ACC rails against proposed fix to US rate disputes

31 January 2007 20:28  [Source: ICIS news]

HOUSTON (ICIS news)--A proposal designed to facilitate rail rate challenges by captive shippers would do more harm than good, a US chemical industry advocacy group said on Wednesday.

Captive shippers - industrial production sites served by only one railroad - suffer higher rates than those that have a choice, said the American Chemistry Council (ACC).

The Surface Transportation Board is charged with settling rate disputes, but the process it currently uses is expensive and biased toward the rail carriers, said the ACC’s senior distribution director Tom Schick.

To solve the problem, the board has proposed adding two less-expensive methods of disputing rates. But the ACC, along with dozens of other trade groups, have objected to the rules.

“What they are proposing would, if adopted, make a horrible situation even more horrible,” Schick said.

He said the current process is only useful for utilities that continuously ship large amounts of coal. The proposed methods - aimed to serve smaller shippers by making it less expensive to contest - only serve to complicate matters.

What is needed is a more efficient system of challenging rates, Schick said. “The filing fee should be very low; the burden on the shipper would have to be low to reasonable in terms of what they have to provide; and they need to be able to access the information they need [to make their case].”

Ideally, he said, an arbitration process would be used and the entire litigation process involving the agency would be scrapped.

He also said the proposed rule change does nothing to address the issues of higher rates faced by captive shippers and the board-imposed rule that lets rail firms essentially eliminate competition by denying service to captive shippers along certain segments.

The Surface Transportation Board on Wednesday heard testimony regarding the proposed rule change.

A board spokesperson said the agency would accept comments on the proposal through 26 February before making a decision.

By: Joseph Lohan
+1 713 525 2653

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