WASHINGTON — The Surface Transportation Board has dismissed a complaint from a coalition of rail shippers taking issue with what they characterized as unfair fuel surcharges.
The STB’s decision to deny the petition for reconsideration on Dec. 30 is the latest in a long-brewing conflict over fuel surcharges. Railroads say they are simply trying to recoup their fuel costs, whereas shippers say the Class Is are actually trying to juice the bottom line.
In the early 2000s, shippers began to complain that railroads were charging exorbitant fees related to fuel usage and that in some cases carriers were actually recovering amounts “over and above” their actual increased fuel costs. The STB ruled in 2006 that if a fuel surcharge was used as “a broader revenue enhancement measure, it is mislabeled” and prohibited surcharges created from the percentage of a base shipping rate.
The STB directed “that any fuel surcharge program applied to regulated traffic must be based on attributes of a movement (such as mileage) that directly affect the amount of fuel consumed.”
The STB created a “safe harbor” index based on the Highway Diesel Fuel Index that carriers could use to craft fuel surcharges. The regulator noted that since the index had already subject to “notice and comment scrutiny” that it would not be subject to challenges from shippers. However, that declaration did not stop Cargill Inc. from filing a complaint alleging that BNSF Railway had used the “safe harbor” index to overcharge the company by hundreds of millions of dollars over five years, far exceeding its actual fuel cost increases. The STB dismissed Cargill’s complaint in 2013.
In 2014, the STB issued an advance notice of proposed rulemaking seeking comments on whether the “safe harbor” provision should be modified or removed. The board specifically wanted to know if the issues seen in the Cargill case were unique. The STB received 15 comments and 10 replies, noting that responses were “varied” but ultimately inconclusive. After five years of inaction, and no agreement between the board’s members, the STB decided to close the matter with no further action.
On Sept. 18, 2019, the Western Coal Traffic League, the American Public Power Association, the Edison Electric Institute, the Freight Rail Customer Alliance, and the National Rural Electric Cooperative Association filed a petition for reconsideration of the board’s decision. In its petition, the shippers alleged the board failed to follow past rulings or consider evidence suggesting the railroads were still using the surcharges to turn a profit rather than recoup costs.
On Dec. 30, the STB ruled that the shipper’s petition for reconsideration “rested on various claims of material error.” At the core of the dismissal was that the shippers never challenged the STB’s rationale for discontinuing the proceeding, which was ultimately because it could not come to a unanimous decision, and that the board was well within its discretion to close the docket due to a lack of substantial feedback from stakeholders.
The STB’s decision only impacts rail traffic subject to regulation. However, non-regulated traffic shippers are also speaking out about fuel surcharges. In October, more than two dozen companies, from Campbell’s Soup to Mercedes-Benz USA, filed lawsuits against multiple Class Is alleging the railroads had conspired to charge excessive fuel surcharges to generate profits [See: “More shippers file suits over railroad fuel surcharges,” Trains News Wire, Oct. 3, 2019].
