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NGFA to 'carefully examine' new STB reasonable rail rate rule

STB's current rate-reasonableness standards inappropriate for grain, and changes are needed to develop more affordable review process.

September 1, 2016

2 Min Read
NGFA to 'carefully examine' new STB reasonable rail rate rule

The National Grain & Feed Assn. (NGFA) said it will "carefully examine" an advance notice of a proposed new rail rate reasonableness methodology — unveiled Aug. 31 by the Surface Transportation Board (STB) — that is intended to be used by shippers of grains and other commodities to challenge unreasonable rail rates.

In the advance notice, STB said it seeks to develop a new rail rate review process that would be more affordable and accessible to shippers of all commodities with comparatively smaller rate disputes with Class I carriers.

"We are particularly gratified that STB recognizes and acknowledges that its three existing rail rate review methodologies present 'accessibility challenges' for grain and other commodity shippers and that the litigation costs required to bring a rate case under even the most simplified existing method can quickly exceed the value of the damages involved in the case," NGFA president Randy Gordon said. "We appreciate the obvious time and effort that the STB put into developing the concepts contained in its advance rule-making notice and the fact that it includes several recommendations made previously by the NGFA. We will be carefully examining these concepts and plan on being fully engaged in providing constructive input to the agency as it proceeds with this rule-making."

NGFA has been an active participant in a previous STB proceeding that focused on the utility of the agency's existing rate methodologies for grain rate cases — a proceeding that laid the groundwork for the agency's new rule-making. As part of that previous proceeding, NGFA in 2015 developed and proposed to STB a totally new rate methodology, called the "agricultural commodity maximum rate methodology," that would create a more accessible, streamlined, cost-effective and workable process for grain shippers to challenge unreasonable rates.

NGFA also has asserted that STB's current rate-reasonableness standards are inappropriate for grain, given the nature and characteristics of rail movements of agricultural commodities, the multiple and varying origin/destination pairs for agricultural shipments and volumes and the nature of railroads' pricing practices, under which uniform rates are imposed across the board for certain commodities or types of traffic. These points were also acknowledged in STB's advance rule-making notice issued Aug. 31.

Opening comments on STB's advance notice of proposed rule-making are due Nov. 14, 2016, with reply comments due Dec. 19.

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