Regulatory agency mulls rulemaking option for rail rate methodologies

The issues include how the STB should use of “final offer” principles in rate cases, which could be used for smaller disputes; how to simplify determining what market dominance looks like; whether to modify the waybill sample to increase the number of observations that can be used in certain rate review methodologies; how to simplify the stand-alone cost test; and how to craft policy that leads to defining long-term revenue adequacy. The STB met in May to discuss these issues and the report’s recommendations. Summaries of what issues the Board discussed are here under “Nonpublic Collaborative Discussions Meeting Summaries in Pre-Docket and Non-Docketed Matters.”

The Board is likely to push forward some issues ahead of others, although for now it appears that many of the report’s recommendations are on the table, an observer said. One question will be whether the STB chooses to draft regulations for some of these issues, including the ones related to final offer arbitration and long-term revenue adequacy.

Shippers generally reacted positively to the recommendations in the April report, while the Association of American Railroads had a more mixed reaction. The trade association supported the report’s treatment of the stand-alone cost test but disagreed with the report’s recommendations on revenue adequacy, which addresses a railroad’s profitability.