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>From the Surface Transportation Board, Washington, D.C.
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The Surface Transportation Board (Board) announced today two initiatives to
explore ways to further protect captive shippers from unreasonable rail
rates. First, the Board proposes to reform its rules on how it resolves
rate disputes to ensure that all captive shippers have a meaningful way to
challenge rates. Second, the Board is taking steps to consider a proposal
submitted by The National Industrial Transportation League (NITL) to
increase rail-to-rail competition.
The
centerpiece
of the Board's rate rules proposal removes the limitation on relief for
cases
brought
under the Simplified-Stand Alone Cost alternative. "Our goal is to
encourage
shippers to use a simplified alternative to a Full-[Stand Alone Cost]
analysis
that is economically sound, yet provides a less complicated and less
expensive
way to challenge freight rates by discarding the requirement that shippers
design
a hypothetical railroad to judge a railroad's real world rates," the Board
wrote
in
the
decision
issued today, in
Rate
Regulation
Reforms
, EP
715.
The
Board
also
proposes
to double the relief available to shippers under its other simplified
approach,
the Three-Benchmark method; to make technical changes to the Full-SAC and
simplified
rate procedures; and to raise the interest rate that railroads must pay on
reparations
to shippers if the railroads are found to have charged unreasonable rates.
In
addition
to these immediate proposals, the Board is beginning a proceeding in
Petition
for Rulemaking to Adopt Revised Competitive Switching Rules
, EP
711,
to
explore
a competitive-access proposal submitted by NITL. "We continue," said the
Board,
"to explore whether there are policy changes the Board could adopt that
would
promote
more rail-to-rail competition and thereby allow competition and the demand
for
services
to establish reasonable rates for transportation by rail, and thus
minimize
the need for Federal regulatory control." Under NITL's proposal, certain
shippers
located in terminal areas that lack effective transportation alternatives
would
be
granted
access to a competing railroad, if there is a working interchange within
30
miles.
The
Board
continues
to evaluate other competitive issues, including what actions to take in
connection
with commodity exemptions, the subject of a separate hearing in
Review
of Commodity, Boxcar, and TOFC/COFC Exemptions
, EP
704,
and
how
to
improve
its rules in transactions involving interchange commitments.
The
Board's
decisions,
Rate
Regulation
Reforms
( http://www.stb.dot.gov/decisions/readingroom.nsf/WebDecisionID/42418?OpenDocument )
, EP
715,
and
[<a
href="http://www.stb.dot.gov/decisions/readingroom.nsf/WebDecisionID/42264?OpenDocument";>Petition
for Rulemaking to Adopt Revised Competitive Switching Rules</a>],
EP
711,
are
available
on the Board's website at
www.stb.dot.gov
. A
fact
sheet
is
attached.
###
FACT
SHEET
Petition
for Rulemaking to Adopt Revised Competitive Switching Rules
, EP
711
Rate
Regulation
Reforms
, EP
715
Captive
shippers have long stated that they do not bring rate disputes to the
Board
because
of high litigation costs associated with the Board's complex Stand Alone
Cost
(SAC)
test
traditionally
used to resolve major rate cases. To provide rail customers with a
lower-cost,
expedited alternative to the SAC test, the Board created simplified
evidentiary
procedures. But because the methodologies used in the simplified
procedures
are less precise than those used in Full-SAC cases, the Board capped the
amount
of relief available under them. During the June 2011 hearing in
Competition
in the Railroad Industry
, EP
705,
the
Board
heard
concerns
from stakeholders that current limits on relief for simplified
alternatives
dissuaded parties from using those procedures to bring rate disputes to
the
agency.
The
centerpiece
of the Board's proposal in
Rate
Regulation
Reforms
, EP
715,
is to
remove
the limitation on relief for cases brought under the Simplified-SAC
alternative.
The Board also proposes to double the relief available under its other
simplified
rate approach, the Three-Benchmark method; to make certain technical
changes
to the Full-SAC and simplified rate procedures; and to raise the interest
rate
that
railroads
must pay on reparations to shippers if the railroads are found to have
charged
unreasonable rates. The technical changes the Board proposes are: (1)
curtailing
the use of cross-over traffic in Full-SAC cases; (2) modifying the
approach
used to allocate revenue from cross-over traffic in Full-SAC and
Simplified-SAC
cases; and (3) improving the accuracy of the Road Property Investment
component
of the Simplified-SAC test. The Board proposes to modify the interest
rate
from
the
current
T-bill rate (currently at 0.10%) to the U.S. Prime Rate (currently at
3.25%),
as published in
The
Wall
Street
Journal
.
Opening
comments are due October 23, 2012, replies are due December 7, 2012, and
rebuttals
are due January 7, 2013.
In
Petition
for Rulemaking to Adopt Revised Competitive Switching Rules
, EP
711,
the
Board
conducted
a preliminary analysis of the rail-to-rail competition proposal and found
that,
before
it could determine how to proceed, it would be in the public interest to
obtain
from interested parties empirical information to augment the Board's
ongoing
analysis of the proposal and to evaluate issues raised in the
Competition
in the Railroad Industry
proceeding.
Specifically, the public is invited to submit information on the
following:
(1) the impact on rates and service for shippers that would qualify under
NITL's
proposal; (2) the impact on rates and service for captive shippers who
would
not
qualify
under NITL's proposal; (3) the impact on the railroad industry, including
its
financial
condition and network efficiencies; and (4) an access pricing proposal.
Opening
comments are due November 23, 2012 and replies are due February 21, 2013.
###
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