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Rail News Home Federal Legislation & Regulation

11/2/2012



Rail News: Federal Legislation & Regulation

STB proposes interchange commitment disclosure rule, receives NGFA comments on bolstering rate challenge policies


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Yesterday, the Surface Transportation Board (STB) announced a proposed rule that would require the disclosure of additional interchange commitment information in a filing for a rail line lease or sale.

An interchange commitment, or paper barrier, is a contractual clause limiting the ability or incentive of a rail line purchaser or lessee to interchange traffic with railroads other than the line's seller or lessor.

The board's rules currently require a party seeking STB authority to sell or lease a line to disclose an interchange commitment in the transaction. The proposed rule would require a party to include with its initial filing additional information on any interchange commitment's impact on shippers, the purchaser or lessee railroad.

"Long-term interchange commitments can affect the competitive environment for years to come," STB officials said in a prepared statement. "The goal of the disclosures is to encourage transactions that are in the public interest, while ensuring that the agency, as well as other interested parties, have sufficient information to judge whether competitive issues require detailed examination."

Meanwhile, the National Grain and Feed Association (NGFA) has called on the STB to improve its rules and policies to help agricultural shippers challenge rail rates deemed unreasonable.

In a statement submitted to the board, NGFA officials commended the STB for proposing changes and soliciting public comments on the current methods available to shippers to challenge rates. But the agency's proposals "fell well short of achieving its stated goal," NGFA officials said in a prepared statement.

The NGFA is urging the STB to undertake a more comprehensive, in-depth review of its "simplified standards" for rail rate regulations. If the STB finds that its current methods for challenging unreasonable rates are inadequate — as NGFA officials believe — it should ask Congress for additional statutory authority "designed to provide genuinely simplified and expedited standards for resolving rail rate disputes," association officials said.

The STB should increase to at least $3 million the amount that could be recovered over a five-year period using the most streamlined mechanism currently available for challenging rail rates, they said.

The NGFA supports the STB's proposal to eliminate the current $5 million limit that shippers potentially can recover using a second simplified board mechanism for challenging unreasonable rates, or the simplified stand-alone cost (SSAC) rules. However, the board should delete a concurrent proposal that would undermine usage of the rate challenge method by "imposing a complex and expensive new burden that would require shippers to calculate the full replacement cost of rail system facilities used to serve the shipper filing the rate complaint," association officials said.

"Rather than creating additional hurdles for utilizing [this] methodology, the STB should be exploring ways to make the SSAC rules less expensive, less complicated and more expedited," they said.

Established in 1896, the NGFA is a nonprofit trade association that represents the interests of more than 1,050 companies involved in the U.S. grain and oilseed industries.


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