[Federal Register Volume 88, Number 2 (Wednesday, January 4, 2023)]
[Rules and Regulations]
[Pages 299-320]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-27926]


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SURFACE TRANSPORTATION BOARD

49 CFR Parts 1002, 1111, 1114 and 1115

[Docket No. EP 755; Docket No. EP 665 (Sub-No. 2)]


Final Offer Rate Review; Expanding Access to Rate Relief

AGENCY: Surface Transportation Board.

ACTION: Final rule; termination of proceeding.

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SUMMARY: The Surface Transportation Board (STB or Board) is adopting a 
final rule in Docket No. EP 755 to establish a new procedure for 
challenging the reasonableness of railroad rates in smaller cases. 
Under this rate review procedure, the Board will decide a case by 
selecting either the complainant's or the defendant's final offer, 
subject to an expedited procedural schedule that adheres to firm 
deadlines. The Board is also terminating its proceeding in Docket No. 
EP 665 (Sub-No. 2).

DATES: The final rule is effective March 6, 2023. The termination of 
proceeding is effective on January 3, 2023.

FOR FURTHER INFORMATION CONTACT: Amy Ziehm at (202) 245-0391. 
Assistance for the hearing impaired is available through the Federal 
Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION: In January 2018, the Board established its 
Rate Reform Task Force (RRTF), with the objectives of developing 
recommendations to reform and streamline the Board's rate review 
processes for large cases and determining how to best provide a rate 
review process for smaller cases. After holding informal meetings 
throughout 2018, the RRTF issued a report on April 25, 2019 (RRTF 
Report).\1\ Among other recommendations, the RRTF included a proposal 
for a final offer procedure, which it described as ``an administrative 
approach that would take advantage of procedural limitations, rather 
than substantive limitations, to constrain the cost and complexity of a 
rate reasonableness case.'' RRTF Rep. 12. Versions of a final offer 
process for rate review have also been recommended by the U.S. 
Department of Agriculture (USDA) and a committee of the Transportation 
Research Board (TRB).
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    \1\ The RRTF Report was posted on the Board's website on April 
29, 2019, and can be accessed at https://www.stb.gov/stb/rail/Rate_Reform_Task_Force_Report.pdf.
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    In a notice of proposed rulemaking issued on September 12, 2019, 
the Board proposed to build on the RRTF recommendation and establish a 
new rate case procedure for smaller cases, the Final Offer Rate Review 
(FORR) procedure. Final Offer Rate Rev. (NPRM), EP 755 et al. (STB 
served Sept. 12, 2019).\2\
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    \2\ The NPRM was published in the Federal Register, 84 FR 48872 
(Sept. 17, 2019).
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    The Board received numerous comments on the NPRM. By decision 
served on May 15, 2020, to permit informal discussions with 
stakeholders, the Board waived the general prohibition on ex parte 
communications between June 1, 2020, and July 15, 2020.

[[Page 300]]

Meetings took place during the specified period; parties filed 
memoranda pursuant to 49 CFR 1102.2(g)(4); the memoranda were posted on 
the Board's website; and parties were permitted to submit written 
comments in response to the memoranda.
    On November 15, 2021, the Board issued a supplemental notice of 
proposed rulemaking, which made minor changes to the proposal in the 
NPRM. Final Offer Rate Rev. (SNPRM), EP 755 et al. (STB served Nov. 15, 
2021).\3\ The Board issued the SNPRM ``so that the modified FORR 
proposal may be considered in parallel with the proposal in Docket No. 
EP 765 to establish an arbitration program that could include an 
exemption from FORR for carriers that participate in the program.'' 
SNPRM, EP 755 et al., slip op. at 9. The Board received several 
comments and reply comments on the SNPRM.\4\
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    \3\ The SNPRM was published in the Federal Register, 86 FR. 
67622 (Nov. 26, 2021).
    \4\ The following parties submitted comments on the SNPRM: the 
American Chemistry Council, The Fertilizer Institute, the National 
Industrial Transportation League, the Chlorine Institute, and the 
Corn Refiners Association (collectively, the Coalition 
Associations); the American Fuel & Petrochemical Manufacturers 
(AFPM); the Association of American Railroads (AAR); BNSF Railway 
Company (BNSF); Indorama Ventures (Indorama); Industrial Minerals 
Association--North America (IMA-NA); National Grain and Feed 
Association (NGFA); Olin Corporation (Olin); Union Pacific Railroad 
Company (UP); and USDA.
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    After considering the comments filed in response to the NPRM and 
SNPRM and information received in meetings with stakeholders, the Board 
will adopt its proposal in Docket No. EP 755 as modified in the SNPRM. 
The Board will also terminate the proceeding in Docket No. EP 665 (Sub-
No. 2).\5\
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    \5\ These proceedings are not consolidated. A single decision is 
being issued for administrative convenience.
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    To the extent the discussion below does not revisit issues raised 
in comments on the NPRM, the SNPRM contains the Board's analysis of 
those issues.

Background

    In the ICC Termination Act of 1995 (ICCTA), Congress directed the 
Board to ``establish a simplified and expedited method for determining 
the reasonableness of challenged rail rates in those cases in which a 
full stand-alone cost [(SAC)] presentation is too costly, given the 
value of the case.'' Public Law 104-88, 109 Stat. 803, 810. In the 
Surface Transportation Board Reauthorization Act of 2015 (STB 
Reauthorization Act), Public Law 114-110, 129 Stat. 2228, Congress 
revised the text of this requirement so that it currently reads: 
``[t]he Board shall maintain 1 or more simplified and expedited methods 
for determining the reasonableness of challenged rates in those cases 
in which a full [SAC] presentation is too costly, given the value of 
the case.'' 49 U.S.C. 10701(d)(3) (emphasis added). In addition, 
section 11 of the STB Reauthorization Act modified 49 U.S.C. 10704(d) 
to require that the Board ``maintain procedures to ensure the 
expeditious handling of challenges to the reasonableness of railroad 
rates.'' \6\ More generally, the rail transportation policy (RTP) at 49 
U.S.C. 10101 states that, in regulating the railroad industry, it is 
the policy of the United States Government to, among other things, 
``provide for the expeditious handling and resolution of all 
proceedings required or permitted to be brought under this part.'' 49 
U.S.C. 10101(15).
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    \6\ Prior to the enactment of the STB Reauthorization Act, Sec.  
10704(d) began with a sentence stating that, ``[w]ithin 9 months 
after January 1, 1996, the Board shall establish procedures to 
ensure expeditious handling of challenges to the reasonableness of 
railroad rates.'' See, e.g., 49 U.S.C. 10704(d) (2014).
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    In 1996, the Board adopted a simplified methodology, known as 
Three-Benchmark, which determines the reasonableness of a challenged 
rate using three benchmark figures. Rate Guidelines--Non-Coal Proc., 1 
S.T.B. 1004 (1996), pet. to reopen denied, 2 S.T.B. 619 (1997), appeal 
dismissed sub nom. Ass'n of Am. R.Rs. v. STB, 146 F.3d 942 (D.C. Cir. 
1998). A decade passed without any complainant bringing a case under 
that methodology. In 2007, the Board modified the Three-Benchmark 
methodology and also created another simplified methodology, known as 
Simplified-SAC, which determines whether a captive shipper is being 
forced to cross-subsidize other parts of the railroad's network. See 
Simplified Standards for Rail Rate Cases, 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. 2009), vacated in part on reh'g, 584 F.3d 1076 
(D.C. Cir. 2009). In 2013, the Board increased the relief available 
under the Three-Benchmark methodology and removed the relief limit on 
the Simplified-SAC methodology, among other things. See Rate Regul. 
Reforms, EP 715 (STB served July 18, 2013), remanded in part sub nom. 
CSX Transp., Inc. v. STB, 754 F.3d 1056 (D.C. Cir. 2014). 
Notwithstanding the Board's efforts to improve its rate review 
methodologies and make them more accessible, only a few Three-Benchmark 
cases have ever been brought to the Board, and no complaint has been 
litigated to completion under the Simplified-SAC methodology.
    The Board has recognized that, for smaller disputes, the litigation 
costs required to bring a case under the Board's existing rate 
reasonableness methodologies can quickly exceed the value of the case. 
Expanding Access to Rate Relief, EP 665 (Sub-No. 2), slip op. at 10 
(STB served Aug. 31, 2016). As the Board stated in Simplified 
Standards, ``[f]or some shippers who have smaller disputes with a 
carrier, even [Simplified-SAC] would be too expensive, given the 
smaller value of their cases. These shippers must also have an avenue 
to pursue relief.'' Simplified Standards, EP 646 (Sub-No. 1), slip op. 
at 16. Along similar lines, as the Board has previously stated, 
simplified procedures ``enable the affected shippers to avail 
themselves of their statutory right to challenge rates charged on 
captive rail traffic regardless of the size of the complaint.'' Non-
Coal Proc., 1 S.T.B. at 1057.\7\
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    \7\ See also Calculation of Variable Costs in Rate Compl. Proc. 
Involving Non-Class I R.Rs., 6 S.T.B. 798, 803 & n.19 (2003) (``[W]e 
have adopted simplified evidentiary procedures for adjudicating rate 
reasonableness in those cases where more sophisticated procedures 
are too costly or burdensome, `to ensure that no shipper is 
foreclosed from exercising its statutory right to challenge the 
reasonableness of rates charged on its captive traffic.''' (quoting 
Non-Coal Proc., 1 S.T.B. at 1008)); Mkt. Dominance Determinations--
Prod. & Geographic Competition, 3 S.T.B. 937, 949 (1998) (excluding 
product and geographic competition from consideration in market 
dominance determinations so as to ``remove a substantial obstacle to 
the shippers' ability to exercise their statutory rights'').
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    In public comments, shippers and other interested parties have 
repeatedly stated that the Board's current options for challenging the 
reasonableness of rates do not meet their need for expeditious 
resolution of disputes at a reasonable cost.\8\ Moreover, because a 
contract rate may not be challenged before the Board, 49 U.S.C. 
10709(c)(1), a party to a contract that is seeking a lower rate may 
shift from contract rates to tariff rates before bringing a rate case, 
and tariff rates may be higher than prior

[[Page 301]]

contract rates.\9\ That factor gives complainants a strong interest in 
having a rate case decided quickly, from start to finish.
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    \8\ See, e.g., Alliance for Rail Competition Opening Comment 22, 
June 26, 2014, Rail Transp. of Grain, Rate Regul. Rev., EP 665 (Sub-
No. 1) (stating that the Three-Benchmark methodology is too costly 
and complex for grain shippers and producers in its current form); 
WCTL Opening Comment 74-76, Oct. 23, 2012, Rate Regulation Reforms, 
EP 715 (the cost and complexity of the Simplified-SAC methodology 
discourage its use); Oversight of the STB Reauthorization Act of 
2015 Before the Subcomm. on R.Rs., Pipelines, & Hazardous Materials 
of the H. Comm. on Transp. & Infrastructure, 115th Cong. (2018) 
(letter from Chris Jahn, then-President of The Fertilizer Institute, 
submitted for the record) (due to the time and expense needed to 
pursue a rate case, it ``does not work'' for most complainants).
    \9\ As an example, a recent rate proceeding involved a 
complainant that had been served pursuant to contracts for many 
years and then filed its complaint as soon as its contract expired. 
See Consumers Energy Co. Compl. 4-5, Jan. 13, 2015, Consumers Energy 
Co. v. CSX Transp., Inc., NOR 42142; see also Occidental Chem. Corp. 
Comments 2-4, Oct. 23, 2012, Rate Regul. Reforms, EP 715 (paying the 
tariff rate for extended periods of time while a rate case is 
litigated--which can add millions of dollars in costs beyond the 
direct costs of litigation--undermines the utility of a rate 
challenge, especially if the carrier requires that all rates bundled 
with the challenged rate also shift to tariff during the pendency of 
the case); PPG Indus., Inc. Comments 3-4, Oct. 23, 2012, Rate Regul. 
Reforms, EP 715 (noting the effect of bundling and stating that 
tariff premium could reach $20 million per year of rate litigation). 
The latter two filings are cited here simply to illustrate the need 
for expedited rate reasonableness procedures, not to indicate that 
the Board takes any position in this proceeding--one way or 
another--on the appropriateness of rate bundling.
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    Accordingly, the Board has continued to explore ideas to improve 
the accessibility of rate relief. For example, in Expanding Access to 
Rate Relief, Docket No. EP 665 (Sub-No. 2), the Board sought comment on 
procedures relying on comparison groups that could comprise a new rate 
reasonableness methodology for use in very small disputes. The initial 
comments on that proposal were universally negative. But among the 
comments submitted in Docket No. EP 665 (Sub-No. 2), the Board received 
a suggestion from USDA that the Board consider procedural limitations 
to streamline and expedite its rate reasonableness review as an 
alternative to substantive limitations. See USDA Reply Comment 5-6, 
Dec. 19, 2016, Expanding Access to Rate Relief, EP 665 (Sub-No. 2). 
USDA specifically recommended a short procedural timeline as a means to 
make rate reasonableness review accessible for smaller disputes. See 
id. To implement this recommendation, USDA suggested that the Board 
adopt a final offer procedure whereby parties would submit market 
dominance and rate reasonableness evidence in a single package offer. 
See id. at 6-7.
    The Board already uses a final offer procedure as part of the 
Three-Benchmark methodology, although it is only one part of the rate 
reasonableness approach as opposed to providing the overall framework, 
as the Board is adopting here.\10\ One of the benchmarks compares the 
markup paid by the challenged traffic to the average markup assessed on 
similar traffic. See, e.g., Rate Regul. Reforms, EP 715, slip op. at 
11. To improve the efficiency of this part of the Three-Benchmark 
methodology and ``enable a prompt, expedited resolution of the 
comparison group selection,'' the Board requires each party to submit 
its final offer comparison group simultaneously, and the Board chooses 
one of those groups without modification. See Simplified Standards, EP 
646 (Sub-No. 1), slip op. at 18.
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    \10\ The Three-Benchmark methodology also includes more 
procedural steps and a longer timeline than the FORR procedure 
adopted here. See 49 CFR 1111.10(a)(2).
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    Although the Board may not require arbitration of rate disputes 
under current law,\11\ and is not doing so here, the benefits of final 
offer procedures used in other settings offer support and background 
for the Board's rule adopted here. For example, final offer procedures 
are used in commercial settings, including the resolution of wage 
disputes in Major League Baseball, and final offer arbitration is 
therefore sometimes referred to as ``baseball arbitration.'' See, e.g., 
Josh Chetwynd, Play Ball? An Analysis of Final-Offer Arb., Its Use in 
Major League Baseball, & Its Potential Applicability to Eur. Football 
Wage & Transfer Disps., 20 Marq. Sports L. Rev. 109 (2009) (noting the 
final offer procedure ``can lead to a win-win situation as it spurs 
negotiated settlement at a very high rate''); see also Michael Carrell 
& Richard Bales, Considering Final Offer Arb. to Resolve Pub. Sector 
Impasses in Times of Concession Bargaining, 28 Ohio St. J. on Disp. 
Resol. 1, 3, 16, 23-24 (2012) (noting that 14 states had codified some 
form of final offer arbitration for certain labor disputes involving 
public sector employees and noting that the procedure ``encourages the 
parties to negotiate toward middle ground rather than staking out polar 
positions'' and ``encourages the parties to settle before 
arbitration'').
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    \11\ See Arb.--Various Matters, EP 586, slip op. at 3 n.7 (STB 
served Sept. 20, 2001); see also 49 U.S.C. 10704(a)(1); 49 U.S.C. 
11704(c)(2). The Board has had a voluntary arbitration process in 
place for more than 20 years, and section 13 of the STB 
Reauthorization Act required adjustments to this process (including 
the addition of rate disputes to the types of matters eligible for 
arbitration), but to date parties have not agreed to arbitration of 
any dispute brought before the Board. See Arb. of Certain Disps., 2 
S.T.B. 564 (1997) (adopting voluntary arbitration procedures at 49 
CFR part 1108); Revisions to Arb. Proc., EP 730 (STB served Sept. 
30, 2016) (making adjustments required by STB Reauthorization Act); 
Joint Pet. for Rulemaking to Establish a Voluntary Arb. Program for 
Small Rate Disps. (Arbitration NPRM), EP 765, slip op. at 2-3 (STB 
served Nov. 15, 2021) (describing the Board's voluntary arbitration 
programs). In addition to its recommendation for a final offer 
procedure that would culminate in a decision by the Board, the RRTF 
recommended legislation that would permit mandatory arbitration of 
small rate cases. See RRTF Rep. 14-15.
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    Similarly, AAR itself provides its members a final offer procedure 
for car hire arbitration. See Circular No. OT-10, Code of Car Hire Rule 
25, https://www.railinc.com/rportal/documents/18/260773/OT-10.pdf. The 
Board described that final offer procedure as ``integral'' to its 
decision to deregulate car hire rates. See Joint Pet. for Rulemaking on 
R.R. Car Hire Comp., EP 334 (Sub-No. 8) et al., slip op. at 1 (STB 
served Apr. 22, 1997).
    Finally in this regard, the Committee for a Study of Freight Rail 
Transportation and Regulation of the Transportation Research Board (TRB 
Committee) described the benefits of adopting ``an independent 
arbitration process similar to the one long used for resolving rate 
disputes in Canada.'' Nat'l Acads. of Sciences, Eng'g, & Med., 
Modernizing Freight Rail Regul. (TRB Report) (2015), at 7, 136-40, 
http://nap.edu/21759.\12\ In particular, the TRB Committee recommended 
``a final-offer rule,'' set on a ``strict time limit,'' whereby ``each 
side offers its evidence, arguments, and possibly a changed rate or 
other remedy in a complete and unmodifiable form after a brief 
hearing.'' TRB Rep. 211-12. According to the TRB Report, adoption of 
such a procedure could enhance complainants' access to rate 
reasonableness protections, while expediting dispute resolution and 
encouraging settlements. Id. at 212.
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    \12\ In the process used by Canadian regulators, final offer 
procedures are administered by an outside arbitrator or panel of 
arbitrators. In Canada, a complainant may submit its rate dispute to 
the Canadian Transportation Agency, which refers the matter to an 
arbitrator or a panel of arbitrators. Canada Transp. Act, S.C. 1996, 
c. 10, as amended, Sec. Sec.  161(1), 162(1) (Can.). The Canadian 
statute establishes a two-tiered structure: if the matter involves 
freight charges of more than $2 million CAD (subject to an inflation 
adjustment), a 60-day procedure applies, and if the matter involves 
freight charges of $2 million CAD or less (subject to an inflation 
adjustment), a 30-day procedure applies. Id. Sec. Sec.  164.1, 
165(2)(b). Among other things, the 60-day procedure allows the 
parties to direct interrogatories to one another, and the arbitrator 
may request written filings beyond the final offers and information 
initially submitted in support of final offers. See id. Sec. Sec.  
163(4), 164(1). In the 30-day procedure, there is no discovery, and 
the arbitrator may request oral presentations from the parties but 
may not request written submissions beyond the final offers and 
replies. See id. Sec.  164.1. The arbitrator's decision is issued 
within 60 days after the matter was submitted for arbitration, or 30 
days if the further expedited procedure applies. Id. Sec.  
165(2)(b). Any resulting rate prescription is limited to two years, 
unless the parties agree to a different period. See id. Sec.  
165(2)(c).
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    The RRTF agreed that a final offer process--with the decision being 
made by the Board rather than an arbitrator--could be an effective way 
to implement procedural limitations, which would improve access to rate 
relief. RRTF Rep. 16.
    Taking into account these recommendations, the Board's NPRM 
proposed to adopt a FORR process with

[[Page 302]]

the following primary features. As proposed, FORR would allow limited 
discovery, with no litigation over discovery disputes; FORR could be 
used only if the complainant elected to use the streamlined market 
dominance approach proposed (and since adopted) in Docket No. EP 756, 
Market Dominance Streamlined Approach; \13\ and the procedural schedule 
would be brief, with a Board decision issued within 135 days after 
filing of the complaint. See NPRM, EP 755 et al., slip op. at 8-10, 13-
14.
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    \13\ Mkt. Dominance Streamlined Approach, EP 756 (STB served 
Aug. 3, 2020) (adopting final rule).
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    Parties would simultaneously submit their market dominance 
presentations, final offers, analyses addressing the reasonableness of 
the challenged rate and support for the rate in the party's offer, and 
explanations of the methodologies used and how they comply with the 
decisional criteria set forth in the NPRM. NPRM, EP 755 et al., slip 
op. at 12. Parties would next submit simultaneous replies. Id.
    The complainant would bear the burden of proof to demonstrate that 
(i) the defendant carrier has market dominance over the transportation 
to which the rate applies, and (ii) the challenged rate is 
unreasonable. NPRM, EP 755 et al., slip op. at 12-13; see also 49 
U.S.C. 10701(d)(1), 10704(a)(1), 11704(b); Union Pac. R.R.--Pet. for 
Declaratory Ord., FD 35504, slip op. at 2 (STB served Oct. 10, 2014). 
If the Board were to find that the complainant's market dominance 
presentation and rate reasonableness analysis demonstrate that the 
defendant carrier has market dominance over the transportation to which 
the rate applies and that the challenged rate is unreasonable, the 
Board would then choose between the parties' final offers. In making 
the rate reasonableness finding and choosing between the offers, the 
Board would take into account the criteria specified in the NPRM: the 
RTP, the Long-Cannon factors in 49 U.S.C. 10701(d)(2), and appropriate 
economic principles. See NPRM, EP 755 et al., slip op. at 10-13.
    The Board proposed a relief cap of $4 million, indexed annually 
using the Producer Price Index, consistent with the potential relief 
afforded under the Three-Benchmark methodology. See NPRM, EP 755 et 
al., slip op. at 16.
    The Board also sought additional comments on Docket No. EP 665 
(Sub-No. 2), including whether to close that docket. NPRM, EP 755 et 
al., slip op. at 17.
    In the SNPRM, the Board made the following changes to its FORR 
proposal: removing the use of adverse inferences and instead adopting a 
process for motions to compel discovery; including mandatory mediation 
in FORR cases; requiring only the complainant to submit market 
dominance evidence on opening; allowing complainants to choose between 
streamlined and non-streamlined market dominance approaches; and 
extending the proposed procedural schedule to accommodate motions to 
compel, mandatory mediation, and (in cases where it is selected) non-
streamlined market dominance. SNPRM, EP 755 et al., slip op. at 35-36, 
38-42. The SNPRM also provided further information regarding FORR's 
decisional criteria. Id. at 26-27.
    Also, on November 25, 2020, the Board instituted a rulemaking 
proceeding to consider a proposal by Canadian National Railway Company, 
CSX Transportation, Inc., The Kansas City Southern Railway Company, 
Norfolk Southern Railway Company, and UP to establish a new, voluntary 
arbitration program for small rate disputes. Joint Pet. for Rulemaking 
to Establish a Voluntary Arb. Program for Small Rate Disps., EP 765 
(STB served Nov. 25, 2020).\14\ In a decision served concurrently with 
the SNPRM, the Board proposed to adopt a form of such an arbitration 
program. See Arbitration NPRM. Concurrently with this decision, the 
Board is issuing a decision in that proceeding that adopts final rules 
implementing a new small rate case arbitration program. See Joint Pet. 
for Rulemaking to Establish a Voluntary Arb. Program for Small Rate 
Disps. (Arbitration Final Rule), EP 765 (STB served Dec. 19, 2022). As 
part of that program, the Board will allow carriers to be exempt from 
rates challenges under the FORR process if all Class I carriers join 
the arbitration program within the specified time period and the 
carriers otherwise satisfy all requirements for exemption established 
in the Arbitration Final Rule.
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    \14\ Canadian Pacific subsequently submitted a letter stating 
that it ``supports the effort to find a workable, reasonable, 
accessible arbitration program for small rate cases, and would 
participate in such a pilot program.'' CP Letter, Jan. 25, 2021, 
Joint Pet. for Rulemaking to Establish a Voluntary Arb. Program for 
Small Rate Disps., EP 765.
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Docket No. EP 755: Final Rule

    After considering the filed comments and information received in 
meetings with stakeholders, the Board will adopt the rule proposed in 
the SNPRM, with one change addressed below in Part III.B. In Part I, 
the Board addresses comments on the purpose of the rule. In Part II, 
the Board addresses comments regarding its authority to adopt a final 
offer procedure. In Part III, the Board addresses other arguments 
against the FORR procedure. In Part IV, the Board addresses the review 
criteria for FORR cases. In Part V, the Board addresses discovery and 
procedural schedule issues. In Part VI, the Board addresses market 
dominance issues. In Part VII, the Board addresses the relief cap. 
Finally, in Part VIII, the Board addresses other miscellaneous issues. 
The text of the final rule is below.

Part I--Purpose of the Rule

    The purpose of this rule is to satisfy the statutory requirement 
that, if the Board determines that a rail carrier has market dominance 
over the transportation to which a particular rate applies, the rate 
established by such carrier for such transportation must be reasonable. 
See 49 U.S.C. 10701(d)(1).\15\ A shipper's ability to challenge a rate 
subject to market dominance is frustrated where the litigation costs of 
the Board's available processes outweigh the benefits of pursuing a 
case. See Non-Coal Proc., 1 S.T.B. at 1049. Furthermore, in addition to 
litigation costs, a shipper must also take into account the risk 
associated with the uncertainty of receiving relief and the time it may 
take to obtain a decision. Because even the Board's smaller rate 
processes raise complexity, cost and duration challenges, shippers 
facing small rate disputes continue to lack meaningful access to the 
Board's existing rate reasonableness procedures. NPRM, EP 755 et al., 
slip op. at 3. Along with the Board's arbitration procedures newly 
adopted in Docket No. EP 765, FORR represents one possible solution for 
providing cost-effective rate relief in small cases. The Board expects 
that FORR's procedural limitations should lower the cost of litigating 
rate disputes, providing complainants who otherwise might be deterred 
from bringing smaller rate cases under one of the Board's existing 
processes an additional and more accessible avenue for rate 
reasonableness review by the Board. NPRM, EP 755 et al., slip op. at 7. 
Reduced litigation costs should also make it more feasible for 
complainants to prove meritorious cases, while a final offer selection 
process would discourage

[[Page 303]]

extreme positions and may facilitate settlement. Id. In addition, 
although the Board has provided in the arbitration rulemaking that 
Class I carriers may be exempt from FORR procedures under certain 
conditions, that exemption is not guaranteed to enter into effect. See 
Arbitration Final Rule, EP 765, slip. op. at 7. And even if the 
arbitration program and FORR exemption take effect, FORR will serve as 
the alternative regulatory process in the event that a carrier 
withdraws from the arbitration program (which carriers will have the 
right to do if there is a change in law). Therefore, FORR remains an 
important long-term measure even with the potential temporary exemption 
established in the arbitration rulemaking.
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    \15\ See also 49 U.S.C. 10701(d)(3) (requiring the Board to 
``maintain 1 or more simplified and expedited methods for 
determining the reasonableness of challenged rates in those cases in 
which a full stand-alone cost presentation is too costly, given the 
value of the case''); 49 U.S.C. 10704(d)(1) (requiring the Board to 
``maintain procedures to ensure the expeditious handling of 
challenges to the reasonableness of railroad rates,'' including 
``appropriate measures for avoiding delay in the discovery and 
evidentiary phases of such proceedings'').
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    AAR continues to question the need for a new procedure to resolve 
small rate disputes. (See AAR SNPRM Comment 17-18.) \16\ Shipper 
interests uniformly indicate that there is a need for such a procedure. 
(AFPM SNPRM Comment 2-3; Coalition Ass'ns SNPRM Comment 1-2; IMA-NA 
SNPRM Comment 2-3; Indorama SNPRM Comment 2-3; NGFA SNPRM Comment 2; 
Olin SNPRM Comment 4-6.)
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    \16\ Unless otherwise specified, citations to the record are to 
the record in Docket No. EP 755.
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    AAR argues that the Board should not ``accept at face value 
unsupported claims from shippers that they have meritorious rate claims 
they have chosen not to bring.'' (AAR SNPRM Comment 17-18.) Therefore, 
according to AAR, the only relevant evidence is the absence of small 
rate cases, which ``could be evidence that tariff-based rates are 
generally reasonable.'' (See id. at 17.)
    As it did in its comments on the NPRM, AAR is again suggesting 
that, in order to adopt a process for determining whether or not 
specific rates are unreasonable, the Board must already have evidence 
that rates as a general matter are unreasonable. (See AAR NPRM Comment 
24.) But as the SNPRM pointed out, AAR's reasoning is circular and 
would prevent the Board from carrying out the statutory mandate to 
determine the reasonableness of rates. See SNPRM, EP 755 et al., slip 
op. at 10-11. AAR argues that the Board should disregard shippers' 
expressions of concern about the existing rate reasonableness processes 
unless an individually identified shipper presents a supported claim 
that it has a meritorious rate case it has chosen not to bring. (See 
AAR SNPRM Comment 17-18.) AAR does not attempt to explain how such a 
shipper would prove its rate case meritorious.
    Contrary to AAR's argument, the problem addressed by this rule is 
illustrated by the lack of small rate cases combined with repeated 
shipper statements that they need rate relief but find the Board's 
existing processes too complex and expensive. NPRM, EP 755 et al., slip 
op. at 2-3; see also id. at 3 n.5; SNPRM, EP 755 et al., slip op. at 
10. Comments from shipper interests in this proceeding bear out that 
problem. (See, e.g., Farmers Union NPRM Comment 5-9 (explaining the 
challenges faced by customers with small rate disputes, as well as 
citations to evidence of steadily rising rail transportation rates for 
agricultural commodities in recent decades); \17\ NGFA NPRM Comment 5-
6; USDA NPRM Comment 2-3.)
---------------------------------------------------------------------------

    \17\ Notwithstanding these widespread rate increases, no rate 
case addressing rail transportation of agricultural commodities has 
been filed with the Board or the ICC since McCarty Farms, which 
commenced in 1981. See McCarty Farms, Inc. v. Burlington N., Inc., 2 
S.T.B. 460, 462-63 (1997) (denying rate relief after reopening and 
remand).
---------------------------------------------------------------------------

    Accordingly, the Board finds that FORR will further the RTP goal of 
maintaining reasonable rates where there is an absence of effective 
competition, see Sec.  10101(6), by providing increased access to rate 
reasonableness determinations in small disputes. By facilitating the 
determination of rate reasonableness in situations where it may not, in 
practice, have been feasible previously, FORR will also foster sound 
economic conditions in transportation. See Sec.  10101(5). And FORR's 
short timelines will promote expeditious regulatory decisions and 
provide for the expeditious handling and resolution of proceedings. See 
Sec.  10101(2), (15).

Part II--Authority To Adopt a Final Offer Procedure

    AAR renews certain of its arguments that the Board lacks statutory 
authority to adopt a final offer procedure under which, having found 
the challenged rate unreasonable, the Board must select one of the 
parties' offers to be the maximum rate going forward. The Board 
disagrees with AAR for the reasons stated in the NPRM, the SNPRM, and 
below.
    The offer stage of FORR represents an exercise of the Board's 
remedial rate prescription authority: ``When the Board, after a full 
hearing, decides that a rate'' violates the statute, ``the Board may 
prescribe the maximum rate . . . to be followed.'' Sec.  10704(a)(1).
    AAR asserts that a final offer procedure exceeds the scope of this 
clause, but that argument lacks merit. (See AAR SNPRM Comment 4-9, 11-
12.) The statute authorizes the Board to ``prescribe the maximum rate . 
. . to be followed.'' That is precisely what the Board would do under 
FORR. ``Prescribe'' means ``[t]o dictate, ordain, or direct; to 
establish authoritatively (as a rule or guideline).'' Black's Law 
Dictionary (11th ed. 2019). As long as the Board satisfies the criteria 
for assessing the reasonableness of rates, choosing among the parties' 
offers as to the maximum rate going forward is, by definition, 
``establishing authoritatively (as a rule or guideline)'' the maximum 
rate to be followed. This aspect of FORR falls within Sec.  
10704(a)(1)'s grant of remedial authority.\18\
---------------------------------------------------------------------------

    \18\ Because the Board's authority to prescribe rates under FORR 
is located in Sec.  10704(a)(1), AAR's contention that Sec.  
10701(d)(3) does not expand the scope of that authority is 
irrelevant. (AAR SNPRM Comment 5.).
---------------------------------------------------------------------------

    Implicit in AAR's argument is the incorrect premise that 
``prescribing'' a rate under Sec.  10704(a)(1) cannot occur unless the 
Board allows itself discretion in each case to prescribe a rate other 
than one a party has proposed. That requirement is absent from Sec.  
10704(a)(1), which says nothing about the extent of discretion the 
Board can or must permit itself in prescribing a maximum rate. Nor has 
AAR identified such a requirement in any other provision, as discussed 
in more detail below. And such a requirement would contradict 
established Board practice. The Board's SAC test has long included a 
procedure for prescribing the maximum rate to be followed. This 
procedure, the Maximum Markup Methodology (MMM), applies mechanically, 
with the Board exercising no discretion as to its application in an 
individual SAC case. See Major Issues in Rail Rate Cases, EP 657 (Sub-
No. 1), slip op. at 14-15 (STB served Oct. 30, 2006), aff'd sub nom. 
BNSF Ry. v. STB, 526 F.3d 770, 777-81 (D.C. Cir. 2008). At the offer 
selection phase of a FORR case, by contrast, the Board would exercise 
discretion in selecting between the offers. The Board's well-
established use the of MMM, therefore, contradicts AAR's contentions 
that FORR is unlawful due to the supposedly insufficient discretion it 
affords the Board. (See, e.g., AAR SNPRM Comment 4-6, 7-9; see also UP 
SNPRM Comment 2-3.) \19\
---------------------------------------------------------------------------

    \19\ AAR repeats its argument that ``there is no basis for using 
[final offer procedures] with regard to the Board's `legislative 
function' of setting rates prospectively.'' (AAR SNPRM Comment 9.) 
AAR states that ``[t]he Board has identified no authority suggesting 
that final-offer procedures can be used by agencies as a way of 
legislating or rulemaking.'' (Id. at 10.) In making this argument, 
AAR cites a footnote in the SNPRM expressly identifying the 
authority that AAR now claims has not been identified. See SNPRM, EP 
755 et al., slip op. at 16 n.30. AAR refers to legislating or 
rulemaking generally, but the agency function at issue here is a 
specific form of quasi-legislative authority: the prospective 
setting of rates. AAR does not deny that Sec. Sec.  10701(d)(3) and 
10704 authorize the Board to develop methods for performing this 
quasi-legislative function.

---------------------------------------------------------------------------

[[Page 304]]

    AAR reiterates its reliance on the magistrate judge's opinion in 
Stone v. U.S. Forest Serv., No. Civ. 03-586-JE, 2004 WL 1631321 (D. Or. 
July 16, 2004). That decision invalidated an agency's use of final 
offer procedures to determine the fair market value of a parcel of 
property because, among other reasons, the governing statute ``d[id] 
not command the agency to select the `better' of the two appraisals,'' 
and the fair market value might have been ``somewhere in between.'' Id. 
at *7.
    The nonbinding opinion in Stone, which cites no authority and 
devotes just a single paragraph to the relevant issue, is 
distinguishable for several reasons. Most importantly, the operative 
statute specified a particular, highly detailed method for assessing 
fair market value--one that was arguably incompatible with a final 
offer approach. See 16 U.S.C. 544g(e)(2) (requiring ``apprais[al] in 
conformity with the Uniform Appraisal Standards for Federal Land 
Acquisitions'').\20\ The Board's statutes, by contrast, authorize the 
agency in general terms to devise methods for calculating the 
reasonableness of a rate and prescribing the future rate to be 
followed. The governing provisions do not specify a particular method 
of calculation. SNPRM, EP 755 et al., slip op. at 16 n.28; see 49 
U.S.C. 10701(d)(3), 10704(a)(1). Second, the object of the Stone 
agency's calculations--the fair market value of an item of real 
estate--was a relatively objective fact that could be determined 
independently of the agency's analysis. In the present context, 
however, there is no ``maximum rate to be followed'' that exists 
independently of a Board determination in a rate reasonableness case; 
although the Board must act rationally and obey its statutes and 
regulations in determining the maximum rate to be followed, that 
determination is not the kind that can be assessed for accuracy with 
reference to the external world. Finally, as explained in the SNPRM, 
Stone also involved a second rationale: the obvious inequities that 
resulted from the fact that the agency was both the adjudicator and the 
purchasing party. See SNPRM, EP 755 et al., slip op. at 13-14. That 
significant factor is wholly absent here.
---------------------------------------------------------------------------

    \20\ Available at http://www.usdoj.gov/enrd/land-ack/.
---------------------------------------------------------------------------

    As in its previous comments, AAR assumes that a maximum reasonable 
rate exists in the abstract, outside of any Board process used to 
determine the maximum reasonable rate. (See AAR SNPRM Comment 8.) 
Proceeding from this assumption, AAR posits a ``common situation'' in 
which this abstract ideal of a maximum reasonable rate falls between 
the litigants' positions. (See id.) Finally, based on the problem it 
has contrived, AAR concludes that FORR would not involve the exercise 
of independent judgment. (See id. at 7-9; see also UP SNPRM Comment 2 
(making similar arguments).) As the SNPRM pointed out, however, the 
idea that the Board must determine the reasonableness of rail rates 
``in the abstract'' was rejected in CSX Transportation, Inc. v. STB, 
568 F.3d at 242, vacated in part on reh'g, 584 F.3d 1076 (D.C. Cir. 
2009). SNPRM, EP 755 et al., slip op. at 16. AAR's theory seems to be 
that the ``considerations'' referenced in the statute--including 
revenue adequacy, the Long-Cannon factors, and the RTP--themselves 
dictate a particular methodology for how the prescribed maximum rate 
should be calculated, and in individual cases, the Board measures the 
challenged rate against the ``maximum reasonable rate'' resulting from 
the statute. (See AAR SNPRM Comment 4, 8-9.) But as noted above, the 
statute supplies only general goals, not methodologies (unlike, for 
example, the statute in Stone that required specific ways of 
calculating a real estate appraisal). Instead, the ICC and the Board 
have developed processes that are applied in individual cases to 
determine a maximum rate in a manner designed to achieve those goals--
as in FORR.\21\ Again, AAR identifies no statutory provision that would 
prevent the Board from committing in advance not to prescribe a maximum 
rate other than one identified by the parties. Nor does AAR 
substantiate any view that such discretion is inherently necessary for 
an agency adjudication to be valid.
---------------------------------------------------------------------------

    \21\ UP argues that FORR is distinguishable from the Board's 
existing rate reasonableness processes because those processes 
``were designed to implement statutory standards.'' (UP SNPRM 
Comment 3.) But as explained in the NPRM, the SNPRM, and this final 
rule, FORR is also ``designed to implement statutory standards.'' 
See, e.g., NPRM, EP 755 et al., slip op. at 10-11; SNPRM, EP 755 et 
al., slip op. at 12-15, 26-29.
---------------------------------------------------------------------------

    AAR argues that because the statute does not mention the parties' 
pleadings among these considerations, the Board cannot adopt one 
party's position. (See AAR SNPRM Comment 8.) But AAR's argument leads 
to the absurd consequence that, in any type of adjudication where one 
party's position is clearly superior, the adjudicator cannot adopt that 
position in its entirety unless Congress has expressly identified the 
parties' pleadings as a source on which the adjudicator may rely.
    The SNPRM pointed out similarities between FORR and the Three-
Benchmark test with respect to decision-making structures and the 
agency's exercise of discretion. See SNPRM, EP 755 et al., slip op. at 
15-16. AAR dismisses this comparison, stating that a final offer 
procedure is only one part of the Three-Benchmark test, whereas it 
provides the overall framework of FORR. (See AAR SNPRM Comment 8); 
SNPRM, EP 755 et al., slip op. at 5. AAR ignores the fact that, apart 
from evidence regarding ``other relevant factors,'' which is optional, 
the Board's Three-Benchmark test comprises a final offer process and a 
formula--an approach in which the Board exercises its discretion in 
deciding between the parties' comparison groups under a final offer 
structure. See Union Pac. R.R. v. STB, 628 F.3d 597, 601 (D.C. Cir. 
2010) (``Since the revenue need adjustment factor is derived from 
static figures published annually by the Board, the Three Benchmark 
framework's reasonableness determination generally turns on the Board's 
selection of a comparison group.''); SNPRM, EP 755 et al., slip op. at 
15.
    UP similarly contends that Three-Benchmark is distinguishable from 
FORR in terms of the Board's exercise of discretion because parties to 
a Three-Benchmark case can choose to submit evidence regarding ``other 
relevant factors.'' (See UP SNPRM Comment 3.) Regarding the point that 
``other relevant factors'' evidence is optional, UP argues that that is 
``consistent with the function of a safety valve.'' (See id.) UP 
erroneously conflates a decision made by parties--whether to submit 
evidence regarding ``other relevant factors'' in a Three-Benchmark 
case--with its argument about the scope of the Board's decision-making. 
UP does not deny that, in any given Three-Benchmark proceeding, parties 
might present the Board with no ``other relevant factors'' evidence. In 
that situation, the Board's exercise of discretion in the context of 
that individual case is no greater than it would be in a FORR case. See 
Union Pac. R.R., 628 F.3d at 601.
    AAR continues to argue that the Board cannot exercise its rate-
prescribing power unless it performs a rate analysis distinct from any 
party's pleadings within each case--as opposed to exercising judgment 
in establishing the process itself. (See AAR SNPRM Comment 8); cf. 
SNPRM, EP 755 et al., slip op. at 15. But again, no such limitation is 
apparent in the statute or

[[Page 305]]

anywhere else, and AAR's arguments would also foreclose any Three-
Benchmark case in which no ``other relevant factors'' are proposed. In 
such a case, the judgment in its entirety would consist of selecting a 
comparison group via final offer and applying the revenue need 
adjustment formula. The Three-Benchmark test has been affirmed on 
judicial review, notwithstanding the restrictive definition of agency 
adjudication that AAR erroneously proposes here. See CSX Transp., Inc. 
v. STB, 568 F.3d at 242.
    Indeed, AAR's theory of adjudication, taken to its logical 
endpoint, would preclude the Board from having any pre-defined 
processes. In an individual SAC case, for example, the result produced 
by the SAC process and Board precedent may be above or below the 
abstract ideal of a maximum rate--which AAR described in its NPRM 
comments as the rate that ``best'' achieves the statutory objectives. 
(AAR NPRM Comment 12; see also UP SNPRM Comment 2 (making a similar 
assumption that there must be an abstract ``actual maximum lawful 
rate'' that exists outside of any process used by the Board to 
determine the maximum reasonable rate).) But Congress expressly 
required the Board to create multiple rate reasonableness processes--
which, by definition, could produce rates above or below AAR's 
hypothesized single ``best'' maximum rate. See Sec. Sec.  10701(d)(3), 
10704(a)(1).
    According to AAR, Sec.  10707(c) ``charge(s)'' the Board with 
determining whether a challenged rate exceeds ``a reasonable maximum 
for that transportation.'' (AAR SNPRM Comment 12.) AAR argues that FORR 
does not permit the Board to bring its own independent judgment to bear 
in determining what ``a reasonable maximum'' rate would be and 
therefore conflicts with this provision. (See id.) This argument merely 
echoes AAR's other faulty arguments regarding ``independent judgment'' 
and is incorrect for the reasons stated above and in the SNPRM. 
Moreover, it is far from clear that Sec.  10707(c) ``charge(s)'' the 
Board with anything. The statutory language partially quoted by AAR 
appears to delineate between the Board's determinations of market 
dominance and rate reasonableness, rather than establishing any 
directive related to rate reasonableness determinations.\22\ Statutory 
structure supports this interpretation, as Sec.  10707 is the provision 
in which Congress addressed market dominance rather than rate 
reasonableness. See, e.g., Act of Oct. 17, 1978, Public Law 95-473, 92 
Stat. 1337, 1382-83 (1978) (splitting Sec.  10709--later renumbered as 
Sec.  10707--from the statute's rate reasonableness provision and 
giving it the heading ``Determination of market dominance in rail 
carrier rate proceedings''). In any event, even if Sec.  10707(c) could 
be read to govern processes beyond the market-dominance determination, 
the statute can at most be read to bear on the Board's determination of 
whether a challenged rate is reasonable; the statute's text in no way 
limits the Board's separate authority under Sec.  10704(a)(1) to 
prescribe a maximum rate to be followed.
---------------------------------------------------------------------------

    \22\ See Sec.  10707(c) (``When the Board finds in any 
proceeding that a rail carrier proposing or defending a rate for 
transportation has market dominance over the transportation to which 
the rate applies, it may then determine that rate to be unreasonable 
if it exceeds a reasonable maximum for that transportation. However, 
a finding of market dominance does not establish a presumption that 
the proposed rate exceeds a reasonable maximum.'').
---------------------------------------------------------------------------

    In the SNPRM, the Board rejected UP's claim that FORR would limit 
the Board's exercise of its statutory authority. Instead, as the SNPRM 
pointed out, FORR facilitates the Board's exercise of that authority by 
establishing a new process for doing so, thereby providing an 
additional avenue for shippers with smaller rate disputes to seek 
relief from rates that would otherwise go unchallenged. See SNPRM, EP 
755 et al., slip op. at 15. The SNPRM further pointed out that, even if 
the Board could be said to be using something less than its 
congressionally delegated authority through FORR (which it is not), the 
agency may choose to act within a narrower range than Congress 
authorized. Id. (citing Midtec Paper Corp. v. Chi. & N.W. Transp. Co., 
3 I.C.C.2d 171, 181 (1986), aff'd sub nom. Midtec Paper Corp. v. United 
States, 857 F.2d 1487, 1500 (D.C. Cir. 1988)).
    UP now tries to distinguish Midtec, arguing that it involved a 
statute ``cast in discretionary terms,'' Midtec, 857 F.2d at 1499, and 
did not ``allow the agency to disregard a mandatory duty delegated by 
Congress, as the Board would be doing under FORR.'' (UP SNPRM Comment 
2.) But on the issue of how to determine whether a rate is reasonable, 
it would be difficult to find a plainer example of a statute ``cast in 
discretionary terms'' than Sec.  10701(d)(3) (``The Board shall 
maintain 1 or more simplified and expedited methods for determining the 
reasonableness of challenged rates in those cases in which a full 
stand-alone cost presentation is too costly, given the value of the 
case.''); see also Sec.  10704(a)(1) (providing in equally 
discretionary terms that, ``[w]hen the Board, after a full hearing, 
decides that a rate charged or collected by a rail carrier for 
transportation subject to the jurisdiction of the Board under this part 
. . . does or will violate this part, the Board may prescribe the 
maximum rate . . . to be followed''). And UP does not even attempt to 
engage with the language of Sec. Sec.  10701(d)(3) or 10704(a)(1) in 
support of its claim that, under FORR, the Board would ``disregard a 
mandatory duty.'' As explained above in response to AAR, the Board 
would carry out its duties under Sec.  10701(d)(3) and under the 
authority of Sec.  10704(a)(1) in a FORR case.
    Finally, AAR again cites Morgan v. United States, 304 U.S. 1, 12 
(1938) for the proposition that ``Congress, in requiring a `full 
hearing,' had regard to judicial standards--not in any technical sense 
but with respect to those fundamental requirements of fairness which 
are of the essence of due process in a proceeding of a judicial 
nature.'' (AAR SNPRM Comment 10); see also Sec.  10704(a)(1) (requiring 
a ``full hearing'' in a rate reasonableness case). According to AAR, a 
judge could not adopt a final offer procedure, so this quote from 
Morgan means the Board cannot either. (See AAR SNPRM Comment 10-11.)
    Even accepting, for argument's sake, the premise that Congress 
lacks power to authorize federal district courts to employ a final 
offer process, AAR fails to acknowledge the reality that administrative 
agencies enjoy far greater procedural flexibility than do federal 
district courts. SNPRM, EP 755 et al., slip op. at 20; see also Sea-
Land Serv., Inc. v. United States, 683 F.2d 491, 495 (D.C. Cir. 1982); 
Pension Benefit Guaranty Corp. v. LTV Corp., 496 U.S. 633, 644 (1990); 
R.R. Comm'n of Tex. v. United States, 765 F.2d 221, 227 (D.C. Cir. 
1985). AAR cannot simply assume that procedural devices unavailable in 
federal litigation are impermissible before agencies.
    That is especially true here, where Congress expressly authorized 
and required the agency to develop rate reasonableness methods in open-
ended terms and without any indication that these methods must be 
limited to those available to courts. See Sec. Sec.  10701(d)(3), 
10704(a)(1); SNPRM, EP 755 et al., slip op. at 20 (noting that AAR has 
not identified any language in these or other provisions that restricts 
the Board's discretion to set a rate by selecting the best of two 
offers after it finds the challenged rate unreasonable and considers 
appropriate statutory

[[Page 306]]

principles).\23\ And in any event, as noted in the SNPRM, Morgan 
predates the enactment of the Administrative Procedure Act (APA). 
SNPRM, EP 755 et al., slip op. at 20. AAR fails to explain how its 
proposal to limit agency adjudicatory procedures to a far narrower band 
survives the APA and the cases construing it.
---------------------------------------------------------------------------

    \23\ Congress, of course, knows how to invoke the procedures 
used in courts where it chooses to do so. See, e.g., STB 
Reauthorization Act Sec.  11(c) (directing the Board to ``initiate a 
proceeding to assess procedures that are available to parties in 
litigation before courts to expedite such litigation and the 
potential application of any such procedures to rate cases''); 
Expediting Rate Cases, EP 733 (STB served Nov. 30, 2017) (carrying 
out this direction). It did not do so in either Sec. Sec.  
10701(d)(3) or 10704(a)(1).
---------------------------------------------------------------------------

Part III--Other Arguments Against the Forr Procedure

A. Burden of Proof

    AAR argues that, even if a FORR complainant bears the burden of 
proof as to market dominance and the reasonableness of the challenged 
rate, it is improperly relieved of the burden as to FORR's third stage, 
the selection of offers. (See AAR SNPRM Comment 12-13; AAR SNPRM Reply 
Comment 5.) AAR relies on 5 U.S.C. 556(d), which establishes that, 
``[e]xcept as otherwise provided by statute, the proponent of a rule or 
order has the burden of proof.'' (See AAR SNPRM Comment 12-13.) Like 
AAR, prior Board decisions have relied on section 556(d) as the source 
of burden allocation in Board adjudications. See, e.g., NPRM, EP 755 et 
al., slip op. at 12-13. Those Board decisions correctly assigned the 
burden of proof to parties seeking relief, based on Board precedent 
establishing such a burden allocation; that precedent will continue to 
apply as a general matter in Board proceedings. See, e.g., Union Pac. 
R.R., FD 35504, slip op. at 2; Duke Energy Corp. v. Norfolk S. Ry., 7 
S.T.B. 89, 100 (2003). On further reflection, however, the Board 
concludes that some of its previous decisions incorrectly identified 
section 556(d)--rather than Board precedent--as the source of that 
burden allocation. As explained in the SNPRM, sections 556 and 557 of 
the APA apply to formal ``trial-type'' hearings, which do not include 
the Board's rate reasonableness proceedings. See SNPRM, EP 755 et al., 
slip op. at 19-20; see also, e.g., R.R. Comm'n of Tex., 765 F.2d at 227 
(formal adjudication procedures will ``obtain only on the requirement 
of a `hearing on the record' ''). And precedent clearly establishes 
that the burden allocation language of section 556(d), in particular, 
does not apply outside formal ``trial-type'' hearings. E.g., Am. 
Trucking Ass'ns v. United States, 344 U.S. 298, 318-20 (1953).
    As discussed above and in the SNPRM, Congress has afforded agencies 
greater procedural leeway in cases that are not formal ``trial-type'' 
hearings. See SNPRM, EP 755 et al., slip op. at 19-20; Sea-Land Serv., 
Inc., 683 F.2d at 495; Pension Benefit Guaranty Corp., 496 U.S. at 644. 
Here, it is within the Board's procedural discretion to place the 
burden on complainants as to the portions of FORR addressing 
jurisdiction and culpability--that is, market dominance and the 
reasonableness of the challenged rate--but not as to the remedial stage 
of offer selection, which is equitable in nature. This allocation of 
burden aligns with the allocation in SAC cases, where complainants bear 
the burden as to market dominance and the SAC analysis, but not as to 
the application of the MMM (described above) to determine the maximum 
reasonable rate that the Board will prescribe. See BNSF Ry., 526 F.3d 
at 777-81 (discussing the MMM); (Coalition Ass'ns Reply Comment 12 
(analogizing similarly to the Board's other rate reasonableness 
procedures)). Again, AAR identifies no statutory provision that would 
foreclose the Board's choice to structure FORR proceedings in this way.
    Adopting the burden allocation proposed in the NPRM and SNPRM will 
allow the Board to use a final offer procedure at the third stage of a 
FORR case, the benefits of which are described above. See also NPRM, EP 
755 et al., slip op. at 4-7 (discussing the benefits of a final offer 
procedure). If complainants also bore the burden at the offer selection 
stage, no stage of the proceeding would contain a final offer 
procedure. Cf. SNPRM, EP 755 et al., slip op. at 22-23 (recognizing 
that a FORR defendant could make a strategic decision to offer a rate 
that is lower than the challenged rate but higher than the 
complainant's offer; if the Board selected such an offer, the 
complainant would obtain rate relief despite the Board's selection of 
the defendant's offer). Therefore, the benefits of a final offer 
procedure--particularly in light of the agency's decades-long efforts 
to create accessible small rate case processes, see id., slip op. at 3-
5, 11--supports the burden allocation adopted here.

B. Specific Scenarios Under FORR

    AAR again describes a hypothetical scenario in which a shipper 
submits an offer below the jurisdictional threshold, see 49 U.S.C. 
10707(d)(1)(A), and yet the complainant otherwise proves that the 
defendant's offer--be it the challenged rate or otherwise--is 
unreasonably high. (See AAR SNPRM Comment 11-12.) But a FORR case would 
never reach that point. If the shipper submits an offer below the 
jurisdictional threshold, its complaint would be dismissed due to that 
failure of proof.
    As noted above, the SNPRM observed that a FORR defendant could make 
a strategic decision to offer a rate that is lower than the challenged 
rate but higher than the complainant's offer. SNPRM, EP 755 et al., 
slip op. at 22-23; (see also UP SNPRM Comment 5 (``it is easier to 
defend a lower rate than a higher rate against a charge that the rate 
is too high'')). The SNPRM drew an analogy to a SAC case, in which a 
party can deliberately take a less aggressive position on an element of 
the analysis if it is concerned about its likelihood of success--a 
decision that changes what the party ultimately submits as the SAC 
rate. Id., slip op. at 23 n.37.
    UP asserts in response that deliberately taking a less aggressive 
position regarding one element of a SAC analysis is not analogous to 
conceding the unlawfulness of the challenged rate under FORR. (See UP 
SNPRM Comment 4.) Immediately following this assertion, however, UP 
makes an argument that confirms the analogy to SAC. According to UP, 
because each party's final offer must reflect what it considers to be a 
maximum reasonable rate, ``a railroad would violate FORR if it were to 
`strategically' make a final offer below what it considers the lawful 
maximum rate.'' (Id.) But UP again fails to recognize that the maximum 
reasonable rate is the rate produced through the Board's rate 
reasonableness process, not an abstraction that exists outside such a 
process. In a SAC case, a party might believe the correct SAC rate is 
higher or lower than what it chooses to submit to the Board, but it can 
submit a different rate nonetheless to improve its likelihood of 
success. Believing in one rate and submitting another does not 
``violate SAC.''
    UP's argument appears to contemplate an intent element in rate 
reasonableness determinations--the idea that a railroad would ``violate 
FORR'' if it argues for one rate but has a different rate in mind. This 
notion also explains UP's suggestion, (see UP SNPRM Comment 4-5), that 
a railroad would be required to advocate for prescription of a rate 
higher than the challenged rate, whenever it happens to believe that 
the rate should be higher than the challenged rate. But the Board's 
rate reasonableness processes do not include an intent element. 
Although the SNPRM stated that ``each party's final offer must

[[Page 307]]

reflect what it considers to be a maximum reasonable rate,'' SNPRM, EP 
755 et al., slip op. at 19, the Board did not intend this statement to 
impose an intent requirement. Indeed, the SNPRM elsewhere recognized 
that a carrier might choose to make a strategic decision to offer a 
rate lower than the challenged rate that the carrier defended in its 
reasonableness evidence. Id. at 23 n.37. To avoid confusion, the Board 
now withdraws the quoted statement of the SNPRM. The Board at the offer 
stage will, of course, endeavor to select the offer that best 
accomplishes the Board's economic and statutory goals (see Part IV 
below), so parties would be wise to develop and explain their offers 
with those considerations in mind. But parties are not prohibited from 
formulating their offers based on additional considerations, as well.
    In a similar vein, the Board also clarifies that a carrier does not 
concede unreasonableness by submitting an offer that is lower than the 
challenged rate (contra AAR SNPRM Comment 15); the parties' offers 
become relevant only after the challenged rate has been judged 
unreasonable. This means that carriers are free to argue ``in the 
alternative'' and submit separate analyses at the rate-reasonableness 
and offer-selection stages. In other words, a carrier's justification 
supporting its choice of offer can proceed on the assumption that the 
challenged rate has already been found unreasonable. Carriers are not 
required to submit an offer that is the same as the challenged rate 
and, contrary to the SNPRM, the Board recognizes that the two analyses 
may not be the same in many cases. Cf. SNPRM, EP 755 et al., slip op. 
at 21.
    UP also repeats its argument posing a hypothetical situation in 
which a complainant submits very compelling evidence that the 
challenged rate is unreasonable and no evidence whatsoever in support 
of its offer. (See UP SNPRM Comment 5-6.) In that situation, UP argues, 
the Board would have to accept that unsupported (and unreasonably low) 
offer, because the Board cannot prescribe the challenged rate after 
finding it unreasonable. (See id.) The SNPRM pointed out in response 
that it is implausible that a complainant's analysis producing an 
unsupported and unreasonably low rate could satisfy FORR's decisional 
criteria to show that the challenged rate is unreasonable. SNPRM, EP 
755 et al., slip op. at 23. UP now contends that ``FORR does not 
require the shipper's evidence of unreasonableness to show the 
shipper's final offer rate would be reasonable. In fact, FORR requires 
separate analyses of the issues, see NPRM at 12 (`each party would be 
required to submit an analysis addressing the reasonableness of the 
challenged rate and support for the rate in the party's offer' 
(emphasis added)), while recognizing the evidence would `likely' (but 
not necessarily) overlap, id. at 12 n.24.'' (UP SNPRM Comment 5-6.)
    UP misconstrues the language it cites from the NPRM. Contrary to 
UP's claim, the NPRM does not say that FORR would require ``separate 
analyses'' of the reasonableness of the challenged rate and support for 
the party's offer. However, UP is correct that FORR does not require a 
party to use the same analysis for both of these purposes. The Board 
therefore clarifies that it retains the ability to prevent abuse of its 
processes. If a complainant ``focus[es] all its efforts'' on showing 
that the challenged rate is unreasonable and submits no support for its 
offer (see UP NPRM Comment 15), for example, the Board could decide to 
dismiss the complaint without reaching the reasonableness of the 
challenged rate. The Board will also confirm its ability to exercise 
this discretion by adding the following language to the regulations 
adopted today: ``If a complainant fails to submit explanation and 
support for its offer, the Board may dismiss the complaint without 
determining the reasonableness of the challenged rate.''

C. FORR's Encouragement of Settlements

    The SNPRM acknowledged that the risks faced by shippers and 
railroads are not reciprocal, because the Board would never prescribe a 
rate higher than the challenged rate. It explained, however, that this 
lack of reciprocity is a result of the Board's statutory mandate to 
regulate railroad conduct rather than shipper conduct. SNPRM, EP 755 et 
al., slip op. at 23-24. AAR now argues that the Board's statutory 
mandate does not distinguish FORR from the Board's other rate 
reasonableness processes, including Three-Benchmark, because they ``do 
not suffer from the same lack of reciprocal risks and do not exert the 
same coercive pressure on the railroads.'' (See AAR SNPRM Comment 15-
16.) The fact that potential carrier risk is greater than potential 
shipper risk in a FORR case, however, does not mean that it would be 
improper or unfair for the Board to adopt FORR. The statutory 
provisions that require railroad rates to be reasonable and authorize 
the Board to regulate rate reasonableness apply to all of the Board's 
processes. See, e.g., 49 U.S.C. 10704(a)(1) (authorizing the Board to 
prescribe a rate or practice for a carrier). As the SNPRM stated, in 
adopting FORR, the Board has weighed the competing considerations and 
determined that FORR would provide sufficient benefits (see, e.g., 
NPRM, EP 755 et al., slip op. at 4-7) even if it were found not to 
afford the full settlement incentives present in certain other 
contexts. SNPRM, EP 755 et al., slip op. at 24.
    The SNPRM stated that, while the Board would not prescribe a rate 
higher than the challenged rate in a FORR case, there is still 
considerable risk to a complainant that brings an unsuccessful FORR 
case that the carrier may conclude based on the Board's evaluation of 
the economic analyses that it has more latitude to set a higher rate. 
Id. The SNRPM also noted that, should the Board find the challenged 
rate has not been shown to be unreasonable in a given case, the Board's 
findings could have a preclusive effect on that complainant in 
subsequent litigation. Id. AAR asserts in response that ``none of these 
risks remotely approach the severity of the risks the railroads face 
from an adverse outcome.'' (AAR SNPRM Comment 16.) But the SNPRM did 
not suggest that complainants' litigation risks are identical to 
defendants' risks, nor do they need to be. As AAR itself points out, 
complainants under the Board's other rate reasonableness processes do 
not run the risk that the Board will prescribe a rate higher than the 
challenged rate, because the Board is not authorized to do so. (See AAR 
SNPRM Comment 16.) Rather, as the SNPRM explained, bringing a FORR case 
is not without risks for complainants--and depending on the 
circumstances of the case, those risks could be significant, such as a 
railroad substantially raising the rate based on the analysis adopted 
in the Board's decision. See SNPRM, EP 755 et al., slip op. at 24.
    The SNPRM also stated that any lack of reciprocity is balanced by 
the defendant carrier's possession of market dominance--a prerequisite 
in any rate case before the Board, including FORR. SNPRM, EP 755 et 
al., slip op. at 24; see also 49 U.S.C. 10707 (market dominance 
prerequisite).\24\ In response, UP argues that the idea of leveling the 
playing field does not make sense because (a) a market dominance 
finding does not mean the railroad is charging

[[Page 308]]

unreasonable rates, as demonstrated by the fact that railroads found to 
have market dominance often prevail in rate cases; and (b) the Board's 
market dominance test does not account for product and geographic 
competition, meaning that even railroads found to have market dominance 
``cannot charge more than market rates.'' (See UP SNPRM Comment 6.) But 
the SNPRM did not say the playing field was unlevel due to railroads' 
charging unreasonable rates. It referred instead to the ``imbalance in 
bargaining power'' inherent in a market dominance finding, which 
Congress sought to level by authorizing rate reasonableness 
determinations and requiring the Board maintain simplified procedures 
for smaller cases. SNPRM, EP 755 et al., slip op. at 24; see also 49 
U.S.C. 10701(d)(1), (3). As for product and geographic competition, the 
Board found that they effectively limit railroad pricing only ``in 
certain circumstances,'' and ``if there are product and geographic 
competitive alternatives that are obviously effective, a shipper would 
be unlikely to pursue a regulatory rate challenge.'' \25\
---------------------------------------------------------------------------

    \24\ The SNPRM noted that a complainant challenging a rate that 
is subject to market dominance (i.e., any complainant whose case 
under FORR reaches the rate reasonableness phase) would not have the 
options that UP assumes would be available to complainants. (See UP 
NPRM Comment 14-16 (assuming, for example, that if a complainant 
loses, it could simply choose not to move traffic under the rate 
that was at issue in the case, or that, ``in many situations,'' the 
challenged rate is constrained by market forces).)''
    \25\ See Mkt. Dominance Determinations--Prod. & Geographic 
Competition, 3 S.T.B. at 946 n.49, 948 (emphasis added), 
reconsideration denied Mkt. Dominance Determinations--Prod. & 
Geographic Competition, EP 627 (STB served July 2, 1999), remanded 
sub nom. Ass'n of Am. R.Rs. v. STB, 237 F.3d 676 (D.C. Cir. 2001), 
decision on remand Mkt. Dominance Determinations--Prod. & Geographic 
Competition, EP 627 (STB served Apr. 6, 2001), pet. for review 
denied sub nom. Ass'n of Am. R.Rs. v. STB, 306 F.3d 1108, 1111 & n.2 
(D.C. Cir. 2002); see also Pet. of the Ass'n of Am. R.R.s, EP 717, 
slip op. at 7 (STB served Mar. 19, 2013) (``Indirect competition 
may, in certain circumstances, effectively constrain rail rates for 
transportation of coal for electric power generation.'') (emphasis 
added).
---------------------------------------------------------------------------

    AAR argued in its NPRM comments--similar to its prior claims in 
opposing other efforts at reforming the Board's rate review processes 
\26\--that rates adopted through FORR settlements would become the 
basis for comparison groups in Three-Benchmark cases, ``further driving 
railroad pricing down.'' (See AAR NPRM Comment 22-23.) The SNPRM 
pointed out in response that AAR's argument would apply whenever any 
shipper obtained a lower rate, either through a Board decision (using 
any rate reasonableness process) or a settlement. SNPRM, EP 755 et al., 
slip op. at 25. AAR now states that it disagrees because FORR ``will 
create a far more severe downward force on rates.'' (AAR SNPRM Comment 
18.)
---------------------------------------------------------------------------

    \26\ See AAR Suppl. Comment 10-11, Feb. 26, 2007, Simplified 
Standards for Rail Rate Cases, EP 646 (Sub-No. 1) (predicting 
incorrectly that the Three-Benchmark approach would ``inevitably 
result in an overall ratcheting down of rates towards an average'').
---------------------------------------------------------------------------

    The SNPRM's explanation to which AAR is responding dealt with a 
specific type of ``downward force on rates''--inclusion of a rate in 
Three-Benchmark comparison groups. AAR's response provides no support 
whatsoever for the idea that FORR would lead to ``ratcheting'' in this 
way any more than lower rates obtained by any other mechanism. To the 
extent AAR is now abandoning its argument about FORR settlements in 
Three-Benchmark comparison groups and arguing more generally that FORR 
will drive down rates, it merely repeats arguments that were addressed 
in the SNPRM. See SNPRM, EP 755 et al., slip op. at 23-25; (see also 
AAR SNPRM Comment 18 (making another, very similar contention that FORR 
``is unfair to railroads, creates massive uncertainty, imposes risks 
that are not reciprocal, and will result in prescribed rates that 
benefit shippers and bear no relation to market outcomes'').)
    Finally, BNSF repeats its assertion that uncertainty in FORR cases 
would deter negotiated outcomes. (See BNSF SNPRM Comment 3.) But as the 
SNPRM pointed out, SNPRM, EP 755 et al., slip op. at 23 n.38, railroad 
commenters offered no support for this claim, and the NPRM cited 
multiple sources supporting the opposite proposition. NPRM, EP 755 et 
al., slip op. at 5-7.

Part IV--Review Criteria

    As noted above, the Board stated that, in reviewing offers, it 
would take into account the RTP,\27\ the Long-Cannon factors in 49 
U.S.C. 10701(d)(2), and appropriate economic principles. See NPRM, EP 
755 et al., slip op. at 10-13; SNPRM, EP 755 et al., slip op. at 26-29 
(further explaining the criteria). Railroad interests continue to argue 
that such a multi-factor test is arbitrary and capricious and 
unconstitutionally vague. The Board rejects these arguments for the 
reasons stated in the SNPRM and below.
---------------------------------------------------------------------------

    \27\ The SNPRM explained that the Board would rely primarily on 
the RTP factors that have previously been relied on in the rate 
reasonableness context: the policy to allow, to the maximum extent 
possible, competition and the demand for services to establish 
reasonable rates for transportation by rail, 49 U.S.C. 10101(1); to 
promote a safe and efficient rail transportation system by allowing 
rail carriers to earn adequate revenues, as determined by the Board, 
Sec.  10101(3); and to maintain reasonable rates where there is an 
absence of effective competition and where rail rates provide 
revenues which exceed the amount necessary to maintain the rail 
system and to attract capital, Sec.  10101(6). SNPRM, EP 755 et al., 
slip op. at 27. The Board emphasized that, to the extent parties 
seek to rely on RTP factors that have not been relied on in the rate 
reasonableness context, they must demonstrate how those factors 
relate to the economic analysis of the reasonableness of the rate. 
For example, if a party wanted to argue that Sec.  10101(4), which 
establishes adequacy of rail service as an RTP goal, is relevant, 
the party must explain the relevance of that RTP factor to the 
proposed methodology. See, e.g., TRB Rep. 148 (``As common carrier 
rates were deregulated, so too was service quality, since a 
product's price and quality will be interlinked''), 201 (attention 
to service quality is necessary to carry out the common carrier 
obligation, which in turn must persist ``to give effect to the law's 
protections for shippers from unreasonable rates'').
---------------------------------------------------------------------------

    In the SNPRM, the Board distinguished FCC v. Fox Television 
Stations, Inc., 567 U.S. 239 (2012), by pointing out, among other 
things, that under FORR the Board would ``us[e] the same statutory 
criteria and economic principles applied in past rate cases using other 
processes.'' SNPRM, EP 755 et al., slip op. at 29. AAR now argues that 
this is not a distinguishing factor because shippers will be able to 
choose an economic methodology within a FORR case. (See AAR SNPRM 
Comment 13-14.)
    AAR selectively quotes a phrase from the paragraph distinguishing 
Fox Television and ignores the analysis in the SNPRM that refutes AAR's 
position. As the SNPRM explained, adjudication of claims under 49 
U.S.C. 10702 and 11101, addressing the reasonableness of practices and 
the common carrier obligation, respectively, bears a close resemblance 
to the approach adopted here. SNPRM, EP 755 et al., slip op. at 30. 
Each involves a non-prescriptive, multi-factor analysis. The ICC and 
the Board have followed this approach for more than a century, with 
judicial approval, despite parties' inability to ``know in advance what 
the Board might deem unreasonable'' with the specificity that AAR would 
apparently require, (AAR NPRM Comment 17-18). SNPRM, EP 755 et al., 
slip op. at 30 (citations omitted).
    In its NPRM comments, AAR characterized FORR as distinct from these 
other agency processes in terms of predictability, implying that the 
Board has given no hint as to how it would reach a decision. (See AAR 
NPRM Comment 17-19; AAR Comment in Response to Mem. 5, Aug. 12, 2020.) 
That is not so; the NPRM articulated the criteria that apply in 
determining rate reasonableness,\28\ and if necessary,

[[Page 309]]

choosing an offer. These criteria would signal to parties what rates 
might be found unreasonable. For instance, if a defendant railroad is 
charging vastly more for the challenged traffic than it does for 
comparable traffic, if it is aware of costly inefficiencies that a new 
railroad would not adopt, or if its revenue from the challenged rate is 
out of proportion to its properly attributable capital requirements and 
other costs of service, (see BNSF Mem. 2 (Mtg. with Board Member 
Begeman)), then it could reasonably predict a lower likelihood of 
success in a FORR case. FORR's level of predictability, which is in 
line with unreasonable practice cases and other adjudications requiring 
the tribunal to weigh multiple factors, does not render the FORR 
procedure arbitrary and capricious or unconstitutionally vague. SNPRM, 
EP 755 et al., slip op. at 31.
---------------------------------------------------------------------------

    \28\ AAR disagreed with similar reasoning proffered by Olin; AAR 
stated that Olin ``misses the point'' because, ``[i]n the rate 
context, the elastic term `reasonable' has specific meaning.'' (AAR 
Comment in Response to Mem. 5, Aug. 12, 2020.) In this attempt to 
distinguish rate reasonableness from unreasonable practice cases and 
rulings on the common carrier obligation, AAR did not cite any 
statutes or case law. See id. AAR relied instead on an article, 
which does not even support the point for which AAR cited it, much 
less provide statutory or precedential support. See id. AAR further 
noted that, with respect to rate reasonableness, Congress has 
required the Board to account for railroad revenue adequacy and the 
Long-Cannon factors. See id. But the FORR process does account for 
these considerations. See NPRM, EP 755 et al., slip op. at 10-12.
---------------------------------------------------------------------------

    In response to the SNPRM's comparison of FORR to other rate 
reasonableness processes in terms of predictability, AAR claims that 
``[i]t is no answer to say that many rate cases `raise[ ] novel 
issues.' '' (AAR SNPRM Comment 14.) But in fact, the SNPRM's analysis 
did answer a position of AAR's that it repeats in its comments on the 
SNPRM. According to AAR, ``[u]nder FORR, it would be impossible for 
railroads to know in advance how to conform their conduct to the law by 
charging a reasonable rate.'' (AAR SNPRM Comment 13-14.) But, as the 
SNPRM pointed out, AAR's argument assumes that the Board cannot have a 
rate reasonableness process unless railroads can predict the outcome of 
that process in advance of the Board's decision in an individual case. 
SNPRM, EP 755 et al., slip op. at 29-30. That argument overstates the 
predictability of other types of litigation before the Board and 
understates the predictability of a FORR case. Notwithstanding parties' 
posturing in negotiations before a rate case, (see BNSF NPRM Comment 
8), they cannot predict in advance the resolution of the novel, 
potentially case-dispositive issues that have arisen in almost every 
recent SAC case--nor can the Board, before the development of an 
administrative record. SAC, however, is not unconstitutionally vague 
and has been upheld on judicial review. SNPRM, EP 755 et al., slip op. 
at 30 (citations omitted).\29\
---------------------------------------------------------------------------

    \29\ AAR again does not address whether the discussion it cites 
from Paralyzed Veterans of America v. D.C. Arena, L.P., 117 F.3d 
579, 584 (D.C. Cir. 1997), survives Perez v. Mortgage Bankers 
Association, 575 U.S. 92 (2015). (See AAR SNPRM Comment 14.) It does 
not matter here, however, for the reasons stated above. Far from 
``promulgat[ing] mush,'' see Paralyzed Veterans, 117 F.3d at 584, 
the Board is adopting a test that requires the balancing of multiple 
factors stated in advance, as in other types of adjudication.
---------------------------------------------------------------------------

    BNSF also disputes the comparison to SAC, asserting that ``parties 
raise novel issues in SAC cases that may affect the predictability of 
the outcome, [but] those cases were litigated under traditional SAC 
procedures where the parties had the ability to fully develop the 
administrative record and the Board had its traditional discretion to 
weigh the evidence and determine what the maximum reasonable rate 
should be. Neither of those procedural protections will be present in 
[a] FORR proceeding.'' (BNSF SNPRM Comment 2.) But BNSF does not 
explain how it believes the massive record development and vast range 
of individual issues that parties present in modern SAC cases--a 
process that has ballooned far beyond what SAC was meant to entail, see 
RRTF Rep. 22--increases parties' ability to predict the resolution of 
novel issues. See SNPRM, EP 755 et al., slip op. at 29-30.
    According to AAR, the Board has not provided sufficient clarity on 
the legal standard because it will not announce the ``winning'' 
standard until the end of a FORR case. (See AAR SNPRM Comment 14; see 
also BNSF SNPRM Comment 2 (parties to a FORR case will have to litigate 
``without knowing what the test is until reading it in the opposing 
party's opening brief'').) However, AAR misstates the nature of the 
standard in FORR cases. As the SNPRM explained, the legal standard in 
FORR cases is a non-prescriptive, multi-factor analysis, which the 
Board set forth in the NPRM and SNPRM. NPRM, EP 755 et al., slip op. at 
10-12; SNPRM, EP 755 et al., slip op. at 26-29. To the extent AAR 
contends an agency's process is unconstitutionally vague unless the 
agency spells out in advance the analysis that such a test would 
produce in an individual case, its position runs afoul of the 
judicially approved legal standards applied in the Board's long-
established processes for adjudicating the reasonableness of practices 
and railroads' adherence to the common carrier obligation. See SNPRM, 
EP 755 et al., slip op. at 30.\30\
---------------------------------------------------------------------------

    \30\ UP argues that it is unlawful to allow a party to prevail 
if its submission does not reflect the statutory rate reasonableness 
criteria. (See UP SNPRM Comment 3-4.) UP is correct to the extent 
that a party should not be able to disregard the statutory criteria 
and still potentially succeed in its case. The Board therefore 
clarifies that, if a party's evidence and argument addressing the 
reasonableness of the challenged rate do not satisfy the statutory 
criteria, it will not prevail on rate reasonableness. And as noted 
above, the Board will endeavor at the offer selection stage to 
select the offer that best accomplishes the Board's economic and 
statutory goals.
---------------------------------------------------------------------------

    BNSF argues that ``[p]arties will face the choice of seeking to 
exhaustively address any potential feasible methodology that could be 
used to analyze the challenged rate to devise arguments in the 
alternative or engaging in a crash effort to adequately analyze novel 
methodologies in the ten days parties have to file their replies--
either option leading to substantial unnecessary litigation expense.'' 
(BNSF SNPRM Comment 2.) As framed by BNSF, a party to an unreasonable 
practice case under Sec.  10702 would feel the need to ``address any 
potential feasible methodology that could be used to analyze the 
challenged [practice] to devise arguments in the alternative,'' but no 
one has suggested that parties litigate this way in such cases. And 
having to analyze the opposing party's submission quickly is a 
necessary part of litigating under a short timeline, which is an 
important aspect of improving the accessibility of the Board's rate 
reasonableness processes. See NPRM, EP 755 et al., slip op. at 3-4.
    Similarly, AAR claims that parties to FORR cases ``will not even 
know the materials they must produce in discovery.'' (AAR SNPRM Comment 
14.) AAR contends that, ``if a party's methodology is ultimately 
rejected by the Board, there is no basis for compelling their opponent 
to produce discovery in service of it.'' (Id. at 14-15.) As the 
Coalition Associations point out in their reply comment, however, to 
support the relevance of a discovery request, a party would have to be 
able to show how the request is relevant to the FORR criteria. (See 
Coalition Ass'ns SNPRM Reply Comment 14.) Also, parties are able to 
conduct discovery in cases addressing the reasonableness of practices 
and railroads' adherence to the common carrier obligation. The fact 
that the legal standards in these cases are non-prescriptive, multi-
factor analyses has not prevented parties from ``even know[ing] the 
materials they must produce in discovery.'' See, e.g., R.R. Salvage & 
Restoration, Inc.--Pet. for Declaratory Order, NOR 42102 (STB served 
July 20, 2010) (resolving a case under Sec.  10702 following 
substantial discovery); Reasonableness of BNSF Ry. Coal Dust Mitigation 
Tariff Provisions, FD 35557 (STB served Dec. 17, 2013) (same); Bar Ale, 
Inc. v. Cal. N. R.R., FD 32821 (STB served July 20, 2001) (resolving a 
case under Sec.  11101

[[Page 310]]

following substantial discovery). A motion to compel in a case using a 
non-prescriptive, multi-factor analysis is not automatically defeated 
by the fact that the Board may ``ultimately reject[]'' the argument for 
which the discovery is sought. See, e.g., Grain Land Coop v. Canadian 
Pac. R.R., NOR 41687, slip op. at 2-3 (STB served Dec. 1, 1997) 
(compelling discovery); Sierra R.R. v. Sacramento Valley R.R., NOR 
42133, slip op. at 4-5 (STB served Apr. 23, 2012) (denying a motion to 
compel based on the merits of that motion, without reliance on the fact 
that the legal standard to be applied was a non-prescriptive, multi-
factor analysis).
    Finally, AAR argues that ``[i]f the railroad's offer is deemed 
`unreasonable,' it is hard to understand how revenue adequacy would 
even be relevant if the Board is compelled to accept the shipper's 
offer.'' (AAR SNPRM Comment 18.) In making this argument, AAR assumes a 
scenario in which the Board has rejected the railroad's offer and is 
``compelled'' to accept the shipper's offer, without any consideration 
of revenue adequacy. As the SNPRM explained, however, the Board would 
not be ``compelled'' to find the challenged rate unreasonable, much 
less reject the railroad's offer or accept the shipper's offer, in a 
case where the evidence does not demonstrate sufficient protection of 
revenue adequacy. SNPRM, EP 755 et al., slip op. at 27-28.

Part V--Discovery and Procedural Schedule

    AAR repeats arguments from its NPRM comments about the brief 
procedural schedule having an unfairly greater impact on railroads than 
on shippers. (See AAR SNPRM Comment 16-17.) However, AAR fails to 
address key aspects of the SNPRM's reasoning in response to these 
arguments. As the SNPRM pointed out, unlike defendants, complainants 
must make their cases largely based on information in the possession of 
the opposing party. See SNPRM, EP 755 et al., slip op. at 37. In this 
regard, shorter discovery deadlines favor the defendants and further 
balance out the burden that railroad interests describe. Id.; see also 
Coalition Ass'ns NPRM Comment 9. And in any event, even assuming that 
the procedural schedule in FORR might, in some cases, place a 
proportionately greater burden upon defendants than would other rate 
review processes, such a burden must be weighed against the likelihood 
that rate relief may be functionally unavailable in a small dispute. 
SNPRM, EP 755 et al., slip op. at 37.
    In the SNPRM, the Board revised its initial FORR proposal to add 
mandatory mediation. Id., slip op. at 38. AFPM opposes this change. 
(AFPM SNPRM Comment 16.) But AFPM merely repeats NGFA's earlier 
argument against mandatory mediation, without addressing the Board's 
response to that argument. (See id.) As the SNPRM noted, the Board's 
mediation program has led to post-complaint settlements, to the benefit 
of the parties and the Board. SNPRM, EP 755 et al., slip op. at 38; see 
also, e.g., Twin City Metals, Inc. v. KET, LLC, NOR 42168 (STB served 
Sept. 23, 2020). The Board concluded that mediation can produce 
substantial benefits and that the possibility of achieving settlement 
through mediation would outweigh a modest lengthening of FORR's 
procedural timeline. SNPRM, EP 755 et al., slip op. at 38; see also, 
e.g., Assessment of Mediation & Arb. Proc., EP 699, slip op. at 2, 4 
(STB served May 13, 2013) (``The Board favors the resolution of 
disputes through the use of mediation and arbitration procedures, in 
lieu of formal Board proceedings, wherever possible. . . . If a dispute 
is amicably resolved, it is likely that the parties would incur 
considerably less time and expense than if they used the Board's formal 
adjudicatory process.'')
    The SNPRM proposed to keep the time period for the Board's decision 
at 90 days rather than reducing it to 60 days. SNPRM, EP 755 et al., 
slip op. at 37-38. AFPM disagrees with this determination, arguing that 
a 60-day comment period is the ``default timeframe'' to submit comments 
in rulemaking actions. (AFPM SNPRM Comment 16.) AFPM also asserts that, 
because the Board has 90 days to issue a decision in major merger 
cases, it should be able to issue a decision in an expedited process 
more quickly than that. (Id.) The Board again declines to make this 
change. AFPM does not explain why it believes the timeline for parties 
to comment in a rulemaking is analogous to the timeline for the Board 
to issue a decision in a rate case. The merger deadline it cites is 
statutory, 49 U.S.C. 11325(b)(3), and AFPM does not explain why 
Congress's reasoning with respect to a different type of proceeding 
must constrain the Board's reasoning with respect to the timing of 
FORR.

Part VI--Market Dominance

    In the SNPRM, the Board proposed to give FORR complainants a choice 
between the streamlined and non-streamlined market dominance 
approaches. SNPRM, EP 755 et al., slip op. at 41; Market Dominance 
Streamlined Approach, EP 756 (STB served Aug. 3, 2020) (adopting 
streamlined market dominance as an option in rate cases); 49 CFR 
1111.12 (streamlined market dominance regulations).
    BNSF argues that allowing non-streamlined market dominance will 
increase the time required in FORR cases, contrary to the Board's 
goals, because the Board will grant extensions of time. (See BNSF SNPRM 
Comment 3.) Although BNSF is correct that extensions of time are not 
prohibited in FORR, the Board intends to disfavor such requests 
strongly. Granting extensions of time in FORR cases would directly 
undermine one of the fundamental attributes of this process--using 
short time limits to constrain the volume and complexity of the record, 
which in turn would allow the Board to issue a decision expeditiously. 
See NPRM, EP 755 et al., slip op. at 6-7. For this reason, even 
extension requests to which both parties consent will be disfavored, 
and parties are encouraged not to spend the scarce time available under 
this procedure on preparing extension requests. Id., slip op. at 14; 
SNPRM, EP 755 et al., slip op. at 41 (specifically discouraging 
extension requests with respect to non-streamlined market dominance). 
Joint requests to allow time to negotiate a settlement, including joint 
requests for mediation, are an exception and will be considered by the 
Board.
    BNSF also asserts that responding to a non-streamlined market 
dominance presentation will be more burdensome to a FORR defendant than 
a Three-Benchmark defendant because in FORR, the complainant ``may 
pursue a novel rate reasonableness theory that will consume a 
disproportionate share of the railroad defendant's time and energy in 
preparing its responsive pleading.'' (BNSF SNPRM Comment 3-4.) But the 
SNPRM acknowledged the possible burden on defendants and accordingly 
tripled defendants' time for replies, from 10 days to 30 days, in cases 
where complainants choose non-streamlined market dominance. SNPRM, EP 
755 et al., slip op. at 41. BNSF does not respond to the Board's 
reasoning for allowing complainants this choice: ``[l]imiting FORR [to 
streamlined market dominance] could effectively deny access to FORR for 
many potential complainants--those who are unable to satisfy one or 
more of the streamlined factors--which is contrary to FORR's goal of 
improving access to rate reasonableness determinations.'' Id.
    BNSF further contends that, ``[i]f the Board chooses to permit 
shippers to use non-streamlined approaches to market dominance on the 
basis that the short time frame is a sufficient protection

[[Page 311]]

against the potential for evidentiary sprawl, then it is logical and 
proportionate to permit evidence of product and geographic competition 
when a shipper elects to use a non-streamlined market dominance 
presentation.'' (BNSF SNPRM Comment 4.) BNSF accurately observes that 
FORR has a significant ``laboratory'' element, (see id.), and relying 
on FORR's tight time frames to limit evidentiary volume in reference to 
product and geographic competition could merit consideration. See TRB 
Rep. 122 (observing that antitrust enforcement agencies are able to 
assess product and geographic competition in a short period of time 
because they strictly limit the time that parties have to compile 
evidence). However, consideration of whether to incorporate product and 
geographic competition in market dominance determinations has 
constituted entire rulemaking proceedings on its own,\31\ and 
addressing it here would unduly expand the scope of this proceeding. 
Therefore, like the possibility of two-tiered relief, see SNPRM, EP 755 
et al., slip op. at 47, and below, the Board will reserve this issue 
for possible future proceedings.
---------------------------------------------------------------------------

    \31\ See, e.g., Mkt. Dominance Determinations--Prod. & 
Geographic Competition, Docket No. EP 627; Pet. of the Ass'n of Am. 
R.R.s, Docket No. EP 717.
---------------------------------------------------------------------------

    The Coalition Associations note that, in a FORR case where the 
complainant chooses streamlined market dominance, it would have the 
option of an evidentiary hearing before an administrative law judge to 
discuss market dominance, but if the complainant chooses non-
streamlined market dominance, it would not have the option of a 
hearing. (Coalition Associations SNPRM Comment 4-5); SNPRM, EP 755 et 
al., slip op. at 39, 42. According to the Coalition Associations, ``it 
is irrational and incongruous for the Board to permit rebuttal evidence 
in streamlined market-dominance cases but to prohibit it in non-
streamlined cases.'' (Coalition Associations SNPRM Comment 5.) The 
Board acknowledges the apparent incongruity in these procedures. 
However, closer examination reveals that the procedure as proposed in 
the SNPRM is neither irrational nor incongruous. As an initial matter, 
the optional hearing in a FORR case using streamlined market dominance 
is not solely an opportunity for the complainant to present rebuttal; 
as the NPRM explained, if the complainant chooses a hearing, both sides 
would be permitted to present their market dominance positions. NPRM, 
EP 755 et al., slip op. at 10. But even to the extent the hearing 
allows for rebuttal, the Board disagrees with the Coalition 
Associations' claim that ``the need for rebuttal is even greater in 
non-streamlined market-dominance cases.'' (Coalition Associations SNPRM 
Comment 5.) The opening submission of a complainant using streamlined 
market dominance is truly minimal, addressing only a specified list of 
factors and without the full evidentiary presentation that a 
complainant would typically submit in a case using non-streamlined 
market dominance. See Mkt. Dominance Streamlined Approach, EP 756, slip 
op. at 4, 27-28, 37 (STB served Aug. 3, 2020). Allowing such a minimal 
opening submission is by design, with the goal of overcoming the 
significant burdens in terms of cost and time that complainants can 
otherwise face in addressing market dominance. See id., slip op. at 1-
3, 6-7. A complainant will have a greater need for rebuttal after 
submitting so little in its streamlined market dominance opening, as 
opposed to a non-streamlined market dominance case where the 
complainant has an opportunity on opening to present its complete 
position regarding market dominance.
    Moreover, the Coalition Associations' proposed solution--
bifurcating market dominance and rate reasonableness pleadings in FORR 
cases using non-streamlined market dominance, (see Coalition 
Associations NPRM Comment 14-15)--would substantially undercut FORR's 
use of short timelines to limit the volume and complexity of the 
evidentiary record. Contrary to Coalition Associations' claim, 
(Coalition Associations SNPRM Comment 7), their proposed addition of 
three rounds of market dominance pleadings would be disproportionate to 
FORR. The SNPRM observed that the various procedural additions proposed 
by parties, some of which the SNPRM adopted, would ``detract[ ] from 
the Board's goal of a highly expedited procedural schedule.'' SNPRM, EP 
755 et al., slip op. at 36. Compared to the longest version of the 
procedural schedule contemplated in the SNPRM, with a maximum of 96 
days for record development, see id., slip op. at 36, 42, the Coalition 
Associations' maximum record development time of 129 days would 
constitute an expansion by greater than 30 percent. (See Coalition 
Associations NPRM Comment 10 (21 days for motions to compel); Coalition 
Associations SNPRM Comment 12 (108 days of record development excluding 
motions to compel).)
    Notwithstanding their concerns about a lack of rebuttal with 
respect to market dominance in non-streamlined cases (Coalition 
Associations SNPRM Comment 6), the Coalition Associations have 
expressed strong support for FORR's rate reasonableness procedure, 
which does not include rebuttal. (See Coalition Associations NPRM 
Comment 2; Coalition Associations SNPRM Comment 1.) The Board has heard 
rail customers' concerns about the duration of rate cases, see NPRM, EP 
755 et al., slip op. at 3-4 & n.7, and FORR's simplified procedure is 
what permits its expedited timeline.
    The SNPRM also proposed to require defendants to file market 
dominance presentations only on reply, rather than on opening. SNPRM, 
EP 755 et al., slip op. at 39-40. AFPM states that it has concerns with 
this approach and recommends, instead, that the Board return to its 
initial proposal of prohibiting complainants from using non-streamlined 
market dominance in FORR cases. (See AFPM SNPRM Comment 16.) AFPM, 
however, does not identify its specific concerns, nor does it respond 
to the Board's reasoning for eliminating FORR defendants' market 
dominance opening, see SNPRM, EP 755 et al., slip op. at 40, or its 
reasoning for allowing complainants to choose non-streamlined market 
dominance, see SNPRM, EP 755 et al., slip op. at 41. In fact, AFPM 
states that it does not oppose giving FORR complainants the choice 
between streamlined and non-streamlined market dominance. (See AFPM 
SNPRM Comment 17.)

Part VII--Relief Cap

    In the NPRM and SNPRM, the Board proposed to establish a relief cap 
of $4 million, indexed annually using the Producer Price Index, which 
would apply to an award of reparations,\32\ a rate prescription or any 
combination of the two. NPRM, EP 755 et al., slip op. at 16; SNPRM, EP 
755 et al., slip op. at 47. This is consistent with the potential 
relief afforded under the Three-Benchmark methodology.\33\ SNPRM, EP 
755 et al., slip op. at 42. The Board further proposed that any rate 
prescription be limited to no more than two years unless the parties 
agree to a different limit on relief. Id., slip op. at 42-43. Such a 
limit is one-fifth of the

[[Page 312]]

10-year limit applied in SAC cases and less than half of the five-year 
limit applied in Simplified-SAC and Three-Benchmark cases, see 
Expanding Access to Rate Relief, EP 665 (Sub-No. 2), slip op. at 6, 
thereby accounting for the expedited deadlines of the FORR procedure.
---------------------------------------------------------------------------

    \32\ The standard reparations period reaches back two years 
prior to the date of the complaint. 49 U.S.C. 11705(c) (requiring 
that complaint to recover damages under 49 U.S.C. 11704(b) be filed 
with the Board within two years after the claim accrues).
    \33\ The relief cap will incorporate indexing that has 
previously been applied to the Three-Benchmark cap, so that the cap 
for FORR is the same as the cap for Three-Benchmark. The Board 
confirms, pursuant to the Coalition Associations' request, that the 
FORR relief cap matches the Three-Benchmark cap, including indexing 
from 2007. (See Coalition Associations SNPRM Comment 9.)
---------------------------------------------------------------------------

    AAR continues to argue that a $4 million dispute is not a small 
case, that the $4 million cap is arbitrary, and that the Board has not 
addressed disaggregation of claims. (See AAR SNPRM Comment 17.) AAR 
offers no support for its opinion that a $4 million case is not 
``small''--which is, of course, a relative term. See, e.g., Consumers 
Energy Co. v. CSX Transp., Inc., NOR 42142, slip op. at 44 (STB served 
Aug. 2, 2018) ($94.9 million in relief in a SAC case). AAR asserts that 
the $4 million cap is arbitrary and suggests that the Board has not 
provided a rationale to support it. But the Board did in fact provide 
that rationale, which AAR does not mention despite its appearance in 
both the NPRM and SNPRM. NPRM, EP 755 et al., slip op. at 16 
(``[a]pplying a relief cap based on the estimated cost to bring a 
Simplified-SAC case would further the Board's intention that Three-
Benchmark and FORR be used in the smallest cases, and applying the same 
$4 million relief cap, as indexed, would provide consistency in terms 
of defining that category of case.''); SNPRM, EP 755 et al., slip op. 
at 43 (same).\34\
---------------------------------------------------------------------------

    \34\ See also Coalition Associations SNPRM Reply Comment 16-17 
(``AAR assumes that Three Benchmark is the next-more-complicated 
method when, in fact, FORR is on par with Three Benchmark; it is an 
alternative to Three Benchmark for small cases, not a less 
complicated method. Indeed, FORR conceivably could be more 
complicated than Three Benchmark, depending upon the methodologies 
that the parties present.''); SNPRM, EP 755 et al., slip op. at 43-
44 (``By applying fast timelines and a simplified procedure, the 
Board intends that FORR would be less costly to litigate, but that 
does not inevitably mean the analysis is less accurate. Parties' 
ability to choose their methodology would allow the use of analyses 
that are equally accurate or more accurate, if the party presenting 
it can prepare the analysis quickly enough to present it in the time 
available.'').
---------------------------------------------------------------------------

    With respect to disaggregation of claims, AAR fails to acknowledge 
that the SNPRM proposed the same case-specific approach that the Board 
has had in place since 2007 for all small rate cases. SNPRM, EP 755 et 
al., slip op. at 44-45. As the Board explained in Simplified Standards, 
``[i]t is not clear that such a mechanism is necessary at this time. 
The Board has ample discretion to protect the integrity of its 
processes from abuse, and we should be able to readily detect and 
remedy improper attempts by a shipper to disaggregate a large claim 
into a number of smaller claims, as the shipper must bring these 
numerous smaller cases to the Board.'' Simplified Standards, EP 646 
(Sub-No. 1), slip op. at 32-33.
    The Coalition Associations state that they ``seek clarification as 
to when the two-year window for applying the relief cap begins. The 
statute clearly allows for two years of reparations, which could result 
in the entire relief period occurring prior to the date of the 
complaint. It also is clear that a complainant could elect to forego 
pre-complaint reparations and apply the relief period from the date of 
the complaint.'' (Coalition Associations SNPRM Comment 10.) As the 
SNPRM stated, the combined cap is identical to the one adopted for 
Three-Benchmark cases. SNPRM, EP 755 et al., slip op. at 45. In a 
Three-Benchmark case, as in any other rate reasonableness case, a 
complainant can choose to seek reparations, a rate prescription, or 
both. See, e.g., Grain Land Coop, NOR 41687, slip op. at 5 (``In its 
amended complaint, Grain Land must indicate what rates it is 
challenging (by tariff reference, tariff item number(s), and specific 
points from and to which the rates apply) and what relief it seeks 
(i.e., rate prescription and/or reparations).'') (emphasis added); 
Sunbelt Chlor Alkali P'ship v. Norfolk S. Ry., NOR 42130, slip op. at 
29 (STB served June 20, 2014) (describing statutory contrasts between 
reparations and rate prescription). FORR complainants, accordingly, 
will have the same options.
    Contrary to the Coalition Associations' suggestion, however, if a 
complainant decides to forgo reparations and seek only a prescription, 
the transition from reparations to prescription occurs on the effective 
date of the prescription order--i.e., the date by which the defendant 
must reduce its rate in compliance with the order. See, e.g., Ariz. 
Pub. Serv. Co. v. Atchison, Topeka & Santa Fe Ry., NOR 41185, slip op. 
at 20 (STB served July 29, 1997) (ordering defendant to reduce its 
rates within 60 days of decision). Therefore, when a complainant 
chooses to forgo reparations, that includes reparations between the 
complaint date and the effective date of the prescription order. The 
alternative proposed by the Coalition Associations--in which the relief 
period begins ``on a date to be determined solely by the complainant,'' 
(Coalition Associations SNPRM Comment 10)--would unreasonably allow 
complainants to choose a relief period that is entirely disconnected 
from the conduct found unlawful by the Board. (See AAR SNPRM Reply 
Comment 7-8.) The Coalition Associations express concern that a FORR 
complainant could receive only reparations, without any prospective 
relief. (See Coalition Associations SNPRM Comment 10.) But that 
possibility exists in Three-Benchmark cases as well, if the complainant 
receives pre-complaint reparations that exhaust the $4 million cap.
    In the SNPRM, the Board proposed not to adopt a two-tiered relief 
structure--in which the top tier has a longer procedural schedule and 
no limit on the size of the relief--at this time, noting that, ``[i]n 
the future, the Board could assess whether FORR may be appropriate for 
larger disputes.'' SNPRM, EP 755 et al., slip op. at 47. IMA-NA, 
Indorama, and AFPM take issue with this proposal, asking that the Board 
instead adopt two-tiered relief immediately. (See IMA-NA SNPRM Comment 
16-17; Indorama SNPRM Comment 16-17; AFPM Comment 18.\35\) This request 
will be declined, as it was at the SNPRM stage. The Board proposed FORR 
to resolve small rate disputes. NPRM, EP 755 et al., slip op. at 7. 
Expanding the scope of this rulemaking to address large rate cases as 
well would delay that important and time-sensitive goal. IMA-NA and 
Indorama argue that ``[t]he Board has ample evidence that this model is 
effective and will not cause an onslaught of rate cases based on the 
history of this process in Canada . . . .'' (IMA-NA SNPRM Comment 16; 
Indorama SNPRM Comment 16.) But as IMA-NA and Indorama acknowledge, 
FORR is not the same as the Canadian process. (See id.) Canadian final 
offer arbitration is informal, confidential, and non-precedential, and 
is conducted by an arbitrator--it is alternative dispute resolution 
rather than adjudication. FORR, by contrast, is an innovative attempt 
to incorporate a final offer procedure into an agency adjudication, 
leading to public, precedential decisions subject to the APA's 
requirements for reasoned decision-making. A new approach is necessary 
in light of the Board's protracted search for a small rate dispute 
process that is accessible to shippers, see NPRM, EP 755 et al., slip 
op. at 2-5, and FORR offers a promising opportunity. But it would be 
premature to conclude, as IMA-NA and Indorama

[[Page 313]]

do, that there is ``ample evidence that this model is effective.''
---------------------------------------------------------------------------

    \35\ AFPM expresses concern that railroads could ``game'' the 
relief cap ``by setting high initial rates such that any relief cap 
will be quickly exhausted'' and argues that a two-tier cap would 
alleviate that concern. (AFPM Comment 18.) As the SNPRM stated in 
response to similar arguments, the Board anticipates addressing such 
conduct in individual cases should it happen, and the Board will 
retain the ability to revise its processes to counteract any abuses 
that may arise. See SNPRM, EP 755 et al., slip op. at 46.
---------------------------------------------------------------------------

    Accordingly, the Board will adopt the relief cap proposed in the 
NPRM and SNPRM.

Part VIII--Miscellaneous Issues

    AAR contends that the Board has not explained why it is not 
applying the conclusions of InterVISTAS Consulting Inc. (InterVISTAS), 
a consultant that prepared a report for the Board in 2016.\36\ (See AAR 
SNPRM Comment 15.) However, AAR cites the page of the SNPRM that 
provides that explanation. See SNPRM, EP 755 et al., slip op. at 47 
(noting, among other things, that the Board was not bound by the 
study). AAR claims that InterVISTAS ``reject[ed] final-offer 
decisionmaking as an alternative way for the Board to decide rate 
disputes.'' (AAR SNPRM Comment 15.) But in fact, InterVISTAS did not 
reject final offer procedures for any substantive reason, or even 
address final offer procedures substantively in the first place. See 
InterVISTAS Rep. 76. Instead, InterVISTAS merely declined to draw any 
conclusions from the Canadian final offer process due to its 
confidentiality. See id. (``[T]he non-transparent final offer 
arbitration process used in Canada to constrain undue exercise of any 
market power by railways provides no guidance for alternatives to SAC. 
It may be that the methodologies put forward by one party or the other 
in the arbitrations could provide insight, but as the process is 
confidential, no guidance can be provided.'') (emphasis added). And in 
any event, AAR fails to identify any particular substance of the 
InterVISTAS report that it contends the Board has not addressed.
---------------------------------------------------------------------------

    \36\ An Examination of the STB's Approach to Freight Rail Rate 
Regul. & Options for Simplification (InterVISTAS Report), 
InterVISTAS Consulting Inc., Sept. 14, 2016, available at https://www.stb.gov/wp-content/uploads/STB-Rate-Regulation-Final-Report.pdf.
---------------------------------------------------------------------------

    Finally, AAR repeats its arguments that the Board must conduct a 
cost-benefit analysis. (See AAR SNPRM Comment 19.) The Board's 
responses in the SNPRM continue to apply, including the fact that 
Executive Order 12866 does not apply to ``independent regulatory 
agencies'' such as the Board, see 49 U.S.C. 1301(a), and that the Board 
has carefully considered the need for regulatory reform, FORR's 
anticipated benefits and burdens, and alternative approaches, including 
the comparison group approach proposed in Docket No. EP 665 (Sub-No. 
2). See SNPRM, EP 755 et al., slip op. at 49 n.75. It is true that the 
SNPRM did not address AAR's reliance on the Policies and Procedures for 
Rulemakings of the U.S. Department of Transportation (DOT). But as AAR 
acknowledged (AAR NPRM Comment 26), DOT's requirements do not apply to 
the Board. See also Vt. Yankee Nuclear Power Corp. v. Nat'l Res. Def. 
Council, 435 U.S. 519, 524-25, 543-48 (1978) (``Agencies are free to 
grant additional procedural rights in the exercise of their discretion, 
but reviewing courts are generally not free to impose them if the 
agencies have not chosen to grant them.'').
Docket No. EP 665 (Sub-No. 2)
    The Board received no further comment on its proposal to close 
Docket No. EP 665 (Sub-No. 2), and therefore will proceed to terminate 
that proceeding. As noted in the SNPRM, the Board may revisit some of 
the ideas presented in Docket No. EP 665 (Sub-No. 2) depending on 
future developments and whether additional steps in the small rate 
dispute context appear necessary.
Regulatory Flexibility Act
    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, 
generally requires a description and analysis of new rules that would 
have a significant economic impact on a substantial number of small 
entities. In drafting a rule, an agency is required to: (1) assess the 
effect that its regulation will have on small entities; (2) analyze 
effective alternatives that may minimize a regulation's impact; and (3) 
make the analysis available for public comment. Sections 601-604. In 
its notice of proposed rulemaking, the agency must either include an 
initial regulatory flexibility analysis, section 603(a), or certify 
that the proposed rule would not have a ``significant impact on a 
substantial number of small entities,'' section 605(b). The impact must 
be a direct impact on small entities ``whose conduct is circumscribed 
or mandated'' by the proposed rule. White Eagle Coop. v. Conner, 553 
F.3d 467, 480 (7th Cir. 2009).
    In the SNPRM, the Board certified under 5 U.S.C. 605(b) that the 
proposed rule would not have a significant economic impact on a 
substantial number of small entities within the meaning of the RFA.\37\ 
The Board explained that its proposed changes to its regulations would 
not mandate or circumscribe the conduct of small entities. The rule 
requires no additional recordkeeping by small railroads or any 
reporting of additional information. Nor do these rules circumscribe or 
mandate any conduct by small railroads that is not already required by 
statute: the establishment of reasonable transportation rates when a 
carrier is found to be market dominant. As the Board noted, small 
railroads have always been subject to rate reasonableness complaints 
and their associated litigation costs, the latter of which the Board 
expects will be reduced through the use of this procedure.
---------------------------------------------------------------------------

    \37\ For the purpose of RFA analysis for rail carriers subject 
to Board jurisdiction, the Board defines a ``small business'' as 
only including those rail carriers classified as Class III rail 
carriers under 49 CFR part 1201, General Instructions Sec.  1-1. See 
Small Entity Size Standards Under the Regul. Flexibility Act, EP 719 
(STB served June 30, 2016).
---------------------------------------------------------------------------

    Additionally, the Board concluded (as it has in past proceedings) 
that the majority of railroads involved in these rate proceedings are 
not small entities within the meaning of the Regulatory Flexibility 
Act. SNPRM, EP 755 et al., slip op. at 50-51 (citing Simplified 
Standards, EP 646 (Sub-No. 1), slip op. at 33-34). Since the inception 
of the Board in 1996, only three of the 51 cases filed challenging the 
reasonableness of freight rail rates have involved a Class III rail 
carrier as a defendant. Those three cases involved a total of 13 Class 
III rail carriers. The Board estimated that there are approximately 656 
Class III rail carriers. Therefore, the Board certified under 5 U.S.C. 
605(b) that the proposed rule, if promulgated, would not have a 
significant economic impact on a substantial number of small entities 
within the meaning of the RFA.
    This final rule adopts the approach proposed in the SNPRM, and the 
same basis for the Board's certification in the SNPRM applies to the 
final rule. Therefore, the Board certifies under 5 U.S.C. 605(b) that 
the final rule will not have a significant economic impact on a 
substantial number of small entities within the meaning of the RFA. A 
copy of this decision will be served upon the Chief Counsel for 
Advocacy, Office of Advocacy, U.S. Small Business Administration, 
Washington, DC 20416.
Paperwork Reduction Act
    In this proceeding, the Board modifies an existing collection of 
information that was approved by the Office of Management and Budget 
(OMB) under the collection of Complaints (OMB Control No. 2140-0029). 
In the NPRM, the Board sought comments pursuant to the Paperwork 
Reduction Act (PRA), 44 U.S.C. 3501-3549, and OMB regulations at 5 CFR 
1320.8(d)(3) regarding: (1) whether the collection of information, as 
modified in the proposed rule in the Appendix, is necessary for the 
proper performance of the functions of the Board, including whether the 
collection has practical utility; (2) the accuracy of

[[Page 314]]

the Board's burden estimates; (3) ways to enhance the quality, utility, 
and clarity of the information collected; and (4) ways to minimize the 
burden of the collection of information on the respondents, including 
the use of automated collection techniques or other forms of 
information technology, when appropriate. No further comments were 
received following the SNPRM.
    This modification and extension request of an existing, approved 
collection will be submitted to OMB for review as required under the 
PRA, 44 U.S.C. 3507(d), and 5 CFR 1320.11. The request will address the 
comment discussed in the SNPRM as part of the PRA approval process. See 
SNPRM, EP 755 et al., slip op. at 51-52.
Congressional Review Act
    Pursuant to the Congressional Review Act, 5 U.S.C. 801-808, the 
Office of Information and Regulatory Affairs has designated this rule 
as non-major, as defined by 5 U.S.C. 804(2).
    It is ordered:
    1. The Board adopts the final rule as set forth in this decision. 
Notice of the adopted rule will be published in the Federal Register.
    2. A copy of this decision will be served upon the Chief Counsel 
for Advocacy, Office of Advocacy, U.S. Small Business Administration.
    3. The final rule in Docket No. EP 755 is effective March 6, 2023.
    4. The termination of Docket No. EP 665 (Sub-No. 2) is effective on 
January 3, 2023.

    Decided: December 19, 2022.

    By the Board, Board Members Fuchs, Hedlund, Oberman, Primus, and 
Schultz. Board Members Fuchs and Schultz dissented with separate 
expressions.
BOARD MEMBER FUCHS, dissenting:
    Congress has entrusted the Board with the responsibility to 
regulate rail carriers' rates, and it has set broad criteria under 
which the Board is to apply its expertise and judgment.\1\ This final 
rule (FORR Final Rule) is the culmination of diligent work and tireless 
leadership to reform the Board's approach to rate review. Recognizing 
the potential benefits of reform, as well as the importance of further 
stimulating new ideas, I voted to propose FORR and twice solicit public 
comment.\2\ After careful consideration of those comments, however, I 
have concluded that FORR is not the answer. FORR is an evasion of the 
Board's fundamental responsibility because it makes the Board entirely 
dependent on litigants' self-determined rate review methodologies, 
gives little meaningful guidance for those methodologies, and prohibits 
the Board from devising its own remedy where necessary. Making matters 
worse, FORR subjects those litigants to a process with intensified and 
unequal pressure, thereby incentivizing them to prioritize litigation 
strategy over their best interpretation of facts and statutory 
criteria. This deeply flawed, all-or-nothing process immediately 
generates uncertainty for industry participants, and it presents unique 
risks that its pressures and precedent will cause significant negative 
effects on our nation's rail network. Rather than issuing FORR Final 
Rule, the Board should have recognized the irreparable problems with 
FORR and instead pursued other reforms while it facilitates an 
additional process to resolve rate disputes via the agency's new 
arbitration program.
---------------------------------------------------------------------------

    \1\ See 49 U.S.C. 10101 (rail transportation policy); 49 U.S.C. 
10701(d)(2) (listing the Long-Cannon factors); 49 U.S.C. 10701(d)(3) 
(directing the Board to establish ``one or more simplified and 
expedited methods for determining the reasonableness of challenged 
rail rates in those cases in which a full stand-alone cost 
presentation is too costly, given the value of the case''); 49 
U.S.C. 10702 (jurisdiction to establish reasonable rates); 49 U.S.C. 
10704(a)(2) (requiring the Board to make an ``adequate and 
continuing effort'' to assist carriers in attaining adequate revenue 
levels).
    \2\ See NPRM, EP 755 et al.; SNPRM, EP 755 et al.
---------------------------------------------------------------------------

    Though the Board has stated its role in regulating rates is to 
serve as ``guardian of the public interest,'' \3\ FORR reduces the 
agency to mere passive, all-or-nothing selections based only on 
litigants' methodologies and proposed remedies. In FORR, the Board does 
not set its own methodology that gives clear, specific meaning to the 
statutory criteria, and FORR Final Rule argues that the Board similarly 
does not have a defined methodology in reasonable practice and common 
carrier obligation disputes. However, in those types of cases, unlike 
in FORR, the Board retains discretion to best implement the relevant 
statutory criteria because it may reject parts or all of parties' 
arguments and devise its own remedy based on its expertise and 
judgment. FORR Final Rule further argues that the Board currently gives 
up discretion in the Three-Benchmark rate review methodology because it 
uses a final offer process for picking comparison groups. However, when 
it established Three-Benchmark, the Board exercised considerable 
discretion to guard the public interest and give specific meaning to 
statutory criteria--based on its own expertise and judgement--by, among 
other things, defining a formula that accounts for the level of revenue 
adequacy to be achieved through a rail carrier's rate-setting.\4\ By 
contrast, FORR offers little useful guidance, let alone a methodology, 
on fundamental concepts like revenue adequacy and differential 
pricing.\5\ FORR is unique among the agency's processes in that the 
Board evades responsibility on both the front and back ends--neither 
defining methodologies in advance nor permitting the Board's own 
remedies in individual cases.
---------------------------------------------------------------------------

    \3\ See Pub. Serv Co. of Colo. v. Burlington N. & Santa Fe Ry., 
NOR 42057, slip op. at 3-4 (STB served Jan. 19, 2005) (in the rate 
reasonableness context, the Board's ``role as the guardian of the 
public interest in unchanged,'' in that, like its predecessor, it is 
``expected to be directly and immediately concerned with the outcome 
of virtually all proceedings conducted before it. . . . not . . . a 
passive arbiter but the guardian of the general public interest, 
with a duty to see that this interest is at all times effectively 
protected'' (internal citations omitted)).
    \4\ See Rate Guidelines--Non-Coal Proceedings, EP 347 (Sub-No. 
2), 1 STB 1004, 1027-34 (1996) (describing RSAM, the revenue 
shortfall allocation method); id. at 1042 (describing the revenue 
need adjustment factor, which is the ratio of RSAM / R/
VC>180); id. at 1020 (listing how the proposed 
factors implement the criteria including the Long-Cannon factors, 
differential pricing, and revenue adequacy); see also Simplified 
Standards for Rail Rate Cases, EP 646 (Sub-No. 1), slip op at 4-5 
(STB served July 28, 2006) (discussing the rail transportation 
policy, Long-Cannon factors, revenue adequacy, and the need to 
establish a simplified and expedited method for determining rate 
reasonableness in cases where a stand-alone cost presentation is too 
costly, given the value of the case).
    \5\ FORR Final Rule's comparison between FORR and ``Maximum 
Markup Methodology,'' or MMM, is misplaced. See FORR Final Rule, EP 
755 et al, slip op. at 11 (citing Major Issues in Rail Rate Cases, 
EP 657 (Sub-No. 1), slip op. at 14-15, (STB served Oct. 30, 2006), 
aff'd sub nom. BNSF Ry. v. STB, 526 F.3d 770 (D.C. Cir. 2008)); see 
also Major Issues, EP 657 (Sub-No. 1), slip op at 9-11, 14-15, 23 
n.44) (establishing, as one part of the Board's effort to address 
six recurring issues in stand-alone cost (SAC) cases, MMM, which is 
used to prescribe rates as part of the SAC methodology). First, 
unlike FORR, SAC is a methodology in which the agency--using its 
expertise and judgment--gives clear, specific meaning to the 
statutory criteria by defining a railroad's revenue needs and 
permissible differential pricing through the prism of contestability 
theory and so-called constrained market pricing (i.e., based on a 
stand-alone railroad's revenue needs). Second, again unlike FORR, 
the Board in a SAC case arrives at the amount of excess revenue, 
subject to MMM, only after using its expertise and judgment to 
resolve many individual disputes, often involving hundreds of small 
details. It is not forced to simply take a litigant's entire 
presentation.
---------------------------------------------------------------------------

    Not only does FORR turn over the Board's responsibility to 
litigants, it diminishes the Board's ability to pick the best outcome 
based on the litigants' presentations. In a FORR case, suppose the 
Board, relying on a litigant's rate reasonableness methodology, finds a 
rate unreasonable. The Board would then turn to the litigants' final 
offers to prescribe the maximum rate. However, in FORR, the maximum 
rate need not

[[Page 315]]

arise out of litigants' rate reasonableness methodologies. Instead, 
litigants' final offers can use different reasoning, or even altogether 
different methodologies. They must simply submit ``explanation and 
support for'' their final offers. See FORR Final Rule, EP 755 et al., 
slip op. at 19, 38. This may lead to suboptimal outcomes. For example, 
in one scenario, FORR requires the Board to prescribe a maximum rate 
using a litigant's final offer even when a litigant's rate 
reasonableness methodology readily shows a different maximum rate that 
the Board would view better implements the statutory criteria. In 
another scenario, FORR prevents the Board from remedying an 
unreasonable rate \6\ if the Board finds the complainant's final offer 
does not have support, even though the statute requires a rail carrier 
to establish reasonable rates. Thus, working within the binary 
selection process that FORR imposes, in some cases the Board cannot 
even select obvious, superior solutions or correct unreasonableness.
---------------------------------------------------------------------------

    \6\ Here, the term ``unreasonable rate'' means that the Board 
would find that rate unreasonable based on the methodologies 
presented, not that the Board necessarily would issue a formal 
ruling just on that matter.
---------------------------------------------------------------------------

    Today's decision might accept these severe, unprecedented 
limitations in hopes that a final offer framework--by virtue of its 
design--will produce good outcomes, but FORR Final Rule offers 
inadequate support for this proposition. The theory behind a final 
offer framework is that the prospect of an all-or-nothing decision 
imposes acute uncertainty and raises the costs of losing, such that 
parties are more likely to settle and make presentations that converge 
toward the middle ground.\7\ FORR Final Rule offers no evidence that a 
final offer framework is welfare-improving in contexts similar to rate 
regulation. If convergence were the sole desired effect, even FORR 
Final Rule's supporting literature--largely based on public sector 
bargaining and baseball arbitration--acknowledges the unresolved debate 
over whether final offers converge.\8\ When cases are decided in the 
absence of convergence, FORR may have unintended distributional 
consequences across individual shippers because all-or-nothing final 
offer frameworks have more variance than other processes--that is, 
similarly-situated litigants have very different results because the 
decision-maker is unable to split the difference where necessary.\9\ 
This dynamic has the potential to distort competition, particularly 
among shippers.
---------------------------------------------------------------------------

    \7\ ``Early proponents of final offer arbitration [(FOA)] argued 
that FOA would lead to convergence in the offers of the two parties. 
The theory originating with Stevens (1966) was that conventional 
arbitration had a `chilling' effect on negotiations and offers 
because the parties were motivated to make extreme offers when 
facing an arbitrator who was thought to `split the difference.' '' 
Comm'n on Health & Safety & Workers' Comp., Cal. Dep't Indus. Rels., 
Literature Review: Final Offer Arbitration, https://www.dir.ca.gov/chswc/basebalarbffinal.htm (last visited Dec. 16, 2022) (internal 
citations omitted); but see id. (``[C]onvergence of the offers under 
FOA compared to conventional arbitration is not a sufficient 
condition for `better' decisions by the arbitrator given that the 
arbitrator can choose only one or the other.''); see also Steven 
Brams & Samuel Merrill, Equilibrium Strategies for Final-Offer 
Arbitration: There is No Median Convergence, Mgmt. Sci. 927 (1983).
    \8\ See Chetwynd, Baseball? An Analysis of Final-Offer 
Arbitration, its Use in Major League Baseball & its Potential 
Applicability to European Football Wage & Transfer Disputes, 20 
Marquette Sports L. Rev. 109, 117, 134 (2009); Carrell & Bales, 
Considering Final Offer Arbitration to Resolve Public Sector 
Impasses in Times of Concession Bargaining, 28 Ohio State J. of 
Disp. Resol. 1, 30-32 (2013).
    \9\ Comm'n on Health & Safety & Workers' Comp., supra.
---------------------------------------------------------------------------

    More alarmingly, FORR has a fundamental flaw in its framework--as 
FORR Final Rule acknowledges, this process, unlike some other final 
offer frameworks in different contexts, does not impose ``reciprocal 
risks.'' See FORR Final Rule, EP 755 et al., slip op. at 19. If 
participants in a final offer process do not have equivalent risks, the 
more risk adverse party will likely give up more--not because its case 
is worse--simply because an all-or-nothing process increases the 
expected costs of losing.\10\ Here, the rail carrier appears to be the 
more risk averse party because the range of outcomes in FORR are 
limited to either the status quo or a rate reduction.\11\ As a result, 
FORR may have an especially coercive, unequal effect on settlements and 
final offers. In practice, to reduce the probability of losing to a 
complainant's offer in its entirety, a rail carrier may be more likely 
to pursue a middle ground that is not best for the network and other 
shippers. Thus, in FORR, litigants--on whom the Board entirely relies--
are incentivized to pursue arguments and outcomes not based on their 
best interpretation of market or network facts and the relevant 
criteria but instead on litigation strategies.
---------------------------------------------------------------------------

    \10\ See Henry S. Farber, An Analysis of Final Offer 
Arbitration, J. of Conflict Resol. 683 (1980); see also Comm'n on 
Health & Safety & Workers' Comp., supra (stating ``economic theory 
as reviewed earlier suggests that the more risk averse party will 
have poorer outcomes on average under this type of arbitration'' and 
finding on a preliminary basis ``there would appear to be enough non 
anecdotal evidence to conclude that baseball arbitration is neither 
working satisfactorily nor producing fair'' outcomes); id. (citing 
Amy Farmer Curry & Paul Pecornio, The Use of Final Offer Arbitration 
as a Screening Device, J. of Conflict Resol. 655 (1993)).
    \11\ That is not to say that, as FORR Final Rule outlines, 
shippers do not experience any costs from the process or that 
litigants do not have relationship reasons to reduce the potency of 
this absence of reciprocity. However, as FORR Final Rule 
acknowledges, there is no escaping that the potential effects on 
rates are unequal. See FORR Final Rule, EP 755 et al., slip op. at 
19-21.
---------------------------------------------------------------------------

    Given these deep and irreparable flaws, FORR could have significant 
negative consequences for the rail network. FORR's decisions are 
precedential, so one litigant's rate reasonableness methodology--for 
which the Board would not find best implements the statutory criteria, 
let alone seek broader public comment or analyze effects across 
carriers--could affect rail rates nationwide, potentially impacting 
infrastructure and operations. Moreover, as noted above, the 
intensified and unequal pressures in FORR could affect the network even 
in the absence of a Board decision. Because FORR Final Rule does little 
to define FORR's broad criteria or give guidance to litigants, effects 
will be felt immediately in the form of particularly acute uncertainty. 
Notably, final offer arbitration in Canada, as well as the Board's 
arbitration program released today, largely avoid these problems. 
Though both share some characteristics of the FORR process, both are 
confidential, and--in the case of the Board's arbitration program--the 
arbitration panel may devise a welfare-improving remedy distinct from 
the parties' presentations.\12\ That is not to say that 
confidentiality, and non-precedential decisions generally, ought to be 
norm for the Board. However, where, as in FORR, the Board evades its 
responsibility and sets forth a flawed process, the broader public 
faces high risks of negative outcomes.
---------------------------------------------------------------------------

    \12\ See Joint Pet. for Rulemaking to Establish a Voluntary Arb. 
Program for Small Rate Disps., EP 765, slip op. at 57-60, 75 (STB 
served December 19, 2022); Canada Transp. Act, S.C. 1996, c. 10, as 
amended, Sec.  167 (Can.). Cf. FORR Final Rule, EP 755 et al., slip 
op. at 1.
---------------------------------------------------------------------------

    The Board's drastic shift to FORR is not justified by FORR Final 
Rule's analysis. FORR Final Rule states that shippers need a more 
accessible rate review option, but it does not fully analyze the extent 
to which this need is the result of high litigation costs rather than 
economic methodologies that have high standards for relief. The SNPRM 
claims that the cost of Three-Benchmark appears to be one-eighth (and 
possibly less) of the potential relief, and it is unclear whether FORR 
Final Rule finds that this ratio makes the methodology cost-
prohibitive.\13\ If FORR Final Rule's

[[Page 316]]

accessibility statement is only about litigation costs, FORR Final Rule 
does not establish that FORR would be less costly than Three-Benchmark. 
Both have final offer components, but Three-Benchmark sets the basic 
economic methodology in advance, whereas FORR requires litigants to 
create their own methodology and reasoning. Further, many of FORR's 
procedural changes that purport to reduce litigation costs, and other 
changes suggested by the Rate Reform Task Force (RRTF), such as page 
limits, are easily applied to Three-Benchmark.\14\ That the Board does 
not simply streamline Three-Benchmark suggests that FORR Final Rule's 
problem statement is perhaps less about costs and more about the 
standards--even the economic foundations--of the Board's existing rate 
review methodologies.\15\ However, despite robust ideas from both the 
RRTF and the public, the Board does not explain why it is impractical 
to improve the standards in the Board's existing methodologies, or--if 
those methodologies are unsound--to create a new methodology. Without 
fully analyzing the underlying the problem and available solutions, the 
Board has insufficient basis for turning away from its traditional 
reliance on methodologies, foregoing its discretion to devise its own 
remedies, and relying on litigants to do the work of the agency.
---------------------------------------------------------------------------

    \13\ See SNPRM, EP 755 et al., slip op. at 43 n.67 (``But the 
most recently reported estimate of the cost to litigate a Three-
Benchmark case is actually $500,000 based on a case completed in 
2010.'') (citing US Magnesium, L.L.C. Comment, V.S. Howard Kaplan 4, 
Oct. 23, 2012, Rate Regul. Reforms, EP 715).
    \14\ See RRTF Report 51-52 (discussing possible benefits of page 
limits). The Board also does not engage with the possibility of 
using statistical methods, extant data, and automation to improve 
its rate review processes, as suggested by the RRTF and others. See, 
e.g., RRTF Report 10, 24-30.
    \15\ This is not meant imply that there is not room for 
potential improvements to the Three-Benchmark methodology. Indeed, 
shippers, railroads, and Board staff have all suggested new 
approaches to a comparison group methodology. (See NGFA Reply 6-7; 
AAR Comment, Oct. 22, 2019); see also AAR Comment 79-80, Nov. 26, 
2019, Hearing on Revenue Adequacy, EP 761; Rail Transportation of 
Grain, Rate Regulation Review, EP 665 (Sub-No. 1), slip op. at 12-15 
(STB served Aug. 31, 2016); RRTF Report 20-21.
---------------------------------------------------------------------------

    Though I disagree with FORR Final Rule, I am not proposing to do 
nothing. I support facilitating an additional process to resolve rate 
disputes via the agency's new arbitration program. Given today's 
decisions, I find the best way forward is to continue to pursue a new 
or revised rate review methodology, as well as other actions that can 
improve the Board's regulations. The Board has before it several ideas 
from the RRTF, contracted experts, and the broader public. I favor 
streamlined processes for rate review and clear rules--specified, 
practical methodologies and standards that both protect the broader 
public and allow industry participants to operate their businesses and 
resolve disputes absent further government intervention. Rate review 
reform efforts, and the broader consideration of the Board's role in 
regulating the rail industry, must not stop because of a deeply flawed, 
highly risky final rule. I respectfully dissent.
BOARD MEMBER SCHULTZ, dissenting:
    For several years, shippers and other interested parties have 
repeatedly informed the Board that the Board's current options for 
challenging the reasonableness of rates do not meet their need for an 
expeditious resolution at a reasonable cost. While I am aware of the 
need for additional methodologies, I respectfully dissent from today's 
decision to finalize Final Offer Rate Review (FORR).
    The Board issued its Supplemental Notice of Proposed Rulemaking 
(SNPRM) in this proceeding concurrently with the Notice of Proposed 
Rulemaking in Joint Petition for Rulemaking to Establish a Voluntary 
Arbitration Program for Small Rate Disputes, Docket No. EP 765, ``so 
that both proposals may be considered simultaneously, including the 
pros and cons of adopting--either with or without modification--the 
voluntary arbitration rule, FORR, both proposals, or taking other 
action.'' Final Offer Rate Review (SNPRM), EP 755 et al., slip op. at 8 
(STB served Nov. 15, 2021). While I voted in favor of the FORR SNPRM, I 
did so because I thought it was important to be able to meet with 
stakeholders about both FORR and the Board's proposed small case rate 
arbitration program (Arbitration) in Docket No. EP 765, as well as for 
stakeholders to be able to review and comment on both proposals at the 
same time. Id. at 54 (Board Member Schultz, concurring). I was not in 
favor of the Board adopting both rules, and the Board's action today--
simultaneously issuing final rules in this docket and in Docket No. EP 
765 while tying them together--is unprecedented and unnecessary. In so 
doing, the Board has injected a level of uncertainty and 
unpredictability into a process that should be predictable and 
consistent. Moreover, I believe Arbitration is a much better option for 
both shippers and carriers primarily because it affords the parties 
their due process and statutory rights to be heard on the merits.\1\ 
The majority's decision to adopt FORR simultaneously with Arbitration 
creates the possibility that while both programs will be enacted, FORR 
could remain in law but go unused if all seven Class I carriers sign up 
for Arbitration.\2\ It is for these reasons that I believe Arbitration 
should have been advanced without the ``backstop'' of FORR. Beyond my 
concerns about the rulemaking process, I also have deep legal and 
practical concerns about FORR, which I believe prevents the Board from 
engaging in reasoned decision-making, fails to properly align risk 
between complainants and defendants, and could depress rail rates below 
what is reasonable.
---------------------------------------------------------------------------

    \1\ Unlike FORR, Arbitration will allow neutral arbitrators to 
determine a reasonable rate as the Board does under the Board's 
current options for challenging the reasonableness of rates.
    \2\ Of course, if even one carrier declines to sign up for 
Arbitration, that program instead will go unused.
---------------------------------------------------------------------------

Reasoned Decision-Making
    The need for new rate review methodologies is well documented. In 
September 2014, the Board commissioned an independent assessment of the 
stand-alone rate reasonableness methodology as well as possible 
alternatives that could reduce the time, complexity, and expense 
involved in rate cases. In January 2018, Chairman Ann Begeman created 
the Rate Reform Task Force to recommend improvements to existing 
processes and to propose new rate review methodologies. And while the 
need for alternatives to the existing methodologies is clear, that need 
cannot supersede the Board's congressionally delegated authority to 
either establish rates based upon its own best judgment or to 
promulgate regulations allowing parties to seek similar relief through 
a voluntary arbitration program, see 49 U.S.C. 11708. Unlike the 
process in Arbitration, FORR would require the Board to choose between 
two rates--even if the Board finds the correct outcome falls above, 
below, or somewhere in between the two submissions. It is this 
limitation on the Board's ability to exercise its own judgment by 
weighing each side's arguments, evaluating the evidence, and 
considering both the public interest and rail transportation policy 
that I find to be so troubling. Agencies must engage in reasoned 
decision-making. See Motor Vehicle Mfrs. Ass'n of U.S. v. State Farm 
Mut. Auto. Ins. Co., 463 U.S. 29, 52 (1983). While the Board, after 
finding a challenged rate to be unlawful, has the discretion to 
determine the ``maximum rate . . . to be followed,'' 49 U.S.C. 
10704(a)(1), the Board must ``exercise its

[[Page 317]]

discretion in a reasoned manner.'' Judulang v. Holder, 565 U.S. 42, 53 
(2011). The Board's ability to discern the best outcome and remain 
evenhanded will depend upon the reasonableness of the submissions made 
by the parties themselves. And while the majority continues to presume 
that ``FORR would not reward extreme positions'' and that ``parties 
likely would have greater success by presenting more moderate 
proposals,'' SNPRM, EP 755 et al., slip op. at 17, I am not convinced 
this will be the case in all instances. See also FORR Final Rule, EP 
755 et al., slip op. at 9 (``[A] final offer selection process would 
discourage extreme positions . . . .''). Perhaps more importantly, I 
believe the Board's congressionally authorized responsibility to 
provide regulatory oversight of rates requires more than a reliance 
upon two submitted proposals. It requires the Board to actually 
exercise its discretion and decision-making authority.
Alignment of Risk
    The majority believes that FORR--like the final-offer arbitration 
(or ``baseball arbitration'') process on which FORR is based--will not 
reward extreme positions, thereby incentivizing both parties to submit 
their most reasonable rate to the Board. See, e.g., id. at 6, 9. 
However, unlike baseball arbitration, in which each side has something 
to lose because the arbitrator can select an offer that puts either 
side in a worse position than it occupied pre-arbitration, in a FORR 
case, the Board is not authorized to prescribe a rate higher than the 
challenged rate. Therefore, a FORR complainant has no risk of a 
decision that places it in a worse position. Without that risk, a FORR 
complainant literally has nothing to lose and, therefore, no reason to 
moderate their position, especially when the Board will only consider 
the final offers after it has already found the challenged rate to be 
unreasonable. By the same token, the defendant carrier will know that 
the complainant has no incentive to moderate its position. This could 
result in a Class I carrier submitting a lower offer than it otherwise 
would to reduce the risk that the Board will select the complainant's 
extreme position. If FORR systematically pushes carriers to submit 
lower offers without encouraging shippers to submit higher offers, the 
effect over time would be to depress railroad rates--not due to rates 
being unreasonable, but merely because of the structure of FORR itself. 
Moreover, because these decisions will not be confidential, they will 
most likely impact rates throughout the freight rail network for years 
if not decades to come, resulting in inconsistent and unpredictable 
rate setting.\3\
---------------------------------------------------------------------------

    \3\ I also believe that the Board and stakeholders are 
underestimating the demand that multiple FORR cases will place on 
the Board's docket. The FORR Final Rule sets out that the Board will 
issue decisions 90 days after the receipt of replies--I question 
whether that goal will be achievable if the Board faces even a few 
FORR cases at the same time, and I am concerned that FORR cases may 
easily overwhelm the Board's ability to deliberate on other matters 
in a timely manner.
---------------------------------------------------------------------------

Conclusion
    The need for a streamlined, cost-effective dispute resolution 
process that provides both consistent deliberation of evidence and 
reliable outcomes is clear. But that need should not be met by a 
process that restricts the Board's ability to exercise its own 
independent judgment and requires it to render a decision proposed by 
only one of the parties. The majority's decision today means that the 
Board could be faced with two extreme and undesirable outcomes with no 
choice but to select one. Without the discretion to ensure that rates 
prescribed in FORR cases are reasonable, FORR could operate to depress 
rail rates below what is needed for carriers to invest in, maintain, or 
even improve the rail network.

Kenyatta Clay,
Clearance Clerk.

List of Subjects

49 CFR Part 1002

    Administrative practice and procedure, Common Carriers, Freedom of 
information.

49 CFR Part 1111

    Administrative practice and procedure, Investigations.

49 CFR Part 1114

    Administrative practice and procedure.

49 CFR Part 1115

    Administrative practice and procedure.

    For the reasons set forth in the preamble, the Surface 
Transportation Board amends parts 1002, 1111, 1114, and 1115 of title 
49, chapter X, of the Code of Federal Regulations as follows:

PART 1002--FEES

0
1. The authority citation for part 1002 continues to read as follows:

    Authority:  5 U.S.C. 552(a)(4)(A), (a)(6)(B), and 553; 31 U.S.C. 
9701; and 49 U.S.C. 1321. Section 1002.1(f)(11) is also issued under 
5 U.S.C. 5514 and 31 U.S.C. 3717.


0
2. Amend Sec.  1002.2 by revising paragraph (f)(56) to read as follows:


Sec.  1002.2   Filing fees.

* * * * *
    (f) * * *

------------------------------------------------------------------------
                   Type of proceeding                           Fee
------------------------------------------------------------------------
 
                              * * * * * * *
PART V: Formal Proceedings:
 (56) A formal complaint alleging unlawful rates or
 practices of carriers:
    (i) A formal complaint filed under the coal rate                $350
     guidelines (Stand-Alone Cost Methodology) alleging
     unlawful rates and/or practices of rail carriers
     under 49 U.S.C. 10704(c)(1)........................
    (ii) A formal complaint involving rail maximum rates             350
     filed under the Simplified-SAC methodology.........
    (iii) A formal complaint involving rail maximum                  150
     rates filed under the Three Benchmark methodology..
    (iv) A formal complaint involving rail maximum rates             150
     filed under the Final Offer Rate Review procedure..
    (v) All other formal complaints (except competitive              350
     access complaints).................................
    (vi) Competitive access complaints..................             150
    (vii) A request for an order compelling a rail                   350
     carrier to establish a common carrier rate.........
------------------------------------------------------------------------


[[Page 318]]

* * * * *

PART 1111--COMPLAINT AND INVESTIGATION PROCEDURES

0
3. The authority citation for part 1111 is revised to read as follows:

    Authority:  49 U.S.C. 10701, 10704, 11701 and 1321.


0
4. Amend Sec.  1111.3 by revising paragraph (c) to read as follows:


Sec.  1111.3   Amended and supplemental complaints.

* * * * *
    (c) Simplified standards. A complaint filed under Simplified-SAC or 
Three-Benchmark may be amended once before the filing of opening 
evidence to opt for a different rate reasonableness methodology, among 
Three-Benchmark, Simplified-SAC, or stand-alone cost. If so amended, 
the procedural schedule begins again under the new methodology as set 
forth at Sec. Sec.  1111.9 and 1111.10. However, only one mediation 
period per complaint shall be required. A complaint filed under Final 
Offer Rate Review may not be amended to opt for Three-Benchmark, 
Simplified-SAC, or stand-alone cost, and a complaint filed under Three-
Benchmark, Simplified-SAC, or stand-alone cost may not be amended to 
opt for Final Offer Rate Review.

0
5. Amend Sec.  1111.5 by revising paragraphs (a), (b), (c), and (e) to 
read as follows:


Sec.  1111.5   Answers and cross complaints.

    (a) Generally. Other than in cases under Final Offer Rate Review, 
which does not require the filing of an answer, an answer shall be 
filed within the time provided in paragraph (c) of this section. An 
answer should be responsive to the complaint and should fully advise 
the Board and the parties of the nature of the defense. In answering a 
complaint challenging the reasonableness of a rail rate, the defendant 
should indicate whether it will contend that the Board is deprived of 
jurisdiction to hear the complaint because the revenue-variable cost 
percentage generated by the traffic is less than 180 percent, or the 
traffic is subject to effective product or geographic competition. In 
response to a complaint filed under Simplified-SAC or Three-Benchmark, 
the answer must include the defendant's preliminary estimate of the 
variable cost of each challenged movement calculated using the 
unadjusted figures produced by the URCS Phase III program.
    (b) Disclosure with Simplified-SAC or Three-Benchmark answer. The 
defendant must provide to the complainant all documents that it relied 
upon to determine the inputs used in the URCS Phase III program.
    (c) Time for filing; copies; service. Other than in cases under 
Final Offer Rate Review, which does not require the filing of an 
answer, an answer must be filed with the Board within 20 days after the 
service of the complaint or within such additional time as the Board 
may provide. The defendant must serve copies of the answer upon the 
complainant and any other defendants.
* * * * *
    (e) Failure to answer complaint. Other than in cases under Final 
Offer Rate Review, which does not require the filing of an answer, 
averments in a complaint are admitted when not denied in an answer to 
the complaint.
* * * * *

0
6. Amend Sec.  1111.10 by adding paragraph (a)(3) to read as follows:


Sec.  1111.10   Procedural schedule in cases using simplified 
standards.

    (a) * * *
    (3)(i) In cases relying upon the Final Offer Rate Review procedure 
where the complainant elects streamlined market dominance:
    (A) Day -25--Complainant files notice of intent to initiate case 
and serves notice on defendant.
    (B) Day 0--Complaint filed; discovery begins.
    (C) Day 35--Discovery closes.
    (D) Day 49--Complainant's opening (rate reasonableness analysis, 
final offer, and opening evidence on market dominance). Defendant's 
opening (rate reasonableness analysis and final offer).
    (E) Day 59--Parties' replies. Defendant's reply evidence on market 
dominance.
    (F) Day 66--Complainant's letter informing the Board whether it 
elects an evidentiary hearing on market dominance.
    (G) Day 73--Telephonic evidentiary hearing before an administrative 
law judge, as described in Sec.  1111.12(d) of this chapter, at the 
discretion of the complainant (market dominance).
    (H) Day 149--Board decision.
    (ii) In cases relying upon the Final Offer Rate Review procedure 
where the complainant elects non-streamlined market dominance:
    (A) Day -25--Complainant files notice of intent to initiate case 
and serves notice on defendant.
    (B) Day 0--Complaint filed; discovery begins.
    (C) Day 35--Discovery closes.
    (D) Day 49--Complainant's opening (rate reasonableness analysis, 
final offer, and opening evidence on market dominance). Defendant's 
opening (rate reasonableness analysis and final offer).
    (E) Day 79--Parties' replies. Defendant's reply evidence on market 
dominance.
    (F) Day 169--Board decision.
    (iii) In addition, the Board will appoint a liaison within five 
business days after the Board receives the pre-filing notification.
    (iv) The mediation period in Final Offer Rate Review cases is 20 
days beginning on the date of appointment of the mediator(s). The Board 
will appoint a mediator or mediators as soon as possible after the 
filing of the notice of intent to initiate a case.
    (v) With its final offer, each party must submit an explanation of 
the methodology it used. If a complainant fails to submit explanation 
and support for its offer, the Board may dismiss the complaint without 
determining the reasonableness of the challenged rate.
* * * * *

0
7. Amend Sec.  1111.11 by revising paragraph (b) to read as follows:


Sec.  1111.11   Meeting to discuss procedural matters.

* * * * *
    (b) Stand-alone cost or simplified standards complaints. In 
complaints challenging the reasonableness of a rail rate based on 
stand-alone cost or the simplified standards, the parties shall meet or 
otherwise discuss discovery and procedural matters within 7 days after 
the complaint is filed in stand-alone cost cases, 3 days after the 
complaint is filed in Final Offer Rate Review cases, and 7 days after 
the mediation period ends in Simplified-SAC or Three-Benchmark cases. 
The parties should inform the Board as soon as possible thereafter 
whether there are unresolved disputes that require Board intervention 
and, if so, the nature of such disputes.

0
8. Amend Sec.  1111.12 by revising paragraphs (c), (d)(1), and (d)(2) 
read as follows:


Sec.  1111.12   Streamlined market dominance.

* * * * *
    (c) A defendant's reply evidence under the streamlined market 
dominance approach may address the factors in paragraph (a) of this 
section and any other issues relevant to market dominance. A 
complainant may elect to submit rebuttal evidence on market dominance 
issues except in cases under Final Offer Rate Review, which does not 
provide for rebuttal. Reply and rebuttal filings under the streamlined 
market dominance approach are each limited to 50 pages, inclusive of 
exhibits and verified statements.

[[Page 319]]

    (d)(1) Pursuant to the authority under Sec.  1011.6 of this 
chapter, an administrative law judge will hold a telephonic evidentiary 
hearing on the market dominance issues at the discretion of the 
complainant in lieu of the submission of a written rebuttal on market 
dominance issues. In cases under Final Offer Rate Review, which does 
not provide for rebuttal, the telephonic evidentiary hearing is at the 
discretion of the complainant.
    (2) The hearing will be held on or about the date that the 
complainant's rebuttal evidence on rate reasonableness is due, except 
in cases under Final Offer Rate Review, where the hearing will be held 
14 days after replies are due unless the parties agree on an earlier 
date. The complainant shall inform the Board by letter submitted in the 
docket, no later than 10 days after defendant's reply is due, whether 
it elects an evidentiary hearing in lieu of the submission of a written 
rebuttal on market dominance issues. In cases under Final Offer Rate 
Review, the complainant shall inform the Board by letter submitted in 
the docket, no later than 7 days after defendant's reply is due, 
whether it elects an evidentiary hearing on market dominance issues.
* * * * *

PART 1114--EVIDENCE; DISCOVERY

0
9. The authority citation for part 1114 continues to read as follows:

    Authority:  5 U.S.C. 559; 49 U.S.C. 1321.


0
10. Amend Sec.  1114.21 by adding paragraph (a)(4) to read as follows:


Sec.  1114.21   Applicability; general provisions.

    (a) * * *
    (4) Except as stated in Sec.  1114.31(a)(2)(iii), time periods 
specified in this subpart do not apply in cases under Final Offer Rate 
Review. Instead, parties in cases under Final Offer Rate Review should 
serve requests, answers to requests, objections, and other discovery-
related communications within a reasonable time given the length of the 
discovery period.
* * * * *

0
11. Amend Sec.  1114.24 by revising paragraph (h) to read as follows:


Sec.  1114.24   Depositions; procedures.

* * * * *
    (h) Return. The officer shall either submit the deposition and all 
exhibits by e-filing (provided the filing complies with Sec.  1104.1(e) 
of this chapter) or securely seal the deposition and all exhibits in an 
envelope endorsed with sufficient information to identify the 
proceeding and marked ``Deposition of (here insert name of witness)'' 
and personally deliver or promptly send it by registered mail to the 
Office of Proceedings. A deposition to be offered in evidence must 
reach the Board not later than 5 days before the date it is to be so 
offered.
* * * * *

0
12. Amend Sec.  1114.31 by revising paragraphs (a) and (d) to read as 
follows:


Sec.  1114.31   Failure to respond to discovery.

    (a) Failure to answer. If a deponent fails to answer or gives an 
evasive answer or incomplete answer to a question propounded under 
Sec.  1114.24(a), or a party fails to answer or gives evasive or 
incomplete answers to written interrogatories served pursuant to Sec.  
1114.26(a), the party seeking discovery may apply for an order 
compelling an answer by motion filed with the Board and served on all 
parties and deponents. Such motion to compel an answer must be filed 
with the Board and served on all parties and deponents. Except as set 
forth in paragraph (a)(2)(iii) of this section, such motion to compel 
an answer must be filed with the Board within 10 days after the failure 
to obtain a responsive answer upon deposition, or within 10 days after 
expiration of the period allowed for submission of answers to 
interrogatories. On matters relating to a deposition on oral 
examination, the proponent of the question may complete or adjourn the 
examination before he applies for an order.
    (1) Reply to motion to compel generally. Except in rate cases to be 
considered under the stand-alone cost methodology or simplified 
standards, the time for filing a reply to a motion to compel is 
governed by 49 CFR 1104.13.
    (2) Motions to compel in stand-alone cost and simplified standards 
rate cases. (i) Motions to compel in stand-alone cost and simplified 
standards rate cases must include a certification that the movant has 
in good faith conferred or attempted to confer with the person or party 
failing to answer discovery to obtain it without Board intervention.
    (ii) In a rate case to be considered under the stand-alone cost, 
Simplified-SAC, or Three-Benchmark methodologies, a reply to a motion 
to compel must be filed with the Board within 10 days of when the 
motion to compel is filed.
    (iii) In a rate case under Final Offer Rate Review, each party may 
file one motion to compel that aggregates all discovery disputes with 
the other party. Each party's motion to compel, if any, shall be filed 
on the 10th day before the close of discovery (or, if not a business 
day, the last business day immediately before the 10th day). The 
procedural schedule will be tolled while motions to compel are pending. 
Replies to motions to compel in Final Offer Rate Review cases must be 
filed with the Board within 7 days of when the motion to compel is 
filed. Upon issuance of a decision on motions to compel, the procedural 
schedule resumes, and any party ordered to respond to discovery must do 
so within the remaining 10 days in the discovery period.
    (3) Conference with parties on motion to compel. Within 5 business 
days after the filing of a reply to a motion to compel in a rate case 
to be considered under the stand-alone cost methodology, Simplified-
SAC, or Three-Benchmark, Board staff may convene a conference with the 
parties to discuss the dispute, attempt to narrow the issues, and 
gather any further information needed to render a ruling.
    (4) Ruling on motion to compel in stand-alone cost, Simplified-SAC, 
and Three-Benchmark rate cases. Within 5 business days after a 
conference with the parties convened pursuant to paragraph (a)(3) of 
this section, the Director of the Office of Proceedings will issue a 
summary ruling on the motion to compel discovery. If no conference is 
convened, the Director of the Office of Proceedings will issue this 
summary ruling within 10 days after the filing of the reply to the 
motion to compel. Appeals of a Director's ruling will proceed under 49 
CFR 1115.9, and the Board will attempt to rule on such appeals within 
20 days after the filing of the reply to the appeal.
* * * * *
    (d) Failure of party to attend or serve answers. If a party or a 
person or an officer, director, managing agent, or employee of a party 
or person willfully fails to appear before the officer who is to take 
his deposition, after being served with a proper notice, or fails to 
serve answers to interrogatories submitted under Sec.  1114.26, after 
proper service of such interrogatories, the Board on motion and notice 
may strike out all or any part of any pleading of that party or person, 
or dismiss the proceeding or any part thereof. Such a motion may not be 
filed in a case under Final Offer Rate Review. In lieu of any such 
order or in addition thereto, the Board shall require the party failing 
to act or the attorney advising that party or both to pay the 
reasonable expenses, including attorney's fees, caused by the failure, 
unless the Board finds that the failure

[[Page 320]]

was substantially justified or that other circumstances make an award 
of expenses unjust.
* * * * *

PART 1115--APPELLATE PROCEDURES

0
13. The authority citation for part 1115 continues to read as follows:

    Authority:  5 U.S.C. 559; 49 U.S.C. 1321; 49 U.S.C. 11708.


0
14. Amend Sec.  1115.3 by revising paragraph (e) to read as follows:


Sec.  1115.3   Board actions other than initial decisions.

* * * * *
    (e) Petitions must be filed within 20 days after the service of the 
action or within any further period (not to exceed 20 days) as the 
Board may authorize. However, in cases under Final Offer Rate Review, 
petitions must be filed within 5 days after the service of the action, 
and replies to petitions must be filed within 10 days after the service 
of the action.
* * * * *
[FR Doc. 2022-27926 Filed 1-3-23; 8:45 am]
BILLING CODE 4915-01-P