STB moves forward, lowers filing fees for rate challenge cases

At a time when the freight railroad industry is seeing more than its fair share of regulatory action, rail shippers received some good news last week, when the Surface Transportation Board said it is reducing the fee shippers pay to file a railroad rate or unreasonable practice complaint from $20,000 to $350—while maintaining its $150 filing fee for an expedited small rate case.

The STB initially kicked the tires on this move in February with a notice of proposed rulemaking. STB Chairman Daniel R. Elliott III said at that time that charging a small business more than $20,000 to bring a complaint is not right, adding that some meritorious cases on behalf of shippers were discouraged by high filing fees.

STB officials said that this decision was based on three considerations:
-the filing of a complaint is often the Board’s only mechanism for investigating and addressing potential rate violations or other unlawful practices;
-high fees for the filing of a formal complaint may discourage shippers and others from bringing complaints before the Board; and
-changes for reducing fees should improve the STB’s management of its docket and resources.

This is not the first time that the concept of lowering filing fees for shippers has been raised. In 2007, legislation entitled the Railroad Competition and Service Act sought to correct certain policies of the Surface Transportation Board (STB), which its authors maintained are contributing to a lack of rail competition, a lack or railroad accountability, and unreliable railroad service.

Much of this legislation stemmed from an October 2006 Government Accountability Office (GAO) report on freight railroad competition in which the GAO found a lack of competition coupled with a lack of attention from the STB on this issue.

The GAO report also said the STB’s rate challenge process is ineffective because rail customers are forced to pay steep filing fees, bear all burdens of proof, and also demonstrate that they can own and operate a railroad for less than the fees being charged.

This legislation proposed that the filing fees be removed to ensure that the rate standard be the same as that applied by most American regulatory agencies—which is the cost plus a reasonable rate of return—and also distributes the burden of proof more equitably between railroads and shippers.

The STB’s decision was warmly welcomed by rail shipper group Consumers United for Rail Equity (CURE).

“The STB should be commended for its effort in lowering filing fees and encouraging previously unrepresented shippers to tell their stories before the commission,” said Glenn English, Chairman of CURE, in a statement. “However, this is the just one of many necessary reforms. We urge the STB to move forward on competitive access, categorical exemptions and other important rulemakings that can provide needed relief to rail-dependent shippers and American consumers.”

An industry expert told LM that shining more light on rate challenge cases without changing the regulations is not a bad thing.

Anthony B. Hatch, principal of New York-based ABH Consulting, said that railroads are still not earning their cost of capital, explaining that if more time is spent on litigation caused by an increased amount of rate cases that would be problematic. But the idea of making the process more simple and transparent might be something the railroads would argue against, but he said they would look OK in that situation.