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STB proposal could pave way for railroad shippers to reduce filing fees for complaint cases

By Jeff Berman, Group News Editor
February 18, 2011

The Surface Transportation Board (STB) this week unveiled a proposal to reduce filing fees for complaint cases for shippers to $350. This would be a significant reduction, as under the current process shippers can pay up to $20,600 to file a complaint.

STB officials said that this proposed rulemaking would implement a new fee schedule that would charge shippers $350 to file a rate or unreasonable practice complaint, with a fee to file an expedited small rate case would remain $150.

STB Chairman Daniel Elliott III said in a statement that “charging a small business more than $20,000 to bring a complaint is not right. I am afraid that some meritorious cases were discouraged by the high filing fees.”

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 push to lower the filing fee was warmly received by railroad shipper concern Consumers United for Rail Equity (CURE).

“Setting reasonable filing fees is a critical step in ensuring that rail shippers can have their complaints heard,” said Glenn English, Chairman of CURE, in a statement. “The STB should be commended for this proposal which would bring the STB’s filing fees in line with filing fees charged by federal district courts.”

This ruling comes at a time when legislative efforts to re-regulate the railroad industry have stalled out to a certain degree. And it follows an announcement by the STB in which it said it will hold a hearing on the current state of competition in the railroad industry on June 22, as well as the re-introduction of re-regulation legislation by Senator Jay Rockefeller (D-WV) and the Railroad Antitrust Enforcement Act introduced by a group of eight bipartisan senators.

With prospects for full re-regulation far from a reality, a railroad industry expert told LM that this proposal can be viewed as one of the first steps to see what the STB can do on its own to improve competition.

“One of the things the Rockefeller bill sets out to do is lower filing fees for complaint cases,” said Jay Roman, president of Escalation Consultants. “Obviously the proposed difference in fees is a substantial drop. Most of the rate cases filed by shippers, though, fall under small rate case guidelines and do not approach the $20,600 level. The STB has a pretty active agenda and lowering the fees would make things even more active. This is good news for railroad shippers.”

Despite shipper complaints regarding railroad service and competition, railroad executives maintain that the existing regulatory railroad environment has produced—for North American railroad shippers—a freight railroad system that is the best in the world and to deprive the industry of its ability to earn its cost of capital could have a chilling effect on capital investments to support traffic growth and it could begin to reverse the great strides we have made after Staggers in the areas of rail safety and service reliability.

The STB is accepting comments on this proposed rule until April 19.

For more articles on railroad shipping, please click here.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).

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