STB Issues Final Offer Rate Review NPRM
Client Alert
On September 12, 2019, the Surface Transportation Board (“Board”) issued a Notice of Proposed Rulemaking that constitutes another attempt by the Board to increase the ability and willingness of captive rail shippers to seek review of rail rates through formal complaint proceedings before the Board. Under this latest proposal, the Board would establish a Final Offer Rate Review (“FORR”) procedure that is based in large part on final offer arbitration procedures used in Canada. The Board has proposed such rules would be applied for cases where the total value of the case (overcharges and prescribed rates) did not exceed $4 million, but it has asked for comment on this proposed limit.
The proposed rule has numerous components that are designed to expedite and simplify the process, thereby making it cheaper for shipper complainants to pursue. A non-exhaustive list of the proposal’s features includes the following:
- The expedited procedural schedule would result in a decision within 135 days.
- Complainant and defendant would have the freedom to propose and support any methodology to demonstrate the appropriate maximum reasonable rate, taking into account certain statutory criteria.
- Complainant would provide advance notice to defendant, and the proceeding would begin at the time a complaint is filed, which also would mark the beginning of a discovery period of 21 days.
- Discovery would necessarily be narrowly tailored and litigation over discovery disputes would not be permitted.
- The defendant railroad would not be required to submit an answer to the complaint.
- Market dominance determinations would be evaluated separately using the Board’s proposed streamlined market dominance approach in Docket No. EP 756, Market Dominance Streamlined Approach.
- At the conclusion of the 21-day discovery period, the parties would simultaneously submit their market dominance presentations and final offers addressing the reasonableness of the challenged rate and support for the rate in the party’s offer.
- The parties would simultaneously submit replies to each other’s presentations ten days later.
- One week after the parties submitted their replies, the complainant could elect to have the parties participate in a telephone hearing before an administrative law judge.
- If the Board finds that the complainant’s market dominance presentation and rate reasonableness analysis demonstrate that the defendant railroad has market dominance, the Board would then choose between the parties’ final offers no later than 90 days after the deadline of the parties replies.
The proposal is a result of the Board’s acknowledgement that its current rate review methodologies are both too costly and time-consuming to be viable for smaller disputes. It is intended to provide a faster, less costly review of certain unreasonable railroad rate claims.
Opening comments are due by November 12, 2019 and replies are due by January 10, 2020. The Board has not yet scheduled a public hearing on the proposal.
If you have any questions about this issue or desire additional information, please do not hesitate to contact our Rail Transportation Group:
- Tom Wilcox (twilcox@gkglaw.com);
- Ed Greenberg (egreenberg@gkglaw.com);
- David Monroe (dmonroe@gkglaw.com);
- Brendan Collins (bcollins@gkglaw.com); or
- Kristine Little (klittle@gkglaw.com).
Additional Recent STB Rail Rate Reform Agenda Items:
STB Proposes Streamlined Approach for Pleading Market Dominance in Rate Reasonableness Proceedings
STB Announces Hearing on Revenue Adequacy Recommendations of the RRTF