The Surface Transportation Board won't challenge a federal appeals court's finding that it lacks authority to resolve rail rate disputes by deciding between one of two offers. The board's decision ends a multi-year legal battle over a rule intended to speed up the agency review process.
Surface Transportation Board Chairman Patrick Fuchs said Friday that the board would not seek higher review of the 8th U.S. Circuit Court of Appeals' decision to vacate the rule, which was modeled after a system used to solve wage disputes in Major League Baseball.
Union Pacific and the Association of American Railroads challenged the rule in late 2022, while five shipper groups — the American Chemistry Council, the Corn Refiners Association, the National Grain and Feed Association, the National Industrial Transportation League and the Fertilizer Institute — had intervened in its defense.
The rate dispute system created by the rule puts the STB's role as an umpire into the hands of one of the parties involved in the dispute by having the board choose between one of only two prescribed maximum reasonable rates presented, Chief Judge Lavenski Smith wrote in the final opinion.
To demonstrate his point, Smith laid out a hypothetical: If a rail carrier charges a rate of $100 and the board concludes that amount is unreasonable, it must determine what a reasonable amount would be in that situation. Meanwhile, the shipper's final offer is $2. Using its own analysis, the board could have hypothetically concluded that $98 is instead a reasonable rate. But under the final offer rate review system, it would need to choose between one of the two options presented: $100 or $2.
"Thus, it is one of the parties—not the Board—that prescribes the maximum rate, contrary to the plain language of the statute," Smith wrote.
Fuchs, who was designated STB chair by President Donald Trump, was one of two members who dissented when the rule was finalized in 2022. He intends to offer new draft action in response to the court's decision to the full board in April, according to a press release.
“In fulfilling its overall mission, the Board must eliminate unsound and unduly burdensome regulations while facilitating access to markets on reasonable terms, including streamlined processes,” Fuchs said in a statement. “I look forward to working collaboratively with shippers, carriers, and the broader public to improve the Board’s adjudications, uphold the law, and make the agency more effective and efficient.”
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