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on September 6, 2016

NGFA to 'carefully examine' STB proposal

The motion relates to creating a new methodology to challenge unreasonable rail rates

The National Grain and Feed Association (NGFA) has announced it will "carefully examine" an advance notice of a proposed new rail rate reasonableness methodology unveiled today by the Surface Transportation Board (STB) intended to be used by grain and other commodity shippers to challenge unreasonable rail rates.

In the advance notice, the STB said it seeks to develop a new rail rate review process that would be more affordable and accessible to shippers of all commodities with comparatively smaller rate disputes with Class I carriers.

"We are particularly gratified that the STB recognizes and acknowledges that its three existing rail rate review methodologies present 'accessibility challenges' for grain and other commodity shippers, and that the litigation costs required to bring a rate case under even the most simplified existing method can quickly exceed the value of the damages involved in the case," said NGFA President Randy Gordon. "We appreciate the obvious time and effort that the STB put into developing the concepts contained in its advance rulemaking notice, and the fact that it includes several recommendations made previously by the NGFA. We will be carefully examining these concepts and plan on being fully engaged in providing constructive input to the agency as it proceeds with this rulemaking."

The NGFA has been an active participant in a previous STB proceeding that focused on the utility of the agency's existing rate methodologies for grain rate cases—a proceeding that laid the groundwork for the agency's new rulemaking. As part of that previous proceeding, the NGFA in 2015 developed and proposed to the STB a totally new rate methodology, called the "agricultural commodity maximum rate methodology," that would create a more accessible, streamlined, cost-effective and workable process for grain shippers to challenge unreasonable rates.

The NGFA also has asserted that the STB's current rate-reasonableness standards are inappropriate for grain given the nature and characteristics of rail movements of agricultural commodities, the multiple and varying origin-and-destination pairs for agricultural shipments and volumes, and the nature of railroads' pricing practices, under which uniform rates are imposed across-the-board for certain commodities or types of traffic. These points were also acknowledged in the STB's advance rulemaking notice issued today.

Opening comments on the STB's advance notice of proposed rulemaking are due Nov. 14, with reply comments due Dec. 19. 

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