Opinion ID: 2679706
Heading Depth: 2
Heading Rank: 4

Heading: modification of the interest rate

Text: CSX’s final challenge goes to the Board’s adoption of a new interest rate for reparations. Prior to this rulemaking, the Board used the T-Bill rate for reparations. In the NPRM, the Board noted its concern that the T-Bill rate was insufficiently compensatory (0.1% at the time) and proposed to replace it with the U.S. Prime Rate (then 3.25%). NPRM, at 18. According to the Board, the interest rate should “correlate[] to market interest rates over a comparable time frame,” and the Board asserted that the U.S. Prime Rate satisfied this test because it was “the interest rate that the banks charge to their most creditworthy customers.” Id. CSX argues that it presented evidence that the Board’s stated premises for changing the interest rate were incorrect, yet the Board failed to address this evidence in its decision. CSX challenged the Board’s statement that the Prime Rate measures actual market interest rates; as CSX pointed out, the Prime Rate is merely a base rate or pricing index. Second, CSX pointed out that the Prime Rate is based on the Federal index, and is not a rate actually given to creditworthy customers. Yet, according to CSX, the Board ignored these comments and simply repeated its belief that the Prime Rate “correlates to market interest rates” and that it is the “rate that the banks charge to their most creditworthy customers.” Decision, at 35–36. 22 We find CSX’s arguments unpersuasive. CSX does not dispute that shippers’ opportunity cost is the appropriate measure for interest on reparations, that the T-Bill rate does not accurately reflect that cost, or that the U.S. Prime Rate represents a rate more attuned to that cost. In short, CSX does not dispute the essential reasoning on which the Board rested its decision to replace the T-Bill rate with the Prime Rate. Accordingly, we find that the Board adequately explained its decision to adopt a new interest rate.