PRIA, Government Policy, Made Personal

Summary

When a railroad rate is challenged as too high, the Surface Transportation Board must decide if the railroad has "market dominance," meaning there is no real competition from other railroads or other ways to ship. The Board can make that decision on its own or after a complaint. If the Board finds the railroad does not have market dominance, that decision controls the rate case unless the Board or a court changes it. If the Board finds market dominance, it can then check whether the rate is above a reasonable maximum, but dominance alone does not mean the rate is too high. If the railroad proves the rate brings in less than 180 percent of its variable costs, the Board must find no market dominance. Variable costs are calculated only from the carrier’s unadjusted costs using the Uniform Rail Costing System (or a Board-approved alternative), adjusted quarterly for local wage and price levels and other Board-specified changes. A shipper may try to dispute that cost showing. A rate at or above 180 percent does not create any presumption about dominance or reasonableness.

Title 49, §10707

Transportation, Source: USLM XML via OLRC

(a)In this section, “market dominance” means an absence of effective competition from other rail carriers or modes of transportation for the transportation to which a rate applies.

(b)When a rate for transportation by a rail carrier providing transportation subject to the jurisdiction of the Board under this part is challenged as being unreasonably high, the Board shall determine whether the rail carrier proposing the rate has market dominance over the transportation to which the rate applies. The Board may make that determination on its own initiative or on complaint. A finding by the Board that the rail carrier does not have market dominance is determinative in a proceeding under this part related to that rate or transportation unless changed or set aside by the Board or set aside by a court of competent jurisdiction.

(c)When the Board finds in any proceeding that a rail carrier proposing or defending a rate for transportation has market dominance over the transportation to which the rate applies, it may then determine that rate to be unreasonable if it exceeds a reasonable maximum for that transportation. However, a finding of market dominance does not establish a presumption that the proposed rate exceeds a reasonable maximum.

(d)(1)(A)In making a determination under this section, the Board shall find that the rail carrier establishing the challenged rate does not have market dominance over the transportation to which the rate applies if such rail carrier proves that the rate charged results in a revenue-variable cost percentage for such transportation that is less than 180 percent.

(B)For purposes of this section, variable costs for a rail carrier shall be determined only by using such carrier’s unadjusted costs, calculated using the Uniform Rail Costing System cost finding methodology (or an alternative methodology adopted by the Board in lieu thereof) and indexed quarterly to account for current wage and price levels in the region in which the carrier operates, with adjustments specified by the Board. A rail carrier may meet its burden of proof under this subsection by establishing its variable costs in accordance with this paragraph, but a shipper may rebut that showing by evidence of such type, and in accordance with such burden of proof, as the Board shall prescribe.

(2)A finding by the Board that a rate charged by a rail carrier results in a revenue-variable cost percentage for the transportation to which the rate applies that is equal to or greater than 180 percent does not establish a presumption that—

(A)such rail carrier has or does not have market dominance over such transportation; or

(B)the proposed rate exceeds or does not exceed a reasonable maximum.

Notes & Related Subsidiaries

Editorial Notes

Prior Provisions

Provisions similar to those in this section were contained in section 10709 of this title prior to the general amendment of this subtitle by Pub. L. 104–88, § 102(a). Prior section 10707 and 10707a were omitted in the general amendment of this subtitle by Pub. L. 104–88, § 102(a). section 10707, Pub. L. 95–473, Oct. 17, 1978, 92 Stat. 1380; Pub. L. 96–448, title II, § 207, Oct. 14, 1980, 94 Stat. 1907; Pub. L. 103–272, § 4(j)(21),

July 5, 1994, 108 Stat. 1369, related to investigation and suspension of new rail carrier rates, classifications, rules, and practices. section 10707a, added Pub. L. 96–448, title II, § 203(a), Oct. 14, 1980, 94 Stat. 1901; amended Pub. L. 103–272, § 4(j)(22),

July 5, 1994, 108 Stat. 1369, related to zone of rail carrier flexibility.

Statutory Notes and Related Subsidiaries

Effective Date

Section effective Jan. 1, 1996, except as otherwise provided in Pub. L. 104–88, see section 2 of Pub. L. 104–88, set out as a note under section 1301 of this title.

§10707 Determination of Market Dominance in Rail Rate Proceedings