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ACC: STB Decision on Rail Policy Reforms Is a Step Forward, but More Needs to Be Done to Promote Freight Rail Competition


Contact: Scott Jensen (202) 249-6511  
Email: Scott_Jensen@americanchemistry.com

WASHINGTON (July 22, 2013)The American Chemistry Council (ACC) issued the following statement on the recent decision by the Surface Transportation Board (STB) in docket Ex Parte 715, which examined an array of rate complaint procedures. In particular, the STB revised the relief caps that it places on the amount a shipper can recover in small and medium size rail rate cases. The STB also decided not to adopt its proposal that would have restricted the use of “cross-over traffic,” an important practice used in evaluating whether a challenged rail rate is reasonable.

“ACC and its members are encouraged by the ongoing efforts by Chairman Elliott and his fellow commissioners to review current policies to help ensure the Board works on behalf of both shippers and railroads. We commend the STB for its recent decision to increase the relief cap for the small Three-Benchmark cases from $1 million to $4 million and to eliminate the $5 million relief cap for the medium size ‘simplified Stand Alone Cost’ procedures. This change will help make the rate dispute process more accessible since the current relief caps have served as a strong disincentive for shippers considering challenges to unreasonably high rail rates.

“We also applaud the STB’s decision not to restrict the use of cross-over traffic in rate cases. The Board wisely avoids complicating an already very complex, expensive and lengthy process. The STB stated clearly that cross-over traffic ‘is now a well-established practice in [the large Stand Alone Cost] cases.’ The STB’s procedures offer the only means to protect rail shippers against excessive freight rates and the proposed restrictions would have denied shippers effective access to relief. 

“Beyond this decision, we encourage the Board to pursue substantive reforms that would help unleash market forces and reduce the need to adjudicate rate disputes. As recent research has shown, freight rail rates have skyrocketed by 76 percent since 2001 after two decades of freight railroad consolidation. In 2011 alone, chemical shippers paid a $4.1 billion premium to ship products by rail. Sharp increases in rail rates have a ripple effect across the economy and make U.S. manufacturers less competitive in a global marketplace. That’s why policymakers, including the STB and Congress, must adopt reforms that promote greater freight rail competition.”

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