Court rules for STB in bottleneck case

WASHINGTON -- According to the Journal of Commerce, some days you can't please anyone.

When the Surface Transportation Board issued its ruling in the "bottleneck" case, both sides -- shippers and railroads -- challenged the agency in court.

Last week, the Court of Appeals for the District of Columbia Circuit issued a decision siding with the STB, saying that railroads must file separately challengeable rates for "bottleneck" segments when shippers have contracts for service over the "non-bottleneck" segments of through routes.

In a rail bottleneck case, more than one railroad may be involved in providing service from an origin to a destination, but only one -- the "bottleneck" carrier -- serves either the origin or the destination.

In the Bottleneck case, shippers wanted to break up through movements into pieces so they could combine a rate for the shorter, bottleneck portion with a rate set by head-to-head competition for the longer non-bottleneck segment. The board said shippers could seek relief if they have a contract for the non-bottleneck segment of the movement. The board's contract exception was based on wording in the Staggers Rail Act of 1980, which says that the agency has no authority to regulate the reasonableness of contract rates.

Reviewing a through rate that includes a contract segment, the Board found, would indirectly constitute review of the contract rate itself.

Railroads had challenged the STB finding. The Eighth Circuit Court of Appeals recently sided with the STB in a challenge from shippers, saying the board was correct when it said railroads do not have to file local rates for bottleneck segments in the absence of a contract over the non-bottleneck segment.

The two court decisions, taken together, uphold the Board's decisions issued in 1996 in the Bottleneck rail rate cases. The case before the D.C. Circuit arose when the STB ordered Union Pacific Railroad to file a tariff with a separately challengeable bottleneck rate that could be used by FMC Corp. in connection with contracts FMC had entered into with CSX Transportation over non-bottleneck segments of certain UP/CSXT through routes.

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February 23, 2000

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