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 242034 

 ENTERED 

Office of Proceedings 

 November 14, 2016 

 Part of 

 Public Record 

Before the U.S. Surface Transportation Board 

STB Ex Parte No. 665 (Sub-No. 2) 

Expanding Access to Rate Relief 

Comments of the 

U.S. Department of Agriculture 

Elvis Cordova 

Acting Under Secretary 

Marketing and Regulatory Programs 

U.S. Department of Agriculture 

Washington, D.C. 20250 

Date: November 14, 2016 
OPENING COMMENTS OF THE 

UNITED STATES DEPARTMENT OF AGRICULTURE 

The Agricultural Adjustment Act of 1938 and the Agricultural Marketing Act of 1946 charge the 

Secretary of Agriculture with the responsibility to represent the interests of agricultural producers and 

shippers in improving transportation services and facilities by, among other things, initiating and 

participating in Surface Transportation Board (Board) proceedings involving rates, charges, tariffs, 

practices, and services. 

The U.S. Department of Agriculture (USDA) appreciates the opportunity to provide comments on the 

Board’s Advanced Notice of Proposed Rulemaking (ANPR). It represents an important first step toward 

expanding access to rate relief for small disputes. USDA applauds the Board for its actions in seeking 

ways to find greater access to rate relief for shippers, especially agricultural shippers whose concerns with 

rates and service prompted the EP 665 proceeding in the first place in 2006. Agriculture experiences 

unique challenges. Weather affects its crops, which can be unpredictable and lead to different 

supply/demand outcomes than expected at the beginning of the growing season. Furthermore, agriculture 

faces highly competitive and ever-changing markets, which means that origins and destinations vary 

frequently, as well as tonnages. Thus, USDA supports the Board’s efforts to make rate relief for grain 

shippers more accessible. 

Many commenters have persuasively argued that the lack of use of the simplified rate cases is not the 

result of the reasonableness of rates, but is instead the result of complicated and expensive procedures that 

act as barriers to meaningful rate review for all but the very largest shippers. In its previous comments for 

EP 665, USDA emphasized the loss of rail competition since the Staggers Rail Act of 1980 (Staggers) 

and the exceptionally high market share of grain shipments held by only a few railroads today.1 This 

explains the findings by the Government Accountability Office (GAO) that initially prompted this 

proceeding.2 The GAO found that, while rates had declined on average since Staggers, they did not 

decline uniformly. Rather, some commodities, like grain, saw significantly smaller declines in rates. 

Similarly, since 2003, rates have been rising on average, but, according to the recent study by the 

Transportation Research Board, grain rates have been increasing well-above average.3 Contrary to the 

1 Remarks of the U.S. Department of Agriculture (EP_665_0_218018, November 1, 2006). 2 Government Accountability Office, Freight Railroads: Industry Health Has Improved, but Concerns about 

Competition and Capacity Should Be Addressed, 2006, p. 14. 3 Transportation Research Board, Special Report 318, Modernizing Freight Rail Regulation, 2015, p. 60. 

2 
railroads assertion of rate reasonableness, these facts highlight the exact opposite. Some shippers pay 

rates well-above the threshold. Unsurprisingly, many shippers have expressed dissatisfaction with their 

rates, because they make the U.S. shipper and producer uncompetitive in the world market. All this points 

to the need for accessible rate review. 

In its previous comments, USDA used an expected value calculation to emphasize the need to lower 

litigation costs and provide clarity on the rate dispute processes and expected outcomes.4 Increasing relief 

limits, while potentially increasing use from relatively larger shippers, would not make the rate review 

process more accessible to small shippers. Their relatively small revenues and low case value preclude 

them from incurring the high costs of existing proceedings. 

Agricultural shippers too have persuasively argued that the rate relief processes have been inaccessible 

due to uncertainty and high litigation costs. Since EP 647, shippers have pointed out that even the 

ostensibly simplified procedures still require expensive expert guidance and high cost lawyers to litigate. 

For instance, the qualitative portion of the market dominance test, the procedures to choose comparable 

traffic, and the railroads’ “other relevant factor” arguments impose costly burdens on shippers who cannot

expect to recover their costs. Moreover, shippers have argued that the tests themselves are inappropriate. 

They pointed to the carrier practice of “across-the-board” pricing that invalidates the existing RVCcomp 

benchmark. They also pointed to the fact that the Board has deemed multiple carriers as revenue 

adequate, which raises questions about the appropriateness of any RVCcomp benchmark, since the Board 

should then consider differential rates unreasonable. 

It is important to keep in mind that this proceeding began as a means of providing rate relief to grain 

shippers, who the GAO singled out as paying higher rates than other commodity shippers, and who face 

unique circumstances that can undoubtedly complicate rate review. USDA is concerned that in moving 

toward a new rate review process for smaller disputes for all shippers—and away from a process 

specifically for grain rate reviews—the unique needs of agricultural shippers could be lost in the shuffle. 

Since the record is replete with concerns from agricultural shippers over the decades and since the record 

for Ex Parte 665 Sub. 1 shows that other shippers did not express concerns about a process that is 

established specifically for agriculture, USDA encourages the Board to revert the proceeding back to a 

grain rate review as originally intended, perhaps as a pilot project. If over time the process proves to be 

workable for agricultural shippers, the Board could always expand the process later for other shippers 

with small disputes and have the added benefit of any lessons learned from the change for grain shippers. 

USDA believes the Board has a unique opportunity with this proceeding to experiment and begin 

embracing some of the suggestions given to the Board in the recent Transportation Research Board (TRB) 

study and expressed during the recent InterVistas roundtable discussion. USDA recognizes the Board 

wants to move forward cautiously, and that fully embracing those suggestions would involve a large 

degree of complexity and uncertainty. Thus, the Board should realize that a grain-specific rate review 

4 Comments of the U.S. Department of Agriculture (EP_665_1_236229, November 1, 2006). 

3 
would entail a significantly lesser degree of changes-because it would be limited to a smaller universe of 

shippers-and therefore would inherently be less risky and more cautious. It seems with changes that 

have been decades in the making that experimenting with smaller steps first before moving on to the 

larger universe of potential changes down the road would be a prudent method to effect change. USDA 

encourages the Board to take the opportunity of using the original approach of a new rate review process 

specifically for grain as a means to experiment with implementing new and better processes and 

methodologies suggested by TRB and the InterVistas roundtable panel. For instance, the Board could use 

this opportunity to implement not only streamlined prescreens, but also a competitive benchmark along 

with tight and strict procedural deadlines. 

While USDA is still contemplating suggestions on the details for this proceeding, it supports the Board's 

overall goal of shortening the case timeline and reducing litigation costs. Achieving this goal will be a key 

determinant of whether the new procedures will work for shippers. USDA supports the general concept of 

using preliminary screens as a way to cut cost and time. In doing so, the Board should choose preliminary 

screens that are clear and easily knowable to shippers prior to initiating a case. USDA generally supports 

the Board's proposal to make market dominance determinations based on abbreviated evidentiary 

submissions. Without speaking to any specific details, USDA also generally supports the Board's 

suggestion of detennining the comparison group based on default parameters in order to reduce litigation 

costs. Finally, USDA supports the Board's goal to streamline the case by placing limits on discovery and 

consolidating the procedural schedule. USDA appreciates the fact that the Board has heard shippers' 

perspectives and has shown a willingness to seek ways in which to provide them with a new rate review 

process that is potentially more accessible. USDA is still considering the details of the Board's proposal 

and is awaiting submissions of other parties. USDA may offer further perspective and/or analysis as the 

proceeding progresses. 

Respectfully submitted, 

Cordova 

Acting Under Secretary 

Marketing and Regulatory Programs 

U.S. Department of Agriculture 

Washington, D.C. 20250 

4 
CERTIFICATE OF SERVICE 

I, Bruce Blanton, certify that on this 14th day of November, 2016, caused a copy of the 

foregoing document to be served by first-class mail, postage prepaid, on all parties of 

record in STB Docket Number EP 665 (Sub-No. 2). 

Bruce Blanton 

Director 

Transportation Services Division 

U.S. Department of Agriculture 

Washington, D.C. 20250