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2/28/2005



Rail News: Rail Industry Trends

STB schedules hearing to gather feedback on stand-alone cost procedures


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On March 24, the Surface Transportation Board plans to hold a hearing on the board's process of determining rail rate challenges using the stand-alone cost (SAC) methodology.

STB members scheduled the hearing to provide railroads, shippers and other interested parties a forum to express views and offer suggestions regarding the board's consideration of rail-rate reasonableness challenges under the SAC methodology. Board members will not discuss pending rail rate cases at the hearing.

Under a SAC test, a complaining shipper designs a hypothetical railroad specifically tailored to serve their needs. The cost to build and operate the railroad are compared to revenue the road is projected to earn. If the shipper demonstrates the stand-alone railroad would earn more than necessary to cover all its costs (including a reasonable return on investment), the board determines the shipper is entitled to rate relief.


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