[Federal Register Volume 80, Number 92 (Wednesday, May 13, 2015)]
[Proposed Rules]
[Pages 27280-27281]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-11558]



[[Page 27280]]

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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

49 CFR Parts 1300 and 1313

[Docket No. EP 665 (Sub-No. 1)]


Rail Transportation of Grain, Rate Regulation Review

AGENCY: Surface Transportation Board, DOT.

ACTION: Notice of public hearing.

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SUMMARY: The Surface Transportation Board (Board) will hold a public 
hearing on June 10, 2015, at its offices in Washington, DC, to further 
examine issues related to the accessibility of rate complaint 
procedures for grain shippers.

DATES: The hearing will be held on June 10, 2015, beginning at 9:30 
a.m., in the Hearing Room at the Board's headquarters located at 395 E 
Street SW., Washington, DC. June 11, 2015, will be reserved should a 
second day of testimony be necessary to accommodate all parties wishing 
to testify. The hearing will be open for public observation. Any party 
wishing to speak at the hearing shall file with the Board a notice of 
intent to participate (identifying the party, the proposed speaker, the 
time requested, and a summary of the key points the speaker intends to 
address) no later than May 29, 2015. Notices of intent to participate 
are not required to be served on the parties of record; they will be 
posted to the Board's Web site when they are filed. Parties shall file 
hearing exhibits, if any, by June 10, 2015.

ADDRESSES: All filings may be submitted either via the Board's e-filing 
format or in the traditional paper format. Any person using e-filing 
should attach a document and otherwise comply with the instructions at 
the ``E-FILING'' link on the Board's Web site at ``www.stb.dot.gov.'' 
Any person submitting a filing in the traditional paper format should 
send an original and 10 copies of the filing to: Surface Transportation 
Board, Attn: Docket No. EP 665 (Sub-No. 1), 395 E Street SW., 
Washington, DC 20423-0001.
    Copies of written submissions will be posted to the Board's Web 
site and will be available for viewing and self-copying in the Board's 
Public Docket Room, Suite 131. Copies of the submissions will also be 
available (for a fee) by contacting the Board's Chief Records Officer 
at (202) 245-0238 or 395 E Street SW., Washington, DC 20423-0001.

FOR FURTHER INFORMATION CONTACT: Valerie Quinn at (202) 245-0382. 
Assistance for the hearing impaired is available through the Federal 
Information Relay Service (FIRS) at (800) 877-8339.

SUPPLEMENTARY INFORMATION: Where a railroad has market dominance--i.e., 
a shipper is captive to a single railroad--its transportation rates for 
common carrier service must be reasonable. 49 U.S.C. 10701(d)(1), 
10702. The Board's general standards for judging the reasonableness of 
rail freight rates are set forth in Coal Rate Guidelines, Nationwide, 1 
I.C.C. 2d 520 (1985), aff'd sub nom. Consolidated Rail Corp. v. United 
States, 812 F.2d 1444 (3d Cir. 1987). The Board has also adopted two 
simplified methods for determining the reasonableness of challenged 
rail rates, the Simplified Stand-Alone Cost (SAC) test and the Three-
Benchmark test. See Simplified Standards for Rail Rate Cases 
(Simplified Standards), EP 646 (Sub-No. 1) (STB served Sept. 5, 2007), 
aff'd sub nom. CSX Transp., Inc. v. STB, 568 F.3d 236 (D.C. Cir.), 
vacated in part on reh'g, 584 F.3d 1076 (D.C. Cir. 2009). Under the 
Three-Benchmark method, the reasonableness of a challenged rate is 
determined by examining the challenged rate in relation to three 
benchmark figures, each of which is expressed as a revenue-to-variable 
cost (R/VC) ratio. Rate Regulation Reforms, EP 715, slip op. at 11 (STB 
served July 25, 2012).\1\ If a challenged rate is above a reasonable 
confidence interval around the estimate of the mean for the adjusted 
comparison group, it is presumed unreasonable and, absent any ``other 
relevant factors,'' the maximum lawful rate will be prescribed at that 
boundary level. See Simplified Standards, slip op. at 21-22.
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    \1\ Under Simplified-SAC, the Board determines whether a captive 
shipper is being forced to cross-subsidize other parts of the 
railroad's rail network by comparing the costs and revenues of the 
actual operations and services provided under the assumption that 
all existing infrastructure along the predominant route used to haul 
the complainant's traffic is needed to serve the traffic on that 
route. Rate Regulation Reforms, EP 715, slip op. at n.2 (STB served 
Mar. 13, 2015).
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    By a decision served in this proceeding on December 12, 2013, the 
Board invited public comment on how to ensure that the Board's rate 
complaint procedures are accessible to grain shippers and provide 
effective protection against unreasonable freight rail transportation 
rates. The Board sought input from interested parties on grain 
shippers' ability to effectively seek relief for unreasonable rates, 
including proposals for modifying existing procedures, or new 
alternative rate relief methodologies, should they be necessary.
    The public comment period was intended to allow parties to consider 
and propose ways that the Board could make the rate reasonableness 
process more accessible to grain shippers. In the comments, parties 
have raised a number of proposals and identified a number of issues 
that merit further discussion. Accordingly, the Board will hold a 
public hearing beginning at 9:30 a.m., on June 10, 2015, at its offices 
in Washington, DC, to further examine issues related to the 
accessibility of rate complaint procedures for grain shippers and 
provide interested persons the opportunity to comment on the 
modifications to the existing procedures and the alternative rate 
relief methodologies proposed during the public comment period. In 
addition to their own proposals and responses, the parties should be 
prepared to discuss the following issues:
    Jurisdictional Threshold. In the comments, it was suggested that 
the Board's Uniform Railroad Costing System (URCS) prevents grain 
shippers from accessing potential rate relief because URCS over-
estimates the cost of shipping grain. Although parties are currently 
prohibited from making movement-specific adjustments to URCS, parties 
are invited to discuss whether the Board should revisit this 
prohibition in determining the quantitative market dominance threshold 
in rate cases for grain shipments.
    Definition of Grain. In the comments, some shippers argued in favor 
of an expansive definition of ``grain'' that includes both grain and 
grain products. Because certain grain products, such as ethanol, 
require different treatment in terms of railroad operations, interested 
parties should be prepared to discuss whether an expansive definition 
of ``grain'' is appropriate in this proceeding.
    Modifications and Alternatives to the Three-Benchmark Approach in 
Grain Rates Cases. Several commenters argue that the Three-Benchmark 
test puts too many limitations on the types of shipments that a shipper 
can include in its comparison group upon which the Board relies to 
determine if the railroad's rate is unreasonable.\2\ Accordingly, 
parties should be prepared to discuss the idea of allowing the use of 
non-defendant traffic and/or traffic with R/VC ratios below 180% in 
comparison groups for grain shipments.
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    \2\ See Alliance for Rail Competition Opening, V.S. Fauth 22-24.

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    In the comments, various parties have also proposed new 
methodologies that could be used specifically for rate cases involving 
grain shipments. These approaches include adopting a ``Two-Benchmark'' 
approach for grain shipments hauled by revenue adequate carriers \3\ 
and replacing the existing Three-Benchmark approach with an ``Ag 
Commodity Maximum Rate Methodology,'' which includes a ``Revenue 
Adequacy Adjustment Factor.'' \4\ To the extent that any parties feel 
that these approaches have merit or are flawed, they should be prepared 
to discuss.
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    \3\ See id. at 25.
    \4\ See National Grain and Feed Association Opening 27-35.
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    Revenue Adequacy. Interested parties are invited to address whether 
the Board should consider the revenues and costs of Canadian carriers' 
full-system operations, to include the parent company and subsidiaries, 
when determining revenue adequacy in rate reasonableness challenges of 
grain shipments.
    Aggregation of Claims. Interested parties are asked to address 
whether the Board should allow multiple agricultural farmers and other 
agricultural shippers to aggregate their distinct rate claims against 
the same carrier into a single proceeding.
    Other Ideas. Additionally, in further considering the matter of 
grain rates, parties are invited to discuss whether there are ways in 
which the Board could create greater transparency for grain shippers 
regarding how railroads set rates. To that end, parties at the hearing 
are asked to address the disclosure requirements for agricultural 
tariff rates under 49 CFR 1300.5 \5\ and whether this requirement 
should be modified to allow for increased transparency. Parties are 
also asked to address the requirement that rail carriers file 
agricultural contract summaries under 49 CFR part 1313 \6\ and whether 
this requirement should be modified to allow for increased 
transparency.
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    \5\ Under Sec.  1300.5(a), a rail carrier must publish, make 
available, and retain for public inspection its currently effective 
rates, schedules of rates, charges, and other service terms, and any 
scheduled changes to the same with respect to transportation of 
agricultural products (including grain, as defined in 7 U.S.C. 75 
and products thereof). The information published must include an 
accurate description of the services offered to the public; the 
specific applicable rates (or the basis for calculating the rates), 
charges, and service terms; and be arranged in a way that allows for 
the determination of the exact rate, charges, and service terms 
applicable to any given shipment. 49 CFR 1300.5(b). Additionally, 
the rail carrier must highlight any increases, reductions, and other 
changes so that the nature and effective dates of those changes are 
readily identifiable. Id.
    \6\ Section 1313 requires that rail carriers subject to the 
Board's jurisdiction promptly file a summary of each contract for 
the transportation of agricultural products (including grain as 
defined in 7 U.S.C. 75) and allows complaints to be filed regarding 
such contracts. 49 CFR 1313.1 and 1313.2. The level of information 
that must be provided in the summary varies depending on whether 
contract is for grain and whether the shipment is to a port. At a 
minimum the summary must include: The carrier name; the specific 
commodity; the shipper's identity; the rail car data; the rates; and 
the charges.
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Board Releases and Live Video Streaming Available via the Internet

    Decisions and notices of the Board, including this notice, are 
available on the Board's Web site at ``www.stb.dot.gov.'' This hearing 
will be available on the Board's Web site by live video streaming. To 
access the hearing, click on the ``Live Video'' link under 
``Information Center'' at the left side of the home page beginning at 
9:30 a.m. on June 10, 2015.
    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.
    It is ordered:
    1. A public hearing will be held on June 10, 2015, at 9:30 a.m., in 
the Board's Hearing Room, at 395 E Street SW., Washington, DC, as 
described above.
    2. Any party wishing to speak at the hearing shall file with the 
Board a notice of intent to participate (identifying the party, the 
proposed speaker, the time requested, and a summary of the key points 
the speaker intends to address) no later than May 29, 2015. The notices 
of intent to participate need not be served on the parties of record. 
Parties appearing at the hearing shall file hearing exhibits, if any, 
by June 10, 2015.
    3. This decision is effective on its service date.

    Decided: May 8, 2015.

    By the Board, Joseph H. Dettmar, Acting Director, Office of 
Proceedings.
Raina S. Contee,
Clearance Clerk.
[FR Doc. 2015-11558 Filed 5-12-15; 8:45 am]
 BILLING CODE 4915-01-P