SURFACE TRANSPORTATION BOARD

Rate Reform Task Force

Background

The Rate Reform Task Force was established by Chairman Ann Begeman in January 2018 to develop recommendations to reform and streamline the Board’s rate methodology for large cases, and to determine how to best provide a rate review process for smaller rate cases.

In April 2018, the Board announced that the task force would begin holding informal meetings with stakeholders to discuss options and ideas for reforming the Board’s rate review methodologies.  Meetings with stakeholders were held throughout 2018.

Task Force Report

The task force issued its report to the Board in April 2019 (see Press Release).  In the report, the task force made the following recommendations:

• Offering proposals that the Board could adopt to reduce the cost and complexity of small rate disputes;

• Calling for legislation that would permit the Board to require arbitration of small rate disputes;

• Suggesting significant simplification of the existing Stand-Alone Cost (SAC) test;

• Proposing an entirely new rate methodology called Incumbent Network Cost Analysis that would look at the cost structure of the defendant carrier itself instead of a hypothetical stand-alone carrier;

• Suggesting a definition for long-term revenue adequacy and three structural remedies that could be tied to this finding: (1) a rate-increase constraint (limiting carriers from raising rates on certain traffic once long-term revenue adequacy has been achieved); (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 by, among other things, removing limitations on the aggregation of claims, improving sampling procedures, and instituting page limits on arguments surrounding “other relevant factors;” and

• Seeking simplification of the market dominance determination.

A copy of the full report can be accessed here:  “Rate Reform Task Force – Report to the Surface Transportation Board” (April 25, 2019).

Section 5 Meetings

Subsequent to the report’s publication, the Board Members participated in “Section 5” meetings to discuss the recommendations directly with the task force.  The required summaries of the meetings prepared by the Board’s General Counsel are below:

• Meeting Summary:  May 1, 2019.
• Meeting Summary:  May 3, 2019.
• Meeting Summary:  May 7, 2019.
• Meeting Summary:  May 10, 2019.

Other Information

Subsequent to the report’s release, the Board received two letters from members of the U.S. Senate on the report, which are provided below, along with the Board’s responses:

• Letter from U.S. Senate Committee on Commerce, Science, and Transportation re. Rate Reform Task Force, May 23, 2019
  • STB Response to Senators Wicker, Fischer, Duckworth, Thune, Klobuchar re. Rate Reform Task Force, June 4, 2019

• Letter from Senators Baldwin and Kennedy re. Rate Reform Task Force and Demurrage, July 25, 2019
  • STB Response to Senators Baldwin and Kennedy re. Rate Reform Task Force and Demurrage, Aug. 8, 2019

Additional correspondence in response to the task force report can be found on the Non-Docketed Public Correspondence page (look for correspondence with the (†) symbol).

Board Actions

On September 12, 2019, the Board issued two related Notices of Proposed Rulemaking based on recommendations provided in the task force’s report.  First, in Final Offer Rate Review, Docket No. EP 755, the Board proposed a new methodology for challenging rates in smaller disputes.  Second, in Market Dominance Streamlined Approach, Docket No. EP 756, the Board proposed a streamlined approach for shippers to plead market dominance in rate reasonableness proceedings.  More information about these two rulemakings is available here.  On August 3, 2020, the Board adopted final rules in Market Dominance Streamlined Approach.  More information is available here.

On November 29, 2019, the Board issued another Notice of Proposed Rulemaking based on one of the task force’s recommendations.  In Waybill Sample Reporting, EP 385 (Sub-No. 8), the Board proposed new regulations that would simplify the sampling rates for non-intermodal carload shipments and to specify separate sampling strata and rates for intermodal shipments, which would create a more robust Waybill Sample that would assist the Board in its decision-making and analyses.  More information about the Board’s proposal is available here.  On September 3, 2020, the Board adopted a final rule in Waybill Sample Reporting. More information on the final rule is available here.

Regulatory Reform Task Force

Background

The Regulatory Reform Task Force was established to comply with the spirit of Executive Order 13,777 (EO), issued February 24, 2017.  The initial goals of the Regulatory Reform Task Force are to: (i) improve implementation of regulatory reform initiatives and policies pursuant to the EO; and (ii) evaluate existing regulations to identify regulations for repeal, replacement, or modification, consistent with applicable law.

Task Force Reports

The Regulatory Reform Task Force issued a status report 90 days after its creation, followed by a listening session in which stakeholders were invited to present their views on streamlining the agency’s regulations.  Subsequent to the listening session, the task force issued a second status report.

• 90-Day Status Report (May 25, 2017)
• Regulatory Reform Task Force, Listening Session Transcript (July 25, 2017)
• Status Report (Nov. 21, 2017)

Board Actions

Based on the task force’s recommendations, the Board has taken a number of actions to streamline its regulations, including:

• Finalizing rules to modify its procedures pertaining to Offers of Financial Assistance to improve that process and protect it against abuse.  Offers of Financial Assistance, Docket No. EP 729 (STB served June 29, 2017).

• Updated its long-standing rules on ex parte communications in informal rulemaking proceedings to permit such communications, subject to disclosure requirements, and to make other clarifications as to when and how interested persons may communicate with the Board about other pending proceedings.  Ex Parte Communications in Informal Rulemaking Proceedings, Docket No. EP 739 (STB served Feb. 28, 2018).

• Replacing outdated procedural and filing rules, specifically, by allowing payment of filing fees and other payments due to the Board through www.pay.gov; permitting nearly all filings to be made by e-filing on the Board’s website; and eliminating the requirement that paper copies be filed with the Board in nearly all instances.  Payment, Filing, and Service Procedures, Docket No. EP 747 (STB served Mar. 22, 2019).

• Modifying its regulations to allow water carriers to publish, file, and keep their tariffs electronically in lieu of submitting paper filings.  Water Carrier Tariff Filing Procedures, Docket No. EP 743 (STB served May 9, 2019).