Railroads ask federal courts to toss new STB rules for settling rate disputes

WASHINGTON – Railroads have filed suit against the Surface Transportation Board’s new rules that are designed to streamline the settlement of rate disputes with shippers.

Last month the STB established two new rate reasonableness procedures, including a voluntary arbitration program and a new process called Final Offer Rate Review. Shippers applauded the move, while the Association of American Railroads said the rules were unworkable.

Union Pacific on Dec. 27 challenged the Final Offer Rate Review rule in a suit filed with the U.S. Court of Appeals for the Eighth Circuit.

CSX Transportation on Dec. 29 filed suit in the U.S. Court of Appeals for the 11th Circuit that challenges the arbitration program. Canadian National’s U.S. subsidiaries, Illinois Central and Grand Trunk, on the same day filed suit against the arbitration program in the U.S. Court of Appeals for the Seventh Circuit.

The suits were disclosed in regulatory filings posted on the STB website on Wednesday.

In announcing the rules, STB Chairman Martin J. Oberman said the decision would make it easier, faster, and cheaper for shippers to file and settle rate cases worth up to $4 million in relief over two years.

“The two rules attempt to strike a balance between the competing interests of various stakeholders,” Oberman said in a statement. “While much of the shipper community has expressed a preference for FORR and the railroad community pursued a voluntary arbitration program in lieu of FORR, both rules have much in common – they both offer relief under similar timeframes, allow for flexibility to use different methodologies, and have the same monetary limits. I am confident that either program will provide shippers with access to more meaningful rate relief than was previously available to them.”

The AAR said Final Offer Rate Review exceeds the STB’s authority because the board would pick rates either proposed by the shipper or the railroad involved rather than perform any economic analysis.

The AAR was critical of the arbitration program’s requirement that all seven Class I railroads agree to participate.