[Federal Register Volume 59, Number 31 (Tuesday, February 15, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-3472]


[[Page Unknown]]

[Federal Register: February 15, 1994]


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INTERSTATE COMMERCE COMMISSION

[Ex Parte No. 347 (Sub-No. 2)]

 

Rate Guidelines; Non-Coal Proceedings

    In a petition filed January 14, 1992, the Association of American 
Railroads (AAR) proposed a simplified stand-alone cost (SSAC) method 
for determining maximum rate reasonableness in small shipper complaint 
proceedings. SSAC employs a computer program which the AAR claims 
estimates stand-alone cost.1 On February 25, 1993, the 
Commission's staff and AAR conducted a workshop to explain their 
respective proposals for simplified maximum rate methodologies. The 
Commission's staff presented a briefing on its Revenue Shortfall 
Allocation Method (RSAM) and AAR, and its consultants, discussed the 
mechanics and theory of SSAC.
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    \1\Stand-alone cost is the Constrained Market Pricing (CMP) 
constraint most often used to evaluate rail rate reasonableness. 
See, Coal Rate Guidelines--Nationwide, 1 I.C.C.2d 520 (1985).
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    On April 28, 1993, the AAR conducted a second technical 
demonstration of SSAC. At that demonstration the AAR applied their 
model to three hypothetical rail movements developed by the 
Commission's staff. The results, produced by the SSAC model, did not 
appear to set a meaningful limit on rates.
    In a decision served December 17, 1993, the Commission asked the 
AAR to explain why the SSAC method should receive further 
consideration, given its apparent infirmities. On January 14, 1994, the 
AAR filed a petition requesting a waiver of that written explanation 
and proposed instead to make an oral presentation before the full 
Commission. The AAR indicates that representative railroad CEO's and 
their economic experts will explain why, ``in light of the logic of CMP 
and in the context of circumstances facing the railroads, shippers and 
the Commission, SSAC is a sound tool for developing probative 
evidence'' in maximum rate reasonableness proceedings.
    Several shipper interests2 filed a joint response (dated 
January 26, 1994) to the AAR's request. Although the shippers do not 
oppose AAR's petition, they request an opportunity to respond to any 
AAR presentation. The shippers suggest that AAR be directed to present 
in writing the evidence it intends to present orally to the Commission, 
with service upon all parties and that the Commission allow shippers to 
reply. On February 1, 1994 the AAR replied.
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    \2\The Society of The Plastics Industry, Inc., The National 
Industrial Transportation League, Edison Electric Institute, and 
Western Coal Traffic League.
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    Given the importance of the non-coal rate guidelines, the time and 
effort AAR has put into developing its SSAC method, and the concerns 
expressed by the Commission's staff and shippers about the infirmities 
of SSAC, we believe an oral presentation would be helpful as we 
consider what action to take in this area. While we understand the 
theory underlying CMP and the need to develop simplified rate 
guidelines consistent with that theory, we need to understand how the 
SSAC results can produce a realistic limit on rates. Therefore, the 
railroads should explain their position with a written statement prior 
to their oral presentation as directed below. However, we do not 
believe that it is necessary at this time to schedule a hearing for all 
parties to present evidence on the same date. The Commission will 
schedule a second hearing for shippers if deemed necessary.
    Due to the nature and importance of this proceeding, the Commission 
finds it necessary to modify its current service list as directed 
below.
    For further information contact Thomas A. Schmitz (202) 927-5720). 
TDD for the hearing impaired: (202) 927-5721.
    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.
    It is ordered:
    1. Persons already on our current service list, as well as those 
persons not already on the list, but who wish henceforth to participate 
must advise the Commission, in writing, of their intent to do so, on or 
before February 25, 1994. Persons must indicate whether they intend to 
actively participate as a party of record, or wish only to receive 
copies of Commission decisions. An original and 10 copies of these 
mailings referencing Ex Parte 347 (Sub-No. 2), supra, must be mailed 
to: Office of the Secretary, Interstate Commerce Commission, 
Washington, DC 20423.
    2. AAR's comments, originally ordered in our decision dated 
December 17, 1993, are now due March 17, 1994.
    3. In its comments explaining why SSAC should receive further 
consideration, the AAR is requested, among other things, to address the 
results produced by their SSAC model. Specifically, the AAR should 
discuss the reasonableness of the results, as opposed to the 
theoretical underpinnings of their model, and describe why they believe 
such output provides a useable constraint on rail rates in the context 
of a small shipper rate reasonableness proceeding. AAR's comments 
should also provide a schedule for their oral presentation including a 
list of speakers, the time required for each speaker, and a synopsis of 
the topics to be discussed by each. AAR should serve upon each party of 
record all evidence filed with the Commission based on the revised 
service list which we will provide as soon as possible after the 
service list is modified.
    4. AAR's oral presentation will be held between 10 a.m. and noon, 
March 30, 1994, in Hearing room A, Interstate Commerce Commission, 12th 
Street and Constitution Avenue, NW., Washington, DC.
    5. Other interested persons may file comments addressing the AAR's 
written and oral presentations by April 30, 1994. Those persons may 
indicate whether, in addition to their written comments, they wish to 
make an oral presentation to the Commission.

    Decided: February 7, 1994.

    By the Commission, Chairman McDonald, Vice Chairman Phillips, 
Commissioners Simmons and Philbin.
Sidney L. Strickland, Jr.,
Secretary.
[FR Doc. 94-3472 Filed 2-14-94; 8:45 am]
BILLING CODE 7035-01-P