After conducting informal meetings with stakeholders, issuing an Advance Notice of Proposed Rulemaking in June, 2016 and receiving hundreds of pages of comments, the STB last week issued a Notice of Proposed Rulemaking (Docket No. EP733) to amend the procedural rules applicable to unreasonable rate challenges by shippers. Railroad rate challenges have been historically exceeding costly and difficult to prosecute. The complex financial modeling required to challenge a railroad’s rates often makes it cost-prohibitive for a shipper to seek a remedy from the STB. As a result, the overwhelming majority of rate challenges have involved coal shipment rates for power plants. The coal cases involve sufficient freight volumes so that even a modest rate adjustment can generate enough savings to offset the costs to prosecute the case.
The new rules proposed by the STB won’t necessarily reduce the overall cost of bringing a rate challenge, but they are intended to make the parties work together more cooperatively and to involve STB staff move frequently in the process, in an effort to promote settlements. In particular, the STB is proposing a mandatory 70 day “pre-complaint” period during which the parties will be required to notify each other of the claims and attempt to mediate the dispute. This forced early mediation may help to give shippers a faster track to rate relief.
For a copy of the STB Decision, click here. Comments to the proposed rulemaking are due by May 15, 2017.