On September 28th, the Surface Transportation Board (STB) issued final rules to implement the arbitration provisions of the STB Reauthorization Act of 2015 (the Act). In the Act, Congress modified the STB’s authority with respect to arbitration of certain disputes. Concluding that a majority of its existing arbitration rules already are consistent with the Act, the STB’s final rules supplement and modify its current rules as necessary to conform them to the Act:

  • Rate Cases. The final rules add rate cases to the list of disputes eligible for arbitration. The STB clarified that “rate disputes” encompass challenges to the reasonableness of a rail carrier’s whole line-haul rate, which may include other charges, such as fuel surcharges, in addition to the base rate. Additionally, because the threshold jurisdictional issue of “market dominance” is not eligible for arbitration, the final rules allow parties to concede market dominance in rate disputes. Alternatively, parties may also arbitrate rate disputes if market dominance is not conceded where parties agree to arbitrate only upon a finding of market dominance by the STB.
  • Arbitration Commencement Procedures. The final rules provide an alternative process for initiating arbitration through a joint notice containing a statement of issues, a willingness to voluntarily arbitrate, the choice of a single arbitrator or a three-member panel, and the requested relief.
  • Relief Caps. The final rules replace the current $200,000 relief cap with the statutory caps of $25 million for rate disputes and $2 million for practice disputes, but permit the parties to agree to lower amounts. In rate disputes, an arbitrator may grant relief in the form of a rate prescription which cannot exceed five years from the date of the arbitration decision.
  • Arbitrator Selection. The final rules set forth procedures for creating and maintaining a roster of arbitrators, arbitrator qualifications, and a process for arbitrator selection.
  • Standard of Review. The final rules adopt the Act’s provisions for appealing arbitrator decisions. Generally, all arbitration decisions must be consistent with sound principles of rail regulation economics. Likewise, the STB will review an arbitration decision to determine if the decision is consistent with sound principles of rail regulation economics.
  • Arbitration Timeline. The final rules set deadlines for various aspects of the arbitration process, including 14 days to select the arbitrator(s), 90 days to submit evidence, and 30 days for the arbitrator’s decision to be served upon the parties.

The STB’s final rules become effective October 30, 2016.