Opinion ID: 187401
Heading Depth: 1
Heading Rank: 7

Heading: Regulatory Lag

Text: The railroads argue that the Board arbitrarily failed to account for the regulatory lag caused by the delay inherent in using waybill sample data. Due to the time it takes the Board to gather the data, the most current waybill samples are at least one year old, and the ability to draw comparison movements from the most recent four samples compounds the problem. Citing the rapid change in rail rates over time, the railroads argue that the use of outdated samples converts the three benchmark system into a comparison between current rates and historical rates. The Board recognized the problem of regulatory lag and established a mechanism for addressing it on a case-by-case basis. Although the three benchmark procedure uses waybill sample data to run the benchmarks and determine a presumed maximum lawful rate, it gives the parties an opportunity to present evidence of other relevant factors to rebut the presumption of lawfulness and seek to modify the maximum allowable rate. Decision at 17, 21-22. The railroads insist that this mechanism is insufficient for three reasons, none of which has merit. First, they argue that the opportunity to modify the presumed maximum lawful rate is illusory because it requires rebutting a presumption. But the Board has representedand the railroads nowhere meaningfully disputethat the presumption simply shifts the normal burden of persuasion to the party seeking a modification. Respt.'s Br. 29; Railroads' Reply Br. 6-7. This clearly allows the railroads a reasonable opportunity to seek a modification. Second, the railroads complain that when they submit evidence of other relevant factors, the Board requires them to quantify the impact of the factors on the overall rate. True, this requires more of the railroads than would a rule allowing them to simply dump evidence in the Board's lap without explanation, but it hardly poses an insurmountable hurdle. Even under the railroads' preferred alternative, they would still need to present data sufficiently precise to have a quantifiable impactthe only difference is that under the Board's system this process of adjustment occurs after calculating the benchmarks, not before. The railroads offer no reason to believe that quantifying the impact of changing conditions is feasible at the outset of the benchmark analysis but impracticable as an adjustment to the result of that analysis. According to the railroads, in a recent set of cases brought under the new guidelines, the Board was unpersuaded by their proffered other relevant factors evidence. E.g., E.I. du Pont De Nemours & Co., STB No. 42099 (June 30, 2008). But whatever its propriety, the Board's decision in those cases, which we remanded to the agency unopposed, CSX Transp., Inc. v. STB, No. 08-1246 (D.C.Cir. Jan. 15, 2009) (remanding STB Nos. 42099, 42100, 42101), hardly impeaches the entire rule. Third, the railroads complain that the Board forbids parties from submitting as other relevant factors evidence either of movement-specific adjustments to the cost estimates or of product or geographic competition. But these objections, to which we turn in the next two subsections, have no special force when applied to the regulatory lag problem. If, as we conclude in that discussion, the Board may exclude evidence of movement-specific costs or of competition generally, it may certainly exclude evidence of change in such costs or competition.