STB Denies Shipper Petitions on Rate Reasonableness Proceeding Rules

Written by William C. Vantuono, Editor-in-Chief
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The Surface Transportation Board on Jan. 24 ruled to deny two petitions seeking reconsideration of a decision adopting final rules that establish a streamlined approach for pleading market dominance in rate reasonableness proceedings. STB adopted the rules more than two years ago.

On Aug. 3, 2020, the Board adopted a final rule “to establish a streamlined approach for pleading market dominance in rate reasonableness proceedings, Market Dominance Streamlined Approach, EP 756). The Board adopted several factors that it said, “if demonstrated by a complainant, would constitute a prima facie showing of market dominance.” They are:

  • The movement has a revenue-to-variable cost (R/VC) ratio of 180% or greater.
  • The movement would exceed 500 highway miles between origin and destination.
  • There is no intramodal competition from other railroads.
  • There is no barge competition.
  • There is no pipeline competition.
  • The complainant has used truck for 10% or less of its volume (by tonnage) subject to the rate at issue over a five-year period.
  • The complainant has no practical build-out alternative due to physical, regulatory, financial, or other issues (or combination of issues).

“In particular, the new regulations allow complainants to demonstrate that prima facie factors for lack of intramodal competition, barge competition, pipeline competition, and practical build-out alternatives have been met by submitting a verified statement from an appropriate official,” STB said in the ruling. “The new regulations also limit streamlined market dominance filings to 50 pages (including exhibits and verified statements) and allow complainants to request an evidentiary hearing conducted by an administrative law judge in lieu of a written rebuttal.”

On Aug. 24, 2020, the American Chemistry Council, Corn Refiners Association, Fertilizer Institute, National Industrial Transportation League, and Chlorine Institute (collectively, the Coalition Associations) filed a petition for reconsideration. On the same day, The Chlorine Institute (CI) submitted a separate filing, Supplemental Petition for Reconsideration. The Coalition Associations argued that the Board “committed material error regarding four aspects of its final rule adopting the streamlined approach. [This included] (1) its holding that complainants must file a new case if they cannot prove market dominance using the streamlined approach, (2) its rejection of the Coalition Associations’ proposed ‘à la carte’ approach, (3) its setting of the mileage threshold factor at 500 miles, and (4) its failure to consider a 30-page limit on filings and its treatment of the effect of electronic workpapers on this limit.“

CI filed a separate petition addressing the issue of the mileage threshold factor with regard to chlorine shipments.

On Sept. 14, 2020, the Association of American Railroads (AAR) filed a reply to the petitions for reconsideration. “AAR argues that Petitioners fail to demonstrate material error, but instead merely disagree with the Board’s decision on these issues,” STB said in its ruling to deny both petitions,” noting that the National Grain and Feed Association (NGFA) also filed a reply on Sept. 21, 2020 that “indicates support for arguments made by the Coalition Associations and CI urging reconsideration of the 500-mile threshold.”

The Board said the Coalition Associations and CI “have not demonstrated that the Board committed material error in the August 2020 Decision and therefore will deny their petitions for reconsideration,” but noted that it “is currently exploring approaches that could be used to adjust the mileage thresholds on a commodity-specific basis.”

Download the decision to deny the petitions:

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