Current Issues Associated With the Rate Relief Process
RCED-99-46: Published: Feb 26, 1999. Publicly Released: Mar 2, 1999.
- Full Report:
Pursuant to a congressional request, GAO provided information on: (1) the Surface Transportation Board's rate relief complaint process and how it has changed since the Interstate Commerce Commission (ICC) Termination Act of 1995 became law; (2) the number and outcome of rate relief cases pending or filed since 1990; and (3) the barriers that shippers face when bringing rate complaints to the Board and potential changes to the process to reduce these barriers.
GAO noted that: (1) the Surface Transportation Board's standard procedures for obtaining rate relief are highly complex and time-consuming; (2) under these standard procedures, the Board: (a) evaluates all competition within the market allegedly dominated by a railroad; and (b) typically assesses the results of a shipper-developed model of a hypothetical, optimally efficient railroad that could provide comparable service in place of the shipper's railroad; (3) the process reflects a statutory scheme whereby the Board must balance two competing objectives: considering the need of the railroad industry for adequate revenues while simultaneously ensuring that the industry does not exert an unfair advantage over shippers without competitive alternatives; (4) since the ICC Termination Act, the Board has attempted to improve the rate complaint process and simplify the process for shippers; (5) it is too early to tell if these steps will significantly lessen the burden of the rate complaint process; (6) very few shippers served by class I railroads have complained to the Board about railroads' rates; (7) generally, only those shippers that depend on rail transportation, such as coal, chemical, and grain shippers, have filed complaints; (8) 18 of these complaints were resolved by negotiated settlements with the railroads before the Board or its predecessor determined whether the contested rate was reasonable; (9) in addition, seven complaints were dismissed in favor of the railroad, five were dismissed for other reasons, and two complaints resulted in rate relief to shippers; (10) nine complaints remain before the Board; (11) GAO's results suggest that of the 709 rail shippers that responded, 531 do not believe that their rail rates are always reasonable and therefore might use the rate complaint process; (12) of the shippers who expressed an opinion about the rate complaint process, GAO estimates that over 70 percent believe that the time, complexity, and costs of filing complaints are barriers that often preclude them from seeking rate relief; (13) all the major U.S. railroads, on the other hand, are generally satisfied with the standard rate complaint process, contending that it is well suited to determining whether a railroad dominates the shipper's market and what rate relief may be needed; (14) however, railroads do not support the simplified procedures or the Board's December 1998 decision to change aspects of its market dominance approach; and (15) this divergence of opinion may make responding to shippers' concerns about the barriers in the rate relief process difficult to resolve.