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10/27/2006



Rail News: Rail Industry Trends

STB should reconsider changes to rate challenge guidelines, agricultural consortium says


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Forty national and state agricultural organizations recently banded together to urge the Surface Transportation Board (STB) to revamp its proposed simplified guidelines for challenging “unreasonable” rail rates.

The board proposes to retain three benchmarks for categorizing rate cases under its simplified guidelines. Eligibility criteria would be based on a case’s maximum value, which would be equal to the challenged rail rate minus 180 percent of variable costs and multiplied by five years of annual shipment volumes.

The guidelines would “deprive shippers of meaningful access to regulatory relief and place them in an even more untenable situation than exists currently,” the group said. Agricultural products have been subjected to an increasing number of double-digit rate increases the past two years, magnifying the need for access to an expeditious and fair regulatory process for challenging rates, the group claims.

In addition, the STB’s proposed monetary limit of $200,000 on a rate case’s cumulative value over five years would mean most grain and grain product shippers would be eligible to challenge a rate on only a small fraction of their traffic, the group said.

“[We] recognize that economically healthy freight railroads are in the interest of all who require their services,” group officials said in a prepared statement. “But the need for the railroads to earn adequate revenue should not be viewed in a vacuum or elevated above the right of shippers to effective regulatory relief when charged unreasonably high rates.”


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