The Rate Reform Task Force was established by the Board in January 2018 to develop recommendations to reform and streamline the Board’s rate methodology for large cases, and to determine how to best provide a rate review process for smaller rate cases. The report makes several key recommendations, including ways to improve some of the Board’s existing methodologies and ideas for new methodologies. Click the link to learn more.
A report on rate case methodology alternatives prepared pursuant to Section 15 of the Surface Transportation Board Reauthorization Act of 2015 is available by clicking on the image. The study was prepared by InterVISTAS Consulting LLC, which the Board commissioned to provide an independent assessment of the Board’s stand-alone cost (SAC) rate reasonableness methodology. Among other things, the scope of the work required InterVISTAS to look for alternative methodologies to SAC that could be used to reduce the time, complexity, and expense of rate cases; determine whether SAC is sufficient for large rate cases; and whether the Board’s simplified methodologies were appropriate alternatives to SAC.
The Board held a roundtable discussion on the report on October 25, 2016. Participants included noted economists from InterVISTAS, the Transportation Research Board of the National Academy of Sciences, the Department of Justice, Georgetown University, Harvard University, Massachusetts Institute of Technology, the University of Oregon, the Consumer Federation of America and the Board’s Office of Economic Analysis. An audiovisual recording of the roundtable is available here. An unofficial transcript of the discussion is available here.
The Board handles these cases using interdisciplinary teams composed of staff from at least three STB offices (the Offices of Economics, Proceedings, and General Counsel). These cases involve voluminous evidentiary submissions by the parties and complex economic, legal, and policy analyses by the Board. To improve efficiency in processing rate cases, in 2014 the Board hired an outside contractor to analyze and offer recommendations on how to STB could improve its internal procedures for processing rate cases. The consultant’s report analyzed the agency’s internal procedures and made several recommendations to improve the Board’s internal processes. The report, delivered in June 2015, provided immediate recommendations (e.g., holding early technical conferences), near-term recommendations to be considered over 3-12 months (e.g., formalizing the prioritization of the many “decision-points” that need to be made in rate cases), and longer-term recommendations (e.g., formalizing the rate case staff training program). Although the report was originally designated confidential, the Board chose to release it to the public. Click the image to view the report.
In response to a request from Congress, the Surface Transportation Board released a report on May 27, 2010 outlining options for updating its Uniform Rail Costing System (URCS), which is used by the Board in rate and other cases. More information on URCS is available here.
The report laid out three alternatives ranging from updating the outdated computer programs (the “Basic Option”) to a complete revamping of the current system that could cost $10 million or more (the “Comprehensive Option”). The Board recommended a hybrid approach (the “Moderate Option”) that would upgrade computer software and modify the existing system to account for the many changes in the railroad industry that have occurred since URCS was first adopted in 1989. The report stated that the suggested improvements would make URCS more reliable and more reflective of today’s railroad industry, and was estimated to cost $625,000 over two years. Click on the image to view the report.
In 2007, the Board hired Christensen Associates, Inc., of Madison, Wis. (Christensen), to assess the state of competition in the rail industry. The consultants engaged in extensive outreach efforts to shippers, railroads, trade associations and other stakeholders. Using data from many sources, including the Board, Christensen released its (revised) report in November 2009. The report was title A Study of Competition in the U.S. Freight Railroad Industry and Analysis of Proposals that Might Enhance Competition. A copy of the report is provided below:
Subsequently, the Board directed Christensen to update its competition study to include the years 2007 and 2008. The supplemental report, titled An Update to the Study of Competition in the U.S. Freight Railroad Industry, was issued in January 2010 and is available here: Final Report (PDF).
The Board reviews and approves the depreciation rates that Class I railroads propose to apply to their property. Carriers submit studies detailing how their depreciation rates are developed. These studies also include analyses supporting the average service lives, retirement dispersion patterns, and salvage ratios used to develop the rates. Click the link to learn more.
The Board’s Office of Economics occasionally conducts studies on rail rate trends and makes those reports available to the public. Click the link to learn more. The studies examine multi-year patterns of average railroad rates charged by the nation’s railroads and include discussions of the key factors behind rate increases or decreases, as well assessments of the impact of rate changes on shippers, consumers, and the nation as a whole.
In addition to the rail rate studies, a list of rate cases that have been adjudicated before the Board is provided.