FORR Effective March 6 For Rail Rate Challenges at STB

This article is taken from NFGA's March 3 newsletter.

Effective March 6, Final Offer Rate Review (FORR) at the Surface Transportation Board (STB) becomes available for shippers to challenge unreasonable rail rates.

The deadline for Class I railroads to opt-in for the Small Rate Case Arbitration Program passed on Feb. 23. STB set up the opt-in procedure as all or none, so if even a single rail carrier opted out of the arbitration program then all rail carriers would be enrolled in FORR. All Class I railroads, with the exception of BNSF, opted out of the arbitration program or wrote that there is no need for a decision since other carriers have opted out.

Therefore, shippers may file a notice of intent under FORR as soon as March 6.

Rate relief available under FORR is limited to approximately $4 million over two years, and rate challenges are only available where the carrier has market dominance, which means no economically effective transportation alternative to a market.

Under a FORR case, the complainant and the railroad each submit an analysis of whether the challenged rate is reasonable and a final offer rate. If the STB decides that the challenged rate is unreasonable, it will select one of the final offers.

The process takes 164 days from the complaint until the STB decision or 149 days if the shipper elects to use the streamlined market-dominance approach. A shipper must file a notice of intent at least 25 days before filing its complaint, and there is a mandatory 20-day mediation period after the shipper files its notice of intent and the STB appoints a mediator.

There are two more reconsideration decisions still to come from STB that could impact the operation of FORR. They are decisions on a petition for reconsideration filed by CSX on revenue adequacy and a petition for reconsideration filed jointly by UP and NS on the following items: 1) the precedential value of decisions on appeals; 2) the requirement that Class I railroads decide whether to sign up for the arbitration program within a 20-day window after the effective date of the rule; 3) the requirement that all Class I carriers opt in for the arbitration program to become operable; 4) the lead arbitrator selection process for the arbitration program; and 5) the reference to “regulated commodities” instead of “regulated traffic.”

Also, UP and the Association of American Railroads have challenged FORR in the U.S. Court of Appeals. NGFA has filed with the court to preserve its right to submit an intervenor’s brief if the court asks for it, and to participate in the oral argument if NGFA requests and the court allows it. FORR will continue to be available for shippers while the court considers the appeals.