Coal shippers could face higher rates if STB changes rules

Coal shippers could see their rates increase if the Surface Transportation Board grants the major U.S. railroads’ request to consider indirect competition, specifically from the natural gas industry, when the agency determines whether it has oversight on coal rate cases, the Journal of Commerce reports.

The Association of American Railroads this week petitioned the STB to initiate a rulemaking that would look to see whether indirect competition - from a product and geographic basis — should be part of the analysis of whether a railroad is “market dominant.” The AAR said there is now ample data to help the STB determine where indirect competition exists and whether it “puts downward pressure on coal rail transportation rates, particularly given the low price of natural gas in recent years.” The STB stopped considering indirect competition in rate cases in 1998, citing difficulty in collecting information needed to judge the impact of outside factors.

“Considering that nearly two-thirds of all rate cases brought before the Board over the last 15 or so years involved coal, we believe the STB should consider the now-easily available evidence in relevant coal rate cases, ” AAR President and CEO Edward R. Hamberger said. “The STB has in the past acknowledged that indirect competition can exist, and the AAR believes that it has effectively addressed the concerns the STB has previously raised.”