STB urged to revise its RR contracts proposal

NITL (The National Industrial Transportation League) -- Logistics Management, 5/20/2008 11:47:00 AM

In comments filed May 12 with the U.S. Surface Transportation Board (STB), the League expressed strong reservations over the agency’s decision to delineate between common carriage rates from contract pricing arrangements by proposing that rail carriers consider requirements for a “full disclosure statement” and “informed consent” when a carrier seeks to enter into a rail transportation contract.

At issue is the lack of a clear demarcation between common carriage and contract rates…particularly when “take it or leave it” unilateral rate arrangements are presented that appear to be a tariff but are viewed by the carriers to be a contract.

The League said it was especially concerned that the STB chose to address the problem without consideration of the approach offered last year by the League and numerous shipper groups and individual shippers when they recommended that the Board should define what is a common carrier tariff. To that end the following definition was offered:

“A ‘common carrier tariff’ within the jurisdiction of the Board is defined as any unilateral offering by a rail carrier, or carriers of rates, charges, conditions of service, or service terms,
whether applicable to shippers generally, any class or group of shippers, or to specified individual shippers. A ‘unilateral offering’ is any offering of rates, charges, conditions of carriage, or service that can be used or accepted by tendering, or stating an intent to tender, traffic to the carrier or carriers. Tariffs cannot be used to form a contract under section
10709.”

This approach the League said would, “…have cured the problems in the text of the rule proposed by the Board, and thus would have resolved the concerns that motivated this proposal.” It went on to say the Joint Proposal would also have resolved the “unintended consequences” noted by the Board which involved the potential disruption to various well established common carriage pricing arrangements, including: unit train tariffs, annual volume rates, the Certificate of Transportation (“COT” ) program, and similar arrangements.”

While the League acknowledged the STB’s concern over the lack of a clear demarcation between common carrier rates and contracts and the “take-it-or-leave-it” unilateral rate offerings which are deemed a contract by carriers-- it stressed, “...the Board’s proposed full disclosure/ informed consent decision will do nothing to alleviate the problem of the ‘take-it-or-leave-it’, ‘unilateral rate arrangements’ identified by shippers and cited by the Board in its decision.”

The League explained that the Board’s approach would simply direct the railroads to place the full disclosure and informational consent language, “on any and all correspondence involving rates from a carrier to a shipper, and will likely require a shipper’s ‘consent’ no matter how unwilling the shipper is to accept the carrier’s ‘offer’.”

Finally the League said while there is a strong and growing need for the Board to clarify what constitutes a contract and a tariff, the agency’s proposal instead of clarifying that situation, simply hands to carriers the ability to make that determination. For a complete copy of the League’s comments, click here (PDF).

Individual companies are encouraged to send supporting comments to the STB. They should be directed to: Anne K. Quinlan, Secretary to the Board, Surface Transportation Board, 395 E Street, S.W., Washington, DC 20423-0001 or e-mail Board.Secretary@stb.dot.gov. Reference STB Ex Parte 676, Rail Transportation Contracts under 49 U.S.C. 10709.

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