Market Matters Blog

Grain shippers will have the opportunity next month to share ideas with the U.S. Surface Transportation Board on how to improve the process for shippers to challenge railroad freight rates they believe are unreasonable.

On March 9, the U.S. Surface Transportation Board announced final rules for revising the procedural schedule for certain large railroad rate cases. The action was taken to comply with the Surface Transportation Board Reauthorization Act of 2015, which called for revising regulations that set the procedural schedule for "stand-alone cost," or "SAC" case handling.

On March 15, the STB announced that its staff will hold informal meetings with stakeholders during April 2016 to explore and discuss ideas to expedite rate reasonableness cases. "These informal discussions will be used to enhance STB staff's perspective on strategies and pathways to expedite and streamline rate cases, especially SAC cases where the board's time to analyze the record and issue a decision has been substantially shortened," stated the press release.

"These meetings will be a valuable opportunity for STB staff and interested parties to talk openly and candidly about our procedures for handling rate cases, and to brainstorm ideas for improving our processes and expediting case resolution," STB Chairman Daniel R. Elliott said in the release. "Additionally, these meetings will further my efforts to make the board more available and accessible to our stakeholders."

The STB announced meeting times will be available Tuesdays, Wednesdays, and Thursdays between 10 a.m. and 2 p.m. during April. Interested persons are requested to contact the Rail Customer and Public Assistance office (202-245-0238) to schedule individual meeting times. Questions about the meetings should also be directed to RCPA.

STB REAUTHORIZATION ACT OF 2015 OUTLINED NEW PROCEDURE

The Surface Transportation Board Reauthorization Act of 2015 was passed by the House of Representatives Dec. 10, 2015, following the Senate passage of the bill on June 18, 2015. The legislation, which was signed into law by President Barack Obama, gives the STB the right to initiate investigations of freight rail practices that have national or regional significance on its own authority, without having to wait for a shipper to first file a formal complaint.

Section 11 of the STB Reauthorization Act requires the board to "maintain procedures for the expeditious handling of rate cases before the agency. Accordingly, timelines in SAC rate case proceedings found at 49 C.F.R. § 1111.8 have been significantly shortened, including limits on the time allowed for discovery and the time allowed for development of the evidentiary record," said the STB. The board's final rules can be found at this link: http://goo.gl/…

NGFA PUSHED FOR BETTER RATE CASE PROCESS

A public hearing was held June 10, 2015, to explore the issue of making the STB's rate case process more accessible to grain shippers and to create a more streamlined, cost-effective and workable process for grain shippers to use to challenge unreasonable rates. The National Grain and Feed Organization (NGFA) urged the STB at that hearing to issue a proposed rulemaking to establish a new process that agricultural commodity shippers could use to challenge freight rates they believe are unreasonable or unlawful under the Staggers Rail Act of 1980.

NGFA said in a press release on June 11, 2015, that NGFA Rail Shipper/Receiver Committee Chairman Kevin Thompson, assistant vice president and transportation lead for Cargill Inc., Minneapolis, Minnesota, told the agency at the June 10 hearing that its current rate-challenge appeal procedures "are simply inappropriate and unworkable for agricultural commodities because they are too complex and costly compared to the potential recover of rate overcharges."

NGFA Board member Bruce Sutherland, vice president of Michigan Agricultural Commodities (MAC), presented real-world examples to the STB of current rate-pricing practices by a major Class I rail carrier. "These increases in rail rates are several orders of magnitude greater than typically thin grain-trading margins," Sutherland said. "Consequently if we are to be price-competitive in selling commodities to domestic user and foreign buyers, we inevitably have to try and pass on the cost impacts we can't absorb back to farmer customers. Seldom are we able to pass such costs forward to the ultimate buyer, as they have alternative sources of supply in the grain market -- which is a truly competitive market."

To see the June 15, 2015 story about the hearing and responses/reactions from both shippers and railroads, see http://goo.gl/…

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary Kennedy on Twitter @MaryCKenn

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