STB''s Expanded Focus

STB''s Expanded Focus

Copyright 2004, Traffic World, Inc.

After concentrating on several large shipper coal rate cases, the Surface Transportation Board now will turn to the problems of small shippers and carriers.

Hearings starting this month come as railroads and shippers are looking for clear signs of the direction of an STB finally up to full three-member voting strength. New board members Frank Mulvey and Douglas Buttrey recently joined chairman Roger Nober who served as a one-man board for about a year.

Public hearings will be held July 21 on railroad rate challenges in relatively limited cases and August 11 on expedited abandonment procedures for shortline railroads.

Public comments in the small rate case proceedings were considered last year. Nober conceded that identifying an appropriate standard in which to resolve such cases, which use a different standard of analysis than large coal rate cases, is the biggest challenge.

"It is also the area where it will be hardest to find any consensus," Nober said while testifying on the subject on Capitol Hill in March. "Last year at our hearing on this subject, while I asked the parties to provide suggestions to the Board on revising the small-case standard, none has yet done so."

A filing on expedited abandonment procedures also was submitted last year on behalf of 65 shortlines. They are represented by the law firm of Weiner, Brodsky, Sidman, Kider PC.

If procedural changes the shortlines want are approved, said attorney Mark Sidman, "Entrepreneurs, shippers and local governments will have a vastly enhanced opportunity to acquire abandoned lines in cases in which the available traffic, in their view, supports continued rail operations."

Sidman said that the number of rail lines abandoned likely would not increase. "However, unproductive lines will be abandoned sooner and at far less cost," he said. "Moreover, those lines will be abandoned before the infrastructure deteriorates beyond the point of restoration. If the small railroad is wrong about the prospects of a line, then a third party can buy the line for net liquidation value and obtain access to third party connections at reasonable rates."

Having the ability to purchase lines at a reduced rate at a time when small railroads are struggling to make the investments needed to upgrade their track to accommodate 286,000-pound Class 1 rail cars "makes a lot of sense," Sidman said.

The proposal also would increase from 30 to 90 days the deadline for an offer of financial assistance to give prospective buyers more time to study and evaluate the line.