On May 22, 2014, the Surface Transportation Board (STB) initiated an Advance Notice of Proposed Rulemaking that solicits public comment on whether the safe harbor provision of the Board’s current fuel surcharge rules should be modified or removed. When the STB adopted fuel surcharge rules in 2007, it concluded that the Highway Diesel Fuel (HDF) Index “accurately reflects changes in fuel costs in the rail industry.” Based on this conclusion, the STB declared a “safe harbor” for any railroad that uses the HDF Index in its fuel surcharge program. In other words, a railroad fuel surcharge program based on the HDF Index is immune from a challenge that it over-recovers actual changes in the railroad’s fuel costs.

The safe harbor rule became an issue in a recent case filed by Cargill against BNSF Railway. According to the STB’s own decision, BNSF’s fuel surcharge revenues exceeded its incremental fuel costs by $181 million. But, because BNSF used the HDF Index to determine its fuel surcharge, the STB dismissed Cargill’s complaint under the safe harbor rule. That result prompted the STB to revisit the safe harbor rule in this new rulemaking proceeding.

Specifically, the STB has requested public comment on the following issues:

  • Whether the safe harbor rule should be modified or removed.
  • Whether or not the growing spread between a rail carrier’s internal fuel costs and the HDF Index observed in the Cargill case was likely an aberration.
  • Whether there are problems associated with use of the HDF Index as a safe harbor in judging the reasonableness of fuel surcharge programs.
  • Whether any problems with the safe harbor can be addressed through modifications.
  • Whether any problems with the safe harbor are outweighed by its benefits.

Opening round comments are due by July 14, 2014, and Reply comments are due by August 12, 2014.