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7/31/2006



Rail News: Rail Industry Trends

STB to revise rate case guidelines, examine grain rates at fall hearing


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Last week, the Surface Transportation Board (STB) began a rulemaking proceeding to revise and clarify its guidelines for rail rate cases that don’t use the full stand-alone cost (SAC) procedure because it’s considered too costly given the case’s value.

The board proposes to create a simplified SAC procedure for medium-size rate disputes, retain and modify the current "three benchmark" method for small rate cases, and base eligibility on the case’s maximum value to distinguish between large, medium and small rate disputes.

Meanwhile, the STB also announced plans to hold a public hearing in fall to address issues surrounding rail-transported grain.

In June, the Government Accountability Office (GAO) released a report on rail rates, competition and capacity, which found grain rates diverged from the industry trends. The amount of grain traffic with comparatively high markups over variable cost increased “notably” between 1985 and 2004, the GAO report stated.

At the hearing, the board will review the interplay between the U.S. and Canadian wheat markets, how the Canadian regulatory system differs from the United States’ and what impact those differences might have on U.S. grain production.

The STB will set a hearing date after the GAO releases its final findings and recommendations in August.


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