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Written by


Marybeth Luczak
, Govt Editor


CSX, Norfolk Southern (NS), Union Pacific (UP) and the U.S. working subsidiaries of CN on Dec. 29, 2022 requested that the Floor Transportation Board (STB) keep its requirement that the Class I railroads decide to a brand new arbitration program for small charge disputes. STB on Jan. 23, 2023 denied the request.

STB on Dec. 19, 2022 adopted two last guidelines establishing new “charge reasonableness procedures” it stated present “two streamlined approaches for shippers and railroads to resolve smaller charge disputes.”

The 2 rulings are Last Provide Charge Overview (FORR) Docket No. EP 755, and Joint Petition for Rulemaking to Set up a Voluntary Arbitration Program for Small Charge Disputes, Docket No. EP 765.

STB described FORR, efficient March 6, 2023, 60 days from date of publication within the Federal Register (Jan. 4, 2023), as “a voluntary arbitration program and a wholly new process for charge challenges.” The ultimate rule establishing the Voluntary Arbitration Program is efficient Feb. 3, 2023, 30 days from the date of publication within the Federal Register (Jan. 4, 2023).

“Both charge evaluate mechanism will considerably enhance shippers’ entry to charge reasonableness evaluations for smaller charge disputes,” STB stated, including that the Voluntary Arbitration Program will turn into operative “provided that all seven Class I carriers decide to taking part in this system for 5 years and achieve this inside 50 days of the date of publication of the ultimate rule within the Federal Register,” and that “if all Class I carriers achieve this, they are going to be exempt from the FORR process.”

Each evaluate mechanisms are restricted to charge disputes value as much as $4 million in aid over two years. Underneath the brand new FORR process, if STB finds a charge to be unreasonable, the Board “will determine the speed by deciding on both the complainant’s or the defendant’s last supply, topic to an expedited procedural schedule that adheres to agency deadlines. Underneath the arbitration program, Class I rail carriers would commit for a interval of 5 years to arbitrate charge disputes, beneath a equally expedited schedule.”

In September 2019, STB issued a Discover of Proposed Rulemaking (NPRM) and sought public touch upon its proposal for the brand new FORR process. “Subsequently, 5 Class I railroads [CN, CSX, Kansas City Southern, NS and UP] filed a joint petition urging the Board to exempt them from the FORR process, promising in return to comply with resolve charge challenges by binding arbitration, a strategy wherein the carriers had beforehand refused to take part for a few years,” the Board famous on Dec. 19, 2022. “The Board reviewed that petition and explored whether or not establishing a voluntary arbitration program would offer a sensible different dispute decision mechanism to deal with smaller charge disputes. In November 2021, following this effort, the Board superior rulemakings in each FORR and the institution of a Voluntary Arbitration Program.”

In accordance with the Dec. 29, 2022 submitting by CSX, NS, UP and the U.S. working subsidiaries of CN (obtain under), “The Board has been proper to acknowledge all through this continuing that it’s basically unfair to ask railroads to decide to a five-year arbitration program with restricted withdrawal rights earlier than they know what the ultimate program might be. Within the December 19 [2022] Resolution, the Board created a brand new arbitration program for small charge disputes, and reaffirmed that it ‘is not going to require carriers to decide to take part within the arbitration program earlier than understanding the content material of the ultimate rule being adopted.’ Certainly, on this continuing the Board denied a movement that will require railroads to state their willingness to take part in arbitration program earlier than rulemaking was concluded, partly as a result of ‘the service’s final determination may change relying on subsequent developments within the Arbitration docket and the FORR docket.’

“However the December 19 [2022] Resolution has been structured in a means that contradicts these statements, by offering that Class I railroads should determine whether or not to enroll in 5 years in this system inside a ‘restricted window’—20 days after the efficient date of the rule (referred to herein because the ‘Pre-Overview Choose-in Requirement’). This signup deadline, which relying upon Federal Register publication might be someday in mid-February 2023, may expire earlier than the Board has determined any reconsideration petitions and will definitely expire earlier than courts have determined any appeals of the December 19 [2022] Resolution. This Pre-Overview Choose-In Requirement is a brand new change to the ultimate rule; the discover of proposed rulemaking proposed to permit a service to file its opt-in discover ‘at any time.’”

In accordance with CSX, NS, UP and the U.S. working subsidiaries of CN, “There is no such thing as a justification for a Pre-Overview Choose-In Requirement forcing railroads to decide to the arbitration program earlier than understanding what its last content material might be, together with final decision of reconsideration petitions and appeals, and this facet of the December 19 [2022] Resolution needs to be stayed pending decision of reconsideration petitions and appeals.”

Whereas the all “the undersigned railroads help the fundamental objectives and construction of the Arbitration Program,” they wrote that they “have considerations over sure features of the December 19 [2022] Resolution. The undersigned railroads are contemplating submitting judicial appeals or petitions for reconsideration, and different events resembling shipper associations could achieve this as effectively. Asking railroads to decide to the Arbitration Program earlier than such petitions for reconsideration and appeals are in the end determined—because the Pre-Overview Choose-in Requirement does—would danger eviscerating railroads’ rights to hunt company reconsideration and judicial appeals of ultimate STB choices and contradict the Board’s holding that it will ‘not require carriers to decide to take part within the arbitration program earlier than understanding the content material of the ultimate rule being adopted.’”

For these causes, CSX, NS, UP and the U.S. working subsidiaries of CN are asking STB to remain its “requirement that Class I railroads decide to the Arbitration Program inside 20 days of its efficient date (the Pre-Overview Choose-in Requirement), and that the Board proceed such a keep till the latter of ultimate decision of all petitions for reconsideration and judicial appeals of the December 19 Resolution. Solely then will railroads know the ultimate contours of the arbitration program and have a good alternative to make choices on whether or not to make a five-year dedication to that program.”

Wilner Weighs In

Railway Age Capitol Hill Contributing Editor Frank N. Wilner, a former STB chief of workers and earlier assistant vp for coverage on the Affiliation of American Railroads, stated the Board’s Democratic majority—Chairman Martin J. Oberman, Karen J. Hedlund and Robert M. Primus—has created a uncommon break in consensus that had been a characteristic of the Oberman chairmanship. 

“The requirement for all Class I railroads to choose in inside 50 days was not within the proposed rule,” Wilner informed Railway Age in December 2022. “Republican Board member Patrick J. Fuchs noticed in a separate expression that this addition to the ultimate rule creates a state of affairs the place if only one Class I railroad declines to take part within the arbitration program, it is going to stop its implementation for all keen contributors. Furthermore, Fuchs stated that if FORR is overturned on judicial evaluate, shippers ‘could find yourself with no extra avenue for aid.’ In his expression, Fuchs recommended two options that will have prevented the petition for keep and that the Democratic majority may nonetheless undertake in revised guidelines.

“One, the STB may have held off on FORR and waited to see whether or not all Class I carriers choose into the arbitration program. Or, the bulk may have included within the rule an annual opt-in interval, offering carriers extra alternatives to opt-in after the conclusion of a possible judicial evaluate of FORR. 

“As for the petition for keep, it’s linked to the true battle forthcoming in an appellate court docket—the legality of the principles themselves.”

CP Feedback on Proposed ‘Keep’

Canadian Pacific (CP) on Jan. 2, 2023 filed feedback with the STB relating to the keep sought by CSX, NS, UP and the U.S. working subsidiaries of CN (obtain under). Whereas CP wrote that it “takes no place on the deserves of the keep,” it continues “to help the hassle to discover a workable, affordable, and accessible Various Dispute Decision (ADR) program for small charge instances, as CP acknowledged in our January 25, 2021 letter to the Board on this docket, and CP believes that the Board’s December 19 [2022] determination and order on this docket was a constructive step within the route of implementing such a program. Nonetheless, CP sees alternatives to enhance the ADR guidelines put ahead within the December 19 [2022] determination and order. If the Board needs to enhance the possibility that each one Class I’s would choose in to a set of ADR procedures, CP sees knowledge within the Board adopting a course of to create alternatives for the ADR guidelines to be improved, ideally earlier than carriers should determine whether or not to choose in to these guidelines.”

January 2023 Courtroom Actions

STB on Jan. 4, 2023 offered discover of the next court docket actions:

  • CSX Transportation, Inc. v. Floor Transportation Board and United States of America, instituted Dec. 29, 2022, in the US Courtroom of Appeals for the Eleventh Circuit, searching for judicial evaluate of the Board’s Dec. 19, 2022 determination in Docket No. EP 765, Joint Petition for Rulemaking to Set up a Voluntary Arbitration Program for Small Charge Disputes.
  • Grand Trunk Company and Illinois Central Railroad Firm v. Floor Transportation Board and United States of America, instituted Dec. 29, 2022, in the US Courtroom of Appeals for the Seventh Circuit, searching for judicial evaluate of the Board’s Dec. 19, 2022 determination in Docket No. EP 765, Joint Petition for Rulemaking to Set up a Voluntary Arbitration Program for Small Charge Disputes.

STB Denial of ‘Keep’ Request

In its Jan. 23, 2023 determination (obtain under), STB wrote that beneath 49 U.S.C. § 1321(b)(4), it “could problem an applicable order, resembling a keep, when vital to forestall irreparable hurt. In deciding a request for keep, the Board considers: (1) whether or not the social gathering searching for a keep is prone to prevail on the deserves, (2) whether or not the social gathering searching for a keep might be irreparably harmed within the absence of a keep, (3) whether or not issuance of a keep would considerably hurt different events, and (4) whether or not issuance of a keep is within the public curiosity. … The social gathering searching for a keep carries the burden of persuasion on all the components required for such extraordinary aid. … The brink consideration in deciding whether or not a keep is suitable is whether or not the transferring social gathering might be irreparably harmed with out it. … As to irreparable hurt, the social gathering searching for a keep should present that the damage claimed is ‘imminent, sure[,] and nice.’”

In accordance with STB, CSX, NS, UP and the U.S. working subsidiaries of CN state that “they intend to problem—both by a petition for reconsideration or judicial enchantment—the so-called ‘Pre- Overview Choose-In Requirement’ directing Class I carriers to tell the Board whether or not they’ll take part within the arbitration no later than 20 days after the ultimate rule turns into efficient, versus a later deadline occurring after appeals and petitions for reconsideration have been resolved. … They argue that imposing a dedication deadline that happens earlier than the decision of any appeals or reconsideration petitions is bigoted and capricious as a result of it’s inconsistent with the Board’s assertion in Arbitration Last Rule that it ‘is not going to require carriers to decide to take part within the arbitration program earlier than understanding the content material of the ultimate rule being adopted.’ … They additional argue {that a} pre-review dedication deadline would circumvent their rights to hunt reconsideration or enchantment. … The 4 Class I carriers [CSX, NS, UP and the U.S. operating subsidiaries of CN] additionally state that they ‘could’ search reconsideration of different features of the arbitration program, although they don’t specify which of them. … Two of them have additionally initiated judicial evaluate of Arbitration Last Rule however have but to element their arguments.”

STB reported that the 4 Class I carriers “haven’t proven that they’re prone to prevail on the deserves” for these causes:

  • “First, the Board can not make the requisite discovering that the 4 Class I carriers are prone to prevail on the deserves as a result of the 4 Class I carriers’ petition fails even to establish any merits-based argument for why the Board or a court docket would make a change to this system. As an alternative, the carriers’ petition presents a single argument as the idea for granting a keep of the pre-review opt-in deadline: that they’re prone to prevail on the argument that Class I carriers needs to be allowed to attend to decide to this system till after any appeals or reconsideration petitions have been determined. However any judicial enchantment or administrative petition for reconsideration primarily based solely on the due date of the opt-in can be meaningless as a result of there can be no cause to regulate the deadline if the arbitration program wouldn’t in any other case change. Though the petition vaguely alludes to the likelihood that some social gathering may file an enchantment that raises extra points, the petition earlier than the Board fails to establish any such points, a lot much less present that these points are seemingly meritorious as can be required for the Board to grant a keep. As a result of the 4 Class I carriers haven’t even argued that there’s some extra facet of this system that they’re seemingly to reach difficult, there may be merely no cause to conclude that this system is prone to change and, thus, no cause for the Board to remain the opt-in deadline in anticipation of such adjustments.
  • “Second, regardless of their opposite assertions, the 4 Class I carriers do know the content material of the rule to which the opt-in requirement would apply: ought to they determine to choose in, they’d be committing to the principles set forth in Arbitration Last Rule as printed within the Federal Register on January 4, 2023. As a result of any profitable judicial enchantment of the rule would presumptively lead to vacatur … the prior dedication by a service to the vacated rule would now not be operative. In any occasion, any materials change to the rule (whether or not achieved through enchantment or reconsideration) would entitle the 4 Class I carriers to withdraw from this system beneath the phrases of this system itself. … A problem to the arbitration program that will be weighty sufficient to floor a profitable enchantment and dissuade the 4 Class I carriers from committing may be very prone to be thought-about materials. Regardless, the petition has recognized no such problem, or, certainly, any merits-based problem in any respect. For that reason, there may be nothing contradictory between the Board’s assertion that it’ll not require the Class I carriers to determine whether or not to take part earlier than understanding the content material of the ultimate rule and the so-called ‘Pre-Overview Choose-In Requirement.’ The Board’s assertion was made in the course of the pendency of the rulemaking in response to the priority articulated by railroad commenters that they’d be required to state whether or not they would select to take part within the arbitration program whereas that program was nonetheless topic to notice-and-comment. However the rulemaking is full and, as defined right here, no foundation has even been recommended to seek out that this system is prone to be modified because of an enchantment. Accordingly, the 4 Class I carriers and all different stakeholders know what the ultimate rule is. The truth that the ultimate rule is topic to the traditional reconsideration and judicial evaluate processes doesn’t change this.
  • “Lastly, the 4 Class I carriers argue that requiring them to determine whether or not to decide to the arbitration program earlier than appeals and reconsideration petitions have concluded deprives them of their skill to enchantment or search reconsideration. However the 4 Class I carriers articulate no cause why they’d not be permitted to proceed their appeals of the Arbitration Last Rule as soon as they’ve opted into the arbitration program and this system has turn into efficient.”

STB additionally discovered that the 4 Class I carriers “haven’t proven irreparable hurt.” In accordance with STB, they “haven’t articulated any cause why they’d forgo their proper to hunt administrative or judicial appeals by selecting to take part within the arbitration program. As well as, the lack of the ‘time, power, and assets’ dedicated to growing the arbitration program doesn’t represent an irreparable hurt. A celebration that takes half in a rulemaking continuing runs the chance that the assets it expends could also be wasted, from the social gathering’s perspective, if the company reaches an consequence the social gathering doesn’t help.” Moreover, the “remaining alleged harms recognized by the 4 Class I carriers are usually not causally associated to the pre-review dedication deadline that they search to remain,” STB reported. “The recognized harms are people who would allegedly accrue if the arbitration program failed to enter impact as a result of not all Class I carriers opted into this system. However the determination whether or not to choose in is one which belongs to the carriers themselves and never the Board. The truth that the opt-in deadline happens earlier than the completion of any appeals or reconsideration processes mustn’t fairly be anticipated to have an effect on the carriers’ preliminary opt-in determination to this system because it exists.”

The 4 Class I carriers have additionally “failed to ascertain that the steadiness of equities and public curiosity favor a keep,” based on STB. “They argue that, absent a keep, it’s doable that not all Class I carriers will choose in and, in consequence, this system is not going to turn into operable, thereby depriving shippers and the general public of the arbitration program’s advantages. However once more, even when cognizable, that alleged hurt will not be causally attributable to the timing of the opt-in requirement: even after this denial, carriers stay free to choose in and, for the explanations acknowledged above, the dearth of a keep mustn’t fairly be anticipated to vary their calculus. If the Board have been to grant the keep, nevertheless, the Board can be guaranteeing that the arbitration program’s advantages wouldn’t come to move in the course of the pendency of the appeals. A keep would due to this fact hurt shippers and the general public by depriving them of the arbitration program advantages that the keep petition champions. As a result of a keep would hurt shippers and the general public with no articulable profit to the 4 Class I carriers, these elements additionally weigh in opposition to a keep.”

STB stated its determination to disclaim the petition to remain is “with out prejudice to events to file a brand new petition for keep inside 10 days of the submitting of petitions for reconsideration.” Whereas all 5 STB Members concurred, Members Patrick Fuchs and Michelle Schultz concurred with separate expressions.

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