STB OPENS REVIEW OF RAILROAD RATING POLICY \ PUBLIC COMMENTS ARE DUE BY MONTH'S END

STB OPENS REVIEW OF RAILROAD RATING POLICY \ PUBLIC COMMENTS ARE DUE BY MONTH'S END

The Surface Transportation Board Wednesday launched a review of rail rate policy to determine whether to retain two defenses that railroads can use when shippers challenge the prices they are charged for freight service.

The agency will examine whether to eliminate product and geographic competition as defenses in cases where the agency is asked to decide whether the carrier has ''market dominance'' over a particular shipment. The carriers, however, could still use competition from other railroads or other transport modes to justify their rates.Comments in the cases are due by May 29, after interested parties notify the board by May 12 that they intend to participate in the case.

The agency's review of market dominance was part of a larger April 17 STB decision that separately is considering issues such as carrier profitability standards, competitive access and commercial relationships between large and small railroads.

Today, railroads use product competition to demonstrate that another product can be substituted for the commodity they are moving. Geographic competition is used to show that goods from another geographic area can be substituted for the product involved in the rate case.

In hearings last month before the STB, customers challenged those defenses, arguing that the railroads had used them to create complex legal proceedings that amount to antitrust cases.

''Shippers regard product and geographic competition issues as major, undue litigation obstacles that discourage captive shippers from ever seeking regulatory relief from unreasonably high rates,'' the decision said.

Customer groups also have argued that they were unfairly forced to bear the burden of proof on product and geographic issues that arose in rate cases. The board moved last month to discourage that practice in a decision involving Union Pacific Railroad and FMC Wyoming Corp.

The STB noted that past rail regulatory decisions have taken two views of product and geographic competition.

A 1976 Interstate Commerce Commission decision excluded those product and geographic competition issues from rate cases, but the agency reversed its view in 1981 and added those defenses.