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STB Reconsiders Rail Fuel Surcharge Safe Harbor Rule

Volume 2, Issue 11
June 15th, 2014
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On May 22 the Surface Transportation Board issued a notice seeking comments on whether the safe harbor provision of the current rail fuel surcharge rules should be modified or removed.

When the STB adopted fuel surcharge rules in 2007, it concluded that the Highway Diesel Fuel Index accurately reflected 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 has prompted the STB to revisit the safe harbor rule in this new rulemaking proceeding.

STB requested public comment on:

  • Should the safe harbor rule be modified or ended by the board?
  • Was the growing spread between a rail internal fuel costs and the HDF Index observed in the Cargill case was likely an aberration?
  • Are there problems associated with use of the HDF Index as a safe harbor in judging the reasonableness of fuel surcharge programs?
  • Can any problems with the safe harbor be addressed through modifications
  • Are any problems with the safe harbor outweighed by its benefits?

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

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