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11/27/2001



Rail News: Rail Industry Trends

STB opts to examine rate cases one at a time


Surface Transportation Board Nov. 27 decided to stick with its usual practice of resolving rate issues as they arise rather than issue a blanket-type rulemaking.
The board rejected Union Pacific Railroad's and Burlington Northern Santa Fe's request to issue a rulemaking governing the stand-alone cost (SAC) test, which STB uses to evaluate the reasonableness of rates railroads charge to captive shippers.
Under the SAC test, a complaining shipper designs a hypothetical railroad tailored to serve its traffic needs, factoring in costs to build and operate the rail; if a shipper demonstrates that a stand-alone railroad would earn more than necessary to cover all its costs, the board determines the shipper is entitled to rate relief.
UP and BNSF — which are facing current shipper proceedings at STB challenging some of the railroads' Western coal rates — claim long-term traffic forecasts required by multi-year SAC analyses are unreliable. The Class Is, among other issues, asked STB to adopt procedures that prevent complaining shippers from attributing unrealistic traffic shares to the SAC test.
STB, while recognizing that UP and BNSF raised key issues, concluded that the processing of pending and future cases wouldn't be materially aided by breaking out and separately examining some or all of the issues identified by the railroads in a general rulemaking.


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