WASHINGTON, July 16, 2014 – The National Grain and Feed Association (NFGA) is urging the U.S. Surface Transportation Board (STB) to adopt new rules for grain shippers to challenge rail freight rates, alleging that current regulations allow railroads to extract “excessive monopoly profits” from agricultural customers.
In a filing with the federal regulator, the NGFS proposed a new “rate-reasonableness methodology” that it says can be used for rate cases involving all commodities eligible for rail arbitration under NGFA's Rail Arbitration Rules. This includes all grains and oilseeds, products derived therefrom (including corn and soybean meal and oil, flour, distillers grains and other feed ingredients), and ethanol and biodiesel.
The association says it is hoping to simplify the process for challenging unreasonable rail rates, while greatly reducing the cost of bringing a rate challenge and expediting the timeliness of STB decisions.
In December, the STB launched a proceeding to examine whether a new approach is needed to allow captive shippers to challenge grain rail rates. NGFA says the agency acted largely in response to its previous filings that maintained current procedures for challenging rates are “unworkable” for agricultural shippers.
“We are pleased the STB has recognized that its current rate case procedures and rules are not amenable to challenges to rail rates for agricultural commodities, and that it is willing to consider adopting rate rules and procedures that are specific to...the unique aspects of the agricultural industry and commodity markets...that are both domestic and international in nature."
NGFA says its proposed methodology relies upon comparable traffic to the challenged rail movement drawn from all railroads using the STB's waybill data sample. Among the factors assessed are distance of the movement, the type of commodity being hauled, the railcar type, whether the railcar is shipper- or railroad-owned, and the type of movement, such as single-car multi-car or unit-train shipments.
To provide a much simpler and less expensive challenge procedure, the NGFA calls for using information obtainable from the STB or available publicly. The proposal would not allow the use of “other relevant factors” or other methods that have been utilized by carriers in the past to complicate rate-challenge proceedings. In addition, the proposal would not place any limits on the amount of rate relief that a challenging shipper could receive.
The NGFA proposes a procedural schedule under which the STB could issue a final decision in 170 days or less after a complaint is filed. The association also asks the STB to confirm existing rules that allow parties directly or indirectly affected by unreasonable rates to seek relief. That would allow agricultural producers who do not directly pay rail rates to challenge the reasonableness of the rates charged to grain elevators and other intermediaries to whom they sell their crops.
The STB has given all parties involved in the proceeding until Aug. 25 to submit comments. NGFA said the board has indicated it likely will conduct a public hearing in the proceeding later this year.
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