Rail Freight Rates – STB Rate Reform Task Force Issues its Report

In January 2018 Chairman Ann Begeman formed a Rail Rate Reform Task Force to recommend improvements to the existing rate review processes and to propose new rate review methodologies. Rail rate rule reform has been Chairman Begeman’s top priority.

Last week, the task force submitted their report to the STB. The Rate Reform Task Force report may be viewed and downloaded here.

Upon initial review, it appears to provide some very promising conclusions and recommendations for positive changes to the existing rules. The recommendations include:

  • Proposals to reduce the cost and complexity of small rate disputes.
  • Recommendation for legislation that would permit the Board to require arbitration of small rate disputes.
  • Simplification of the existing Stand-Alone Cost (SAC) test.
  • Proposing an entirely new rate that considers the cost structure of the defendant carrier itself instead of a hypothetical stand-alone carrier.
  • Defining long-term revenue adequacy and three structural remedies: (1) a rate-increase constraint; (2) a reversal of the Board’s long-standing “Bottleneck” decisions so that shippers can direct long-term revenue adequate carriers to deliver movements to a feasible interchange of the shipper’s choosing; and (3) a restoration of certain simplifications in the existing Simplified SAC process.
  • Increasing the accessibility of the Three-Benchmark comparison approach.
  • Simplification of the market dominance determination.

In announcing the report, the Board stated that they will be soliciting public input on the report in the near future.