The Board Seeks Comments on Modifications to Proposed Procedure for Challenging the Reasonableness of Railroad Rates in Smaller Cases

On November 15, 2021, the Board issued a supplemental notice of proposed rulemaking (SNPRM) in Docket Nos. EP 755, Final Offer Rate Review, and EP 665 (Sub-No. 2), Expanding Access to Rate Relief.  Final Offer Rate Review, EP 755 (STB served Nov. 15, 2021).  The Board stated that, in response to comments received on the notice of proposed rulemaking (NPRM) in those dockets, and to ensure parallel consideration of the proposal in Docket No. EP 765, Joint Petition for Rulemaking to Establish an Alternative Voluntary Arbitration Program for Small Rate Disputes, the Board was inviting parties to comment on certain modifications to the rate reasonableness procedure proposed in the NPRM.  Id., slip op. at 1.

The Board had issued an NPRM on September 12, 2019 in Docket Nos. EP 755 and EP 665 (Sub-No. 2), proposing a new procedure for challenging the reasonableness of railroad rates in smaller cases, the Final Offer Rate Review (FORR) procedure.  Final Offer Rate Review, EP 755 (STB served Sept. 12, 2019).  As proposed, the FORR procedure “would allow limited discovery, with no litigation over discovery disputes.”  Id., slip op. at 7.  Additionally, “FORR could only be used if the complainant elected to use the streamlined market dominance approach proposed (and since adopted) in Docket No. EP 756, Market Dominance Streamlined Approach; and the procedural schedule would be brief, with a Board decision issued 135 days after the complaint is filed.”  Id.  Each party would file “an analysis addressing the reasonableness of the challenged rate and support for the rate in the party’s offer.”  Id., slip op. at 10.  The Board’s criteria for choosing between the offers and determining rate reasonableness would be based on its consideration of the rail transportation policy [(RTP)] in 49 U.S.C. § 10101, the Long-Cannon factors in 49 U.S.C. § 10701(d)(2), and appropriate economic principles.”  Id.  According to the Board, the FORR procedure would “provid[e] faster, less costly review of claims of unreasonable railroad rates.”  Id., slip op. at 7.

In its decision served on November 15, 2021, the Board stated that it was issuing the SNPRM “[i]n light of filed comments and information received in meeting with stakeholders.”  Final Offer Rate Review, EP 755, slip op. at 3 (STB served Nov. 15, 2021).  The Board addressed comments that it received on the purpose of the rule, the Board’s statutory authority to adopt FORR, and the appropriateness of a final offer procedure.  See id., slip op. at 9. 

Additionally, the Board stated that, based on the record to date, it “finds that FORR would “further the RTP goal of maintaining reasonable rates where there is an absence of effective competition . . . by providing increased access to rate reasonableness determinations in small disputes.”  Id., slip op. at 12.  According to the Board, “FORR would also foster sound economic conditions in transportation . . . [and] promote expeditious regulatory decisions and provide for the expeditious handling and resolution of proceedings.”  Id.  The Board also found that it would be acting within its statutory authority in enacting FORR.  Id., slip op. at 15.

The Board proposed various modifications to the FORR procedure.  For instance, the Board “proposes to include mandatory mediation in FORR cases, ensuring that FORR’s mediation approach remains consistent with other rate reasonableness procedures.”  Id., slip op. at 38.  Thus, the Board will extend the procedural schedule beyond the time period proposed in the NPRM.  Id.  Under the revised schedule, the Board would issue a decision no later than 149 dates after the complaint is filed, except in certain cases.  Id., slip op. at 39.

The Board also proposed “not to limit FORR complainants to streamlined market dominance.”  Id., slip op. at 41.  Complainants “would be permitted to try to carry their market dominance burden using a non-streamlined presentation if they believe they can do so in the time available.”  Id.  In cases where the complainant elected non-streamlined market dominance, the Board would issue a decision no later than 169 days after the complaint is filed.  Id., slip op. at 42.

Furthermore, the Board addressed a number of miscellaneous issues in the SNPRM.  For instance, the Board continued to propose a relief cap of $4 million.  Id., slip op. at 42, 47.  The Board also proposed “to close Docket No. EP 665 (Sub-No. 2) but may revisit some of the ideas presented there depending on future developments and whether additional steps in the small rate dispute context appear necessary.”  Id., slip op. at 50.  With respect to the Board’s review criteria, the Board noted that it continued “to propose a nonprescriptive, multi-factor test, which would apply in the rate reasonableness determination regarding the challenged rate and, if necessary, in selecting between the offers.” Id., slip op. at 26.

The Board requested comments on the revisions to the rate reasonableness procedure set forth in the SNPRM, as well as other issues identified in the SNPRM.  Id., slip op. at 3.  Additionally, the Board is “waiv[ing] the general prohibition on ex parte communications regarding matters related to this proceeding.”  Id., slip op. at 2.

In a decision served on December 29, 2021, in Docket Nos. 765, 755, and 665 (Sub-No. 2), the Board denied a request to hold Docket No. EP 765 in abeyance and ordered that reply comments in these dockets are due by April 15, 2022.  See Joint Petition for Rulemaking To Establish A Voluntary Arbitration Program For Small Rate Disputes, EP 765 (STB served Dec. 29, 2021). 

Share this post: