First small rail rate case favors shipper

NITL (The National Industrial Transportation League) -- Logistics Management, 7/9/2008 8:39:00 AM

In what could prove to be a major precedent and remedy for small rail rate complaints, the U.S. Surface Transportation Board (STB) ruled unanimously in favor of a shipper this week who filed under a new administrative procedure which allows for relief in "small rate cases." The complaint filed by E.I. du Pont de Nemours and Company (DuPont) was made pursuant to the STB's "Three-Benchmark" method, under which the first tier of total available rate relief is limited to $1 million over a five year period. In this proceeding, DuPont challenged the reasonableness of rates charged by CSX Transportation (CSXT) for seven movements of chemicals between various origins and destinations.

The STB found CSXT had market dominance over the transportation set forth in DuPont's complaints and that the rates charged in six of the seven movements by the railroad were unreasonably high. CSXT is directed by the Board to establish new rates that do not exceed the maximum rates prescribed in the decision and to pay reparations and reduce rates totaling up to $1 million per complaint, or a total of $3 million for the three complaints, over a five year period. The exact size of the award will depend on the actual number of shipments made by DuPont along the routes subject to the rate challenges.

Under the Board's "Three Benchmarks" process, shippers with small rate disputes (as set forth in the DuPont case) may pursue awards of up to $1 million for a filing fee of $150 per complaint to the Board with a decision rendered within eight months of filing a complaint. For mid-size rate disputes, shippers may pursue the "Simplified Stand Alone Cost" process, whereby shippers may obtain an award of up to $5 million in relief within 17 months of filing a complaint. Finally under the third tier, shippers may utilize the traditional "Stand Alone Cost" methodology available and applicable to large rate cases where awards are unlimited.

The League was an active participant in pushing for changes in the Board's methodology so as to permit new procedures for resolving disputes in smaller rate cases. For too many years, the dispute resolution procedure in larger rate cases has made it too expensive to pursue, vague, and simply too risky from a financial perspective. DuPont was represented before the STB by the League's General Counsel, Nicholas DiMichael, and Jeffrey O. Moreno of the firm Thompson Hine. In announcing their decision for DuPont, STB Chairman Charles (Chip) D. Nottingham said "Today's unanimous decision demonstrates the Board's dedication to resolving disputes between railroads and their customers in an accessible, affordable, and expeditious manner. Freight-rail customers can rest assured that the Board will take effective action to strike down unreasonably high rates." For a copy of the decisions go to the STB website at: http://www.stb.dot.gov.

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