disputes, and in particular, to the estimated 73% of
challengeable rail traffic for which the large rate case process would be
financially impracticable.
· Requires, for all rail rate disputes, mandatory, nonbinding mediation—a
mechanism that has been used successfully in previous cases to arrive at
negotiated settlements.
· Allows rail customers to choose the methodology that is most
appropriate for consideration of their complaints:
o A rail customer choosing the simplest approach, the "Three-Benchmark"
methodology, will be eligible to recover up to $1 million over a 5-year
period.
o A rail customer choosing the "Simplified Stand-Alone Cost" methodology
will be eligible to recover up to $5 million over a 5-year period.
· Requires the use of the Board's Uniform Rail Costing System (URCS),
without any movement-specific adjustments, to determine the variable cost
of the challenged movement. URCS is the general purpose costing model
used to determine if a rate is subject to the Board's jurisdiction (i.e.,
whether the rate is above 180% of the carrier's variable cost of proving
the service). Calculating variable costs based on URCS is a quick and
administratively simple process; the advance work is performed by the
Board annually, and the computer program is available to the public at a
minimal cost.
· Clarifies and revises the Three-Benchmark methodology that evaluates a
challenged rate in relation to three benchmark figures. Specifically,
this revised methodology:
o Allows shippers of any size (including small shippers) to use this most
expedited dispute resolution process to obtain up to $1 million, with a
filing fee of $150.
o Establishes an expedited procedural schedule that calls for a Board
decision within approximately eight months of filing a complaint.
o Changes previous Board policy by providing a complaining shipper access
to the unmasked Waybill Sample. The Waybill Sample is a database of
nationwide shipments by rail carriers. The unmasked version includes
confidential contract revenue information.
o Provides a more detailed explanation of how the comparison group should
be developed. Comparability will be determined by reviewing a variety of
factors, such as length of movement, commodity type, traffic densities of
the likely routes involved, and demand elasticity (although the comparison
group need not have movements with identical demand). Movements with
different cost characteristics may be included in the comparison group.
Only movements of the defendant carrier may be included in the comparison
group and the movements must be drawn from the Waybill Sample provided to
the parties by the Board at the outset of the case.
o Establishes a "final offer" system for selecting the comparison group.
The shipper and railroad will each simultaneously tender their evidence
regarding an appropriate comparison group. The Board must select the
comparison group that it concludes is most similar in the aggregate to the
issue movements, without modification.
o Corrects the calculation of the Revenue Shortfall Allocation Method
(RSAM) benchmark, to ensure that when a carrier is not "revenue adequate"
under the Board's annual calculations, the carrier's RSAM benchmark will
be greater than its R/VC>180 benchmark.
o Uses a single formula for the RSAM benchmark figure, instead of the
previous range of values.
o Creates rebuttal presumptions as to the reasonableness of the
challenged rate based on the relationship between the R/VCCOMP, RSAM and
R/VC>180 benchmarks. Each movement in the selected comparison group will
be adjusted by the ratio of RSAM ÷ R/VC>180 to reflect the revenue needs
of the defendant carrier. If the challenged rate is above the mean (with
a confidence interval) of the adjusted comparison group, it will be
presumed unreasonable.
· Creates a Simplified Stand-Alone Cost methodology for medium-sized rail
rate disputes. Specifically, this methodology:
o Allows any shipper to use this process to obtain up to $5 million in
relief, with a filing fee of $10,600.
o Establishes an expedited procedural schedule that calls for a Board
decision within approximately 17 months of filing a complaint.
o Focuses the analysis on whether the carrier is abusing its market power
by charging more than it needs to earn a reasonable return on the
replacement cost of the infrastructure used to serve that shipper.
o Simplifies and standardizes the route selection, traffic group
selection, configuration, road property investment calculation, operating
plan determination and operating expenses calculation, greatly reducing
the cost of bringing a case before the Board.
-----------------------------***-----------------------------
If you have received this e-mail in error or wish to unsubscribe from STB
News, please send an e-mail message to stbnewslistserver@xxxxxxxxxxx and
place "unsubscribe stbnews" as the body of the message.
[Railroad Photos] [Home] [NTSB] [FAA] [NSF] [USDA] [Photo] [Yosemite] [T5] [Hot Springs] [Steve's Art] [SB Lupus] [FDA News]
|