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Rail News: Rail Industry Trends

STB stands by its decision to exclude product and geographic competition considerations from rate complaints


Surface Transportation Board April 3 reaffirmed its previous decision to exclude product and geographic competition considerations from market dominance analysis when considering railroad rate complaints.
In an earlier court case, Association of American Railroads sought judicial review of STB’s December 1998 and July 1999 decisions that excluded product and geographic competition as factors in market dominance proceedings.
U.S. Court of Appeals for the District of Columbia Circuit earlier this year returned the matter to the board for further consideration, rejecting railroads’ claims that the law requires STB to consider product and geographic competition.
Under federal law, STB can’t review the reasonableness of a challenged rail rate unless the board first determines that the railroad at issue has market dominance — an absence of effective competition from other railroads or modes of transportation to which a rate applies.
Before 1999, STB’s procedures enabled railroads to demonstrate the lack of market dominance by showing proof of competition among railroads or other transportation modes, or that a complaining shipper could avoid using a defendant railroad by shipping or receiving a substitute product (product competition), or by obtaining its product from a different source or shipping to a different destination (geographic competition).
STB has determined that its reaffirmed decision would not contravene Rail Transportation Policy that directs the board to rely on competition rather than regulation when possible, because a competitive rate challenge is unlikely, and if a challenge occurs, it’s unlikely to be disturbed.
The board also denied AAR’s petition requesting STB to reopen the proceeding to further consider specific rail rate proposals incorporating evidence of product and geographic competition, and that the board direct shippers and railroads to negotiate compromise rules.
STB believes its members already have considered and rejected such proposals, "and that nothing but unwarranted uncertainty would be gained by reopening the proceeding at this time."