Rule2025-10162
Final Offer Rate Review; Expanding Access to Rate Relief
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 6, 2025
Effective
June 6, 2025
Issuing agencies
Surface Transportation Board
Abstract
The Surface Transportation Board (Board) is removing its final rule concerning Final Offer Rate Review because the final rule was vacated upon judicial review. The Board is also terminating the proceeding in Docket No. EP 665 (Sub-No. 2).
Full Text
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<title>Federal Register, Volume 90 Issue 108 (Friday, June 6, 2025)</title>
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[Federal Register Volume 90, Number 108 (Friday, June 6, 2025)]
[Rules and Regulations]
[Pages 24077-24080]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-10162]
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SURFACE TRANSPORTATION BOARD
49 CFR Parts 1002, 1111, 1114 and 1115
[Docket Nos. EP 755; EP 665 (Sub-No. 2)]
Final Offer Rate Review; Expanding Access to Rate Relief
AGENCY: Surface Transportation Board.
ACTION: Final rule; removal.
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SUMMARY: The Surface Transportation Board (Board) is removing its final
rule concerning Final Offer Rate Review because the final rule was
vacated upon judicial review. The Board is also terminating the
proceeding in Docket No. EP 665 (Sub-No. 2).
DATES: Effective June 6, 2025.
FOR FURTHER INFORMATION CONTACT: Amy C. Ziehm at (202) 245-0391. If you
require accommodation under the Americans with Disabilities Act, please
call (202) 245-0245.
SUPPLEMENTARY INFORMATION: In a notice of proposed rulemaking (NPRM)
issued September 12, 2019, the Board proposed a new rate case procedure
for smaller cases, known as Final Offer Rate Review (FORR). Final Offer
Rate Rev., EP 755 et al. (STB served Sept. 12, 2019).\1\ The Board also
sought comment on whether to close a proceeding in Docket No. EP 665
(Sub-No. 2),\2\ in which the Board had sought public comment regarding
potential rate reasonableness methodologies but had not proposed a
rule. Id. at 17. The Board issued a supplemental notice of proposed
rulemaking regarding FORR on November 15, 2021 (Nov. 2021 Decision),
and adopted the final rule on December 19, 2022. Final Offer Rate Rev.,
EP 755 et al. (STB served Nov. 15, 2021) (86 FR 67622 (Nov. 26, 2021));
Final Offer Rate Rev., EP 755 et al. (STB served Dec. 19, 2022) (with
Board Members Fuchs and Schultz dissenting) (88 FR 299 (Jan. 4, 2023)).
The final rule implemented FORR by amending 49 CFR parts 1002, 1111,
1114, and 1115. It also terminated the proceeding in Docket No. EP 665
(Sub-No. 2). The final rule took effect on March 6, 2023. 88 FR 299
(Jan. 4, 2023). On January 24, 2023, several shipper interest groups
jointly filed a petition for reconsideration of several aspects of the
decision, and that petition remains pending before the Board.
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\1\ The NPRM was published in the Federal Register, 84 FR 48872
(Sept. 17, 2019).
\2\ The proceedings in Docket Nos. EP 755 and EP 665 (Sub-No. 2)
are not consolidated. A single decision is being issued for
administrative convenience.
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Petitions for judicial review of the final rule were filed in the
U.S. Courts of Appeals for the Eighth Circuit and the District of
Columbia Circuit and were ultimately consolidated in the Eighth
Circuit. The Eighth Circuit held that the Board lacked statutory
authority to prescribe rates through FORR and vacated the final rule.
Union Pac. R.R. v. STB, 113 F.4th 823 (8th Cir. 2024), reh'g and reh'g
en banc denied, Nos. 22-3648 & 23-1325 (8th Cir. Dec. 10, 2024).
In light of the Court's opinion, portions of 49 CFR parts 1002,
1111, 1114, and 1115 will be revised to
[[Page 24078]]
remove the provisions that were added by the final rule in order to
implement FORR. Because this action follows a final court determination
vacating the final rule, the Board finds good cause to dispense with
notice and comment under the Administrative Procedure Act (APA). See 5
U.S.C. 553(b)(B); EME Homer City Generation, L.P. v. EPA, 795 F.3d 118,
134-35 (D.C. Cir. 2015); On-Time Performance Under Section 213 of the
Passenger Rail Inv. & Improvement Act of 2008, EP 726, slip op. at 1
(STB served May 4, 2018). The Board is not, at this time, removing the
portions of 49 CFR part 1108 that refer to FORR. Those references were
added to the Board's regulations in a separate rulemaking, Joint
Petition for Rulemaking to Establish a Voluntary Arbitration Program
for Small Rate Disputes, EP 765 (STB served Dec. 19, 2022), which is
currently the subject of petitions for reconsideration at the Board and
litigation in the U.S. Court of Appeals for the Seventh Circuit. The
Board will amend part 1108 as appropriate at a future time.
Additionally, like the FORR docket, the proceeding in Docket No. EP
665 (Sub-No. 2) will again be terminated. Although this aspect of the
final rule was not the subject of any argument before the Court of
Appeals or of the Eighth Circuit's opinion, the Court's judgment
formally vacated the Board's entire final rule and associated decision,
including the aspect of it that terminated the proceeding in Docket No.
EP 665 (Sub-No. 2). Nothing in the Court's opinion suggests that the
Board cannot terminate that proceeding again. In the interest of
administrative efficiency, the Board will close that proceeding again,
but, as stated in the supplemental notice of proposed rulemaking, the
Board ``may revisit some of the ideas presented there depending on
future developments.'' Nov. 2021 Decision, EP 755 et al., slip op. at
50. Indeed, the Board is exploring additional ways to improve its
processes, including for rate cases. Because terminating Docket No. EP
665 (Sub-No. 2) now repeats an action that was previously subject to
notice and comment and was not substantively affected by the Court's
opinion, the Board finds good cause to dispense with notice and comment
under the APA with respect to that action, as well. See 5 U.S.C.
553(b)(B).
The Regulatory Flexibility Act (RFA), as amended by the Small
Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 601-612,
generally requires an agency to prepare a regulatory flexibility
analysis of any rule subject to notice and comment rulemaking
requirements, unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities.
Because the Board has determined that notice and comment are not
required under the APA for this rulemaking, the requirements of the RFA
do not apply.
The Congressional Review Act (CRA), as amended by the GAO Database
Modernization Act of 2023, requires that the Board submit a report to
the Comptroller General if the Board revokes a rule or the rule ``is
made ineffective for any other reason.'' 5 U.S.C. 801(a)(1)(D). The
Board will submit such a report for FORR. Pursuant to the CRA, the
Office of Information and Regulatory Affairs (OIRA) has designated this
final rule/removal as non-major, as defined by 5 U.S.C. 804(2).
Executive Order 12866, as modified by Executive Order 14215,
provides that OIRA will review all significant rules. OIRA has
determined that this rule is not significant. This action is considered
an Executive Order 14192 deregulatory action.
This rulemaking does not contain a new or amended information
collection requirement subject to the Paperwork Reduction Act of 1995,
44 U.S.C. 3501-3521.
It is ordered:
1. Parts 1002, 1111, 1114, and 1115 are modified as set forth
below, and notice will be published in the Federal Register.
2. The proceeding in Docket No. EP 755 is terminated, and the
petition for reconsideration filed by the American Chemistry Council,
the Fertilizer Institute, the National Industrial Transportation
League, the Chlorine Institute, and the Corn Refiners' Association is
denied as moot.
3. The proceeding in Docket No. EP 665 (Sub-No. 2) is terminated.
4. The modifications to parts 1002, 1111, 1114, and 1115 are
effective on June 6, 2025. The remainder of this decision is effective
on its date of service.
Decided: May 29, 2025.
By the Board, Board Members Fuchs, Hedlund, Primus, and Schultz.
Board Member Primus concurred with a separate expression.
BOARD MEMBER PRIMUS, concurring:
At the outset, I feel as though I should apologize to shippers
along our national freight rail network for the actions that led to
this decision. I'm sorry the Eighth Circuit took such a narrow and
woefully incorrect view of the Board's authority to develop a procedure
that attempted to provide much needed rate relief. I'm sorry the Board
chose not to launch a full-throated appeal of the court's myopic
decision which, I believe, will have a lasting impact on future rate
cases. But what I'm most sorry for is the fact that shippers will
continue to be relegated to the black hole that is the Board's archaic
rate-relief system. A system that has proven to provide more headaches
and hardships than actual rate relief.
Reluctantly, I vote for today's decision because the Eighth Circuit
has ordered the vacatur of the Board's Final Offer Rate Review (FORR)
rule, but I do so under extreme protest. The Board's work on FORR
spanned three previous chairmen, myself included, and the resulting
rule was an appropriate attempt to make the adjudication of smaller
rate disputes more accessible, reasonable, and less time-consuming. The
recognition that small rate cases are too expensive and too complex to
be worth pursuing under existing Board processes was central to
Chairman Ann Begeman's establishment of the Rate Reform Task Force
(RRTF) in 2018. Under Chairman Begeman's leadership, one of the RRTF's
recommendations, for a ``final offer'' procedure for small rate cases,
was incorporated into the Board's FORR rule, which was ultimately
adopted in 2022 under Chairman Martin Oberman. The Board's defense of
the FORR rule, culminating in the Eighth Circuit's decision to vacate
the rule, occurred while I was Chairman.
The Eighth Circuit found that the Board lacked the statutory
authority to prescribe rates through FORR. In addition, although the
railroads appealing the FORR rule did not brief the question, the
Eighth Circuit sua sponte found that rate cases are formal
adjudications under the Administrative Procedure Act (APA). I disagreed
with both bases for the Eighth Circuit's ruling, and I supported the
Board's decision to file a petition for rehearing en banc in the Eighth
Circuit seeking to have that court amend its opinion to omit discussion
of whether rate cases are formal adjudications. Furthermore, once the
Eighth Circuit denied the Board's petition for rehearing, I believe the
Board should have pursued its appeal rights further by filing a
petition for a writ of certiorari with the Supreme Court. I believe all
avenues of appeal should have been exhausted because the Eighth
Circuit's ruling that rate cases are formal adjudications under the APA
was not only unnecessary to the court's decision to vacate the FORR
rule, but it has the potential to hamstring future efforts by the Board
to afford all shippers with access to a viable rate review process.
[[Page 24079]]
Without the FORR rule, the inadequacies of the Board's existing
processes for small rate disputes remain, and I look forward to working
with my colleagues to find workable solutions for the industry. In this
vein, I believe Congress has an important role to play, both in
defining the Board's authority in rate cases more broadly and in small
rate cases in particular. First, Congress should clarify that rate
cases at the Board are not formal adjudications under the APA requiring
formal, trial-like procedures. Second, Congress should enact
legislation empowering the Board to require mandatory arbitration of
small rate disputes, as doing so would allow the Board to explore
implementation of another of the RRTF's recommendations for how the
Board could improve adjudication of small rate cases.
List of Subjects
49 CFR Part 1002
Administrative practice and procedure, Common carriers, Freedom of
information.
49 CFR Part 1111
Administrative practice and procedure, Investigations.
49 CFR Part 1114
Administrative practice and procedure.
49 CFR Part 1115
Administrative practice and procedure.
Jeffrey Herzig,
Clearance Clerk.
For the reasons set forth in the preamble, and under the authority
of 49 U.S.C. 1321(a), the Surface Transportation Board amends parts
1002, 1111, 1114, and 1115 of title 49, chapter X, of the Code of
Federal Regulations as follows:
PART 1002--FEES
0
1. The authority citation for part 1002 continues to read as follows:
Authority: 5 U.S.C. 552(a)(4)(A), (a)(6)(B), and 553; 31 U.S.C.
9701; and 49 U.S.C. 1321. Section 1002.1(f)(11) is also issued under
5 U.S.C. 5514 and 31 U.S.C. 3717.
0
2. Amend Sec. 1002.2 by revising paragraph (f)(56) to read as follows:
Sec. 1002.2 Filing fees.
* * * * *
(f) * * *
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Type of proceeding Fee
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* * * * * * *
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Part V: Formal Proceedings
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(56) A formal complaint alleging unlawful rates or
practices of carriers:
(i) A formal complaint filed under the coal rate $350
guidelines (Stand-Alone Cost Methodology) alleging
unlawful rates and/or practices of rail carriers
under 49 U.S.C. 10704(c)(1)........................
(ii) A formal complaint involving rail maximum rates 350
filed under the Simplified-SAC methodology.........
(iii) A formal complaint involving rail maximum 150
rates filed under the Three Benchmark methodology..
(iv) All other formal complaints (except competitive 350
access complaints).................................
(v) Competitive access complaints................... 150
(vi) A request for an order compelling a rail 350
carrier to establish a common carrier rate.........
* * * * * * *
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* * * * *
PART 1111--COMPLAINT AND INVESTIGATION PROCEDURES
0
3. The authority for part 1111 continues to read as follows:
Authority: 49 U.S.C. 10701, 10704, 11701 and 1321.
0
4. Amend Sec. 1111.3 by revising paragraph (c) to read as follows:
Sec. 1111.3 Amended and supplemental complaints.
* * * * *
(c) Simplified standards. A complaint filed under the simplified
standards may be amended once before the filing of opening evidence to
opt for a different rate reasonableness methodology, among Three-
Benchmark, Simplified-SAC, or stand-alone cost. If so amended, the
procedural schedule begins again under the new methodology as set forth
at Sec. Sec. 1111.9 and 1111.10. However, only one mediation period
per complaint shall be required.
0
5. Amend Sec. 1111.5 by revising paragraphs (a), (b), (c), and (e) to
read as follows:
Sec. 1111.5 Answers and cross complaints.
(a) Generally. An answer shall be filed within the time provided in
paragraph (c) of this section. An answer should be responsive to the
complaint and should fully advise the Board and the parties of the
nature of the defense. In answering a complaint challenging the
reasonableness of a rail rate, the defendant should indicate whether it
will contend that the Board is deprived of jurisdiction to hear the
complaint because the revenue-variable cost percentage generated by the
traffic is less than 180 percent, or the traffic is subject to
effective product or geographic competition. In response to a complaint
filed under the simplified standards, the answer must include the
defendant's preliminary estimate of the variable cost of each
challenged movement calculated using the unadjusted figures produced by
the URCS Phase III program.
(b) Disclosure with simplified standards answer. The defendant must
provide to the complainant all documents that it relied upon to
determine the inputs used in the URCS Phase III program.
(c) Time for filing; copies; service. An answer must be filed with
the Board within 20 days after the service of the complaint or within
such additional time as the Board may provide. The defendant must serve
copies of the answer upon the complainant and any other defendants.
* * * * *
(e) Failure to answer complaint. Averments in a complaint are
admitted when not denied in an answer to the complaint.
* * * * *
Sec. 1111.10 [Amended]
0
6. Amend Sec. 1111.10 by removing paragraph (a)(3).
0
7. Amend Sec. 1111.11 by revising paragraph (b) to read as follows:
[[Page 24080]]
Sec. 1111.11 Meeting to discuss procedural matters.
* * * * *
(b) Stand-alone cost or simplified standards complaints. In
complaints challenging the reasonableness of a rail rate based on
stand-alone cost or the simplified standards, the parties shall meet or
otherwise discuss discovery and procedural matters within 7 days after
the complaint is filed in stand-alone cost cases, and 7 days after the
mediation period ends in simplified standards cases. The parties should
inform the Board as soon as possible thereafter whether there are
unresolved disputes that require Board intervention and, if so, the
nature of such disputes.
0
8. Amend Sec. 1111.12 by revising paragraphs (c) and (d)(1) and (2) to
read as follows:
Sec. 1111.12 Streamlined market dominance.
* * * * *
(c) A defendant's reply evidence under the streamlined market
dominance approach may address the factors in paragraph (a) of this
section and any other issues relevant to market dominance. A
complainant may elect to submit rebuttal evidence on market dominance
issues. Reply and rebuttal filings under the streamlined market
dominance approach are each limited to 50 pages, inclusive of exhibits
and verified statements.
(d)(1) Pursuant to the authority under Sec. 1011.6 of this
chapter, an administrative law judge will hold a telephonic evidentiary
hearing on the market dominance issues at the discretion of the
complainant in lieu of the submission of a written rebuttal on market
dominance issues.
(2) The hearing will be held on or about the date that the
complainant's rebuttal evidence on rate reasonableness is due. The
complainant shall inform the Board by letter submitted in the docket,
no later than 10 days after defendant's reply is due, whether it elects
an evidentiary hearing in lieu of the submission of a written rebuttal
on market dominance issues.
* * * * *
PART 1114--EVIDENCE; DISCOVERY
0
9. The authority citation for part 1114 continues to read as follows:
Authority: 5 U.S.C. 559; 49 U.S.C. 1321.
Sec. 1114.21 [Amended]
0
10. Amend Sec. 1114.21 by removing paragraph (a)(4).
0
11. Amend Sec. 1114.31 by revising paragraphs (a) and (d) to read as
follows:
Sec. 1114.31 Failure to respond to discovery.
(a) Failure to answer. If a deponent fails to answer or gives an
evasive answer or incomplete answer to a question propounded under
Sec. 1114.24(a), or a party fails to answer or gives evasive or
incomplete answers to written interrogatories served pursuant to Sec.
1114.26(a), the party seeking discovery may apply for an order
compelling an answer by motion filed with the Board and served on all
parties and deponents. Such motion to compel an answer must be filed
with the Board and served on all parties and deponents. Such motion to
compel an answer must be filed with the Board within 10 days after the
failure to obtain a responsive answer upon deposition, or within 10
days after expiration of the period allowed for submission of answers
to interrogatories. On matters relating to a deposition on oral
examination, the proponent of the question may complete or adjourn the
examination before he applies for an order.
(1) Reply to motion to compel generally. Except in rate cases to be
considered under the stand-alone cost methodology or simplified
standards, the time for filing a reply to a motion to compel is
governed by 49 CFR 1104.13.
(2) Motions to compel in stand-alone cost and simplified standards
rate cases. (i) Motions to compel in stand-alone cost and simplified
standards rate cases must include a certification that the movant has
in good faith conferred or attempted to confer with the person or party
failing to answer discovery to obtain it without Board intervention.
(ii) In a rate case to be considered under the stand-alone cost or
simplified standards methodologies, a reply to a motion to compel must
be filed with the Board within 10 days of when the motion to compel is
filed.
(3) Conference with parties on motion to compel. Within 5 business
days after the filing of a reply to a motion to compel in a rate case
to be considered under the stand-alone cost methodology or under the
simplified standards, Board staff may convene a conference with the
parties to discuss the dispute, attempt to narrow the issues, and
gather any further information needed to render a ruling.
(4) Ruling on motion to compel in stand-alone cost and simplified
standards rate cases. Within 5 business days after a conference with
the parties convened pursuant to paragraph (a)(3) of this section, the
Director of the Office of Proceedings will issue a summary ruling on
the motion to compel discovery. If no conference is convened, the
Director of the Office of Proceedings will issue this summary ruling
within 10 days after the filing of the reply to the motion to compel.
Appeals of a Director's ruling will proceed under 49 CFR 1115.9, and
the Board will attempt to rule on such appeals within 20 days after the
filing of the reply to the appeal.
* * * * *
(d) Failure of party to attend or serve answers. If a party or a
person or an officer, director, managing agent, or employee of a party
or person willfully fails to appear before the officer who is to take
his deposition, after being served with a proper notice, or fails to
serve answers to interrogatories submitted under Sec. 1114.26, after
proper service of such interrogatories, the Board on motion and notice
may strike out all or any part of any pleading of that party or person,
or dismiss the proceeding or any part thereof. In lieu of any such
order or in addition thereto, the Board shall require the party failing
to act or the attorney advising that party or both to pay the
reasonable expenses, including attorney's fees, caused by the failure,
unless the Board finds that the failure was substantially justified or
that other circumstances make an award of expenses unjust.
* * * * *
PART 1115--APPELLATE PROCEDURES
0
12. The authority citation for part 1115 continues to read as follows:
Authority: 5 U.S.C. 559; 49 U.S.C. 1321; 49 U.S.C. 11708.
0
13. Amend Sec. 1115.3 by revising paragraph (e) to read as follows:
Sec. 1115.3 Board actions other than initial decisions.
* * * * *
(e) Petitions must be filed within 20 days after the service of the
action or within any further period (not to exceed 20 days) as the
Board may authorize. However, in cases seeking expedited relief for
service emergencies under the accelerated process at 49 CFR 1146.2,
petitions must be filed within 5 days after the service of the action,
and replies to petitions must be filed within 10 days after the service
of the action.
* * * * *
[FR Doc. 2025-10162 Filed 6-5-25; 8:45 am]
BILLING CODE 4915-01-P
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