Joint Petition for Rulemaking To Establish a Voluntary Arbitration Program for Small Rate Disputes

Federal RegisterNov 26, 2021

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SURFACE TRANSPORTATION BOARD

49 CFR Parts 1011, 1108, 1115 and 1244

[Docket No. EP 765]

Joint Petition for Rulemaking To Establish a Voluntary Arbitration Program for Small Rate Disputes

AGENCY:

Surface Transportation Board.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

In response to a joint petition for rulemaking filed by five Class I rail carriers, the Surface Transportation Board (STB or Board) proposes to modify its regulations to establish a voluntary arbitration program for small rate disputes.

DATES:

Comments on the proposed rule are due by January 14, 2022. Reply comments are due by March 15, 2022.

ADDRESSES:

Comments and replies may be filed with the Board via e-filing on the Board's website at

www.stb.gov

and will be posted to the Board's website.

FOR FURTHER INFORMATION CONTACT:

Amy Ziehm at (202) 245-0391. Assistance for the hearing impaired is available through the Federal Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION:

Pursuant to 49 U.S.C. 11708, the Board's regulations at 49 CFR part 1108 establish a voluntary arbitration program “under which participating parties, including rail carriers and shippers, have agreed voluntarily in advance or on a case-by-case basis to resolve disputes about arbitration-program-eligible matters brought before the Board using the Board's arbitration procedures.” 49 CFR 1108.1(c).

On July 31, 2020, five Class I rail carriers—Canadian National Railway Company (CN),

CSX Transportation, Inc. (CSXT), the Kansas City Southern Railway Company, Norfolk Southern Corp. (NSR), and Union Pacific Railroad Company (UP) (collectively, Petitioners)—filed a petition for rulemaking (the Petition) to add a small rate case arbitration program at 49 CFR part 1108a, which would function alongside the existing arbitration program at 49 CFR part 1108.

Petitioners pledge to consent to arbitrate disputes under their proposed program for a period of five years, provided the Board adopts the program according to the terms set forth in the Petition. These terms include the right of the carriers to withdraw from the program under certain circumstances, such as if the Board adopts a material change to its existing rate reasonableness methodologies or creates a new rate reasonableness methodology after a shipper or railroad has opted into the program. (Pet. 17.)

The petition lists one of the petitioners only as “CN.” A supplemental filing identifies this party as the “U.S. operating subsidiaries of CN.” Although not identified in either filing, the Board understands “CN” to mean Canadian National Railway Company.

Although the Petition refers to Norfolk Southern Corp., a noncarrier, a subsequent supplement instead refers to that entity's operating affiliate, Norfolk Southern Railway Company. (Pet'rs Suppl. 2.) When referring to NSR in this decision, the Board is referring only to Norfolk Southern Railway Company.

Replies to the Petition were filed on August 20, 2020, by the National Grain and Feed Association (NGFA); Olin Corporation (Olin); the American Fuel & Petrochemical Manufacturers (AFPM); the U.S. Department of Agriculture (USDA);

and (filing jointly) the American Chemistry Council, Corn Refiners Association, Institute of Scrap Recycling Industries, National Industrial Transportation League, The Chlorine Institute, and The Fertilizer Institute (collectively, Joint Shippers).

USDA structures its comment as individual letters to the three then-current Board Members. Aside from the headings, the content of each letter is identical.

Supplemental pleadings were filed on September 10, 2020, and the Board instituted a rulemaking proceeding to consider the proposal on November 25, 2020.

After considering the Petition and the comments received, the Board will grant the Petition, as qualified below, and propose new regulations at 49 CFR part 1108, subpart B,

establishing a voluntary arbitration program for small rate cases.

Petitioners proposed that the regulations establishing the new arbitration program at a new part (49 CFR part 1108a) but creating a new subpart within 49 CFR part 1108 is more consistent with Code of Federal Regulations formatting.

Background

The Board established arbitration procedures at 49 CFR part 1108 in 1997.

See Arb. of Certain Disputes Subject to the Statutory Juris. of the STB,

62 FR 46217 (Sept. 2, 1997), 2 S.T.B. 564 (1997). Under those procedures, as originally conceived, parties could agree voluntarily on a case-by-case basis to arbitrate any dispute involving the payment of money or involving rates or practices related to rail transportation or services subject to the Board's statutory jurisdiction.

Id.

at 565. The Board established those procedures pursuant to its authority at 49 U.S.C. 721 (now 49 U.S.C. 1321), which generally authorizes the Board to prescribe regulations in carrying out its statutory responsibilities.

Id.

at 582.

In 2013, the Board modified its arbitration procedures in

Assessment of Mediation & Arbitration Procedures,

78 FR 29071 (May 17, 2013), EP 699 (STB served May 13, 2013) (revising and consolidating the Board's arbitration procedures). Among other things, the Board established a program under which a party could voluntarily agree in advance to arbitrate particular types of disputes with clearly defined limits of liability.

Id.

at 4. The revised regulations did not include rate disputes as an arbitration-program-eligible matter.

Id.

at 7-9.

The revised regulations permitted parties to agree on a case-by-case basis to arbitrate additional matters, provided that the matters were within the Board's statutory jurisdiction to resolve and that the dispute did not require the Board to grant, deny, stay or revoke a license or other regulatory approval or exemption, and did not involve labor protective conditions.

See Assessment of Mediation & Arb. Procs.,

EP 699, slip op. at 8-9.

In section 13 of the Surface Transportation Board Reauthorization Act of 2015 (STB Reauthorization Act), Congress required the Board to promulgate regulations establishing a voluntary and binding arbitration process to resolve rail rate and practice complaints under its jurisdiction.

See

Public Law 114-110, section 13, 129 Stat. 2228, 2235-38. Section 13, which is codified at 49 U.S.C. 11708, set forth certain requirements and procedures for the Board's arbitration process, such as listing categories of covered disputes and imposing timelines.

Id.

In response to section 13 of the STB Reauthorization Act, the Board further adjusted its procedures at 49 CFR part 1108 to add rate disputes to the matters eligible for arbitration under its arbitration program and made other changes to conform to the requirements set forth in the statute.

See Revisions to Arb. Procs.

(

Revisions Final Rule

), 81 FR 69410 (Oct. 6, 2016), EP 730, slip op. at 1-2 (STB served Sept. 30, 2016)

corrected

(STB served Oct. 11, 2016). To date, three Class I carriers have opted into the Board's arbitration program for certain types of disputes (though not rate disputes),

but the program has never been used.

See

UP Notice (June 21, 2013), CSXT Notice (June 28, 2019), and CN Notice (July 1, 2019),

Assessment of Mediation & Arb. Procs.,

EP 699.

In January 2018, the Board established the Rate Reform Task Force (RRTF) with the objective of, among other things, determining how best to provide a rate review process for small cases.

After

holding informal meetings throughout 2018, the RRTF issued a report on April 25, 2019 (RRTF Report).

Two key recommendations of the report were legislation to permit mandatory arbitration of small rate disputes and that the Board establish a new rate reasonableness decision-making process under which a shipper and railroad would each submit a “final offer” of what it believes a reasonable rate to be, subject to short, non-flexible deadlines, with the Board selecting one party's offer without revision. RRTF Report 14-20.

The RRTF Report stated that, for small disputes, the litigation costs required to bring a case under the Board's existing rate reasonableness methodologies can quickly exceed the value of the case. RRTF Report 5-8, 9, 14;

see also Expanding Access to Rate Relief,

81 FR 61647 (Sept. 7, 2016), EP 665 (Sub-No. 2), slip op. at 10 (STB served Aug. 31, 2016).

The RRTF Report can be accessed on the Board's website at

https://prod.stb.gov/wp-content/uploads/Rate-Reform-Task-Force-Report-April-2019.pdf.

In September 2019, the Board proposed a new procedure for challenging the reasonableness of railroad rates in smaller cases based on a final offer selection procedure, which it called Final Offer Rate Review (FORR).

See Final Offer Rate Rev.,

84 FR 48872 (Sept. 17, 2019), EP 755 (STB served Sept. 12, 2019). All Class I carriers who commented in that proceeding opposed FORR on both legal and policy grounds. In its comments, CN argued that the Board should abandon consideration of FORR and suggested that the Board instead consider including within its existing arbitration program a targeted avenue for smaller rate disputes.

See

CN Comments 25-27, Nov. 12, 2019,

Final Offer Rate Rev.,

EP 755;

see also

CN Reply Comments 2-3, Jan. 10, 2020,

Final Offer Rate Rev.,

EP 755. CN stated that such a program should include the following features: Mandatory mediation, confidentiality, non-precedential decisions, more modest limits on relief than those authorized under 49 U.S.C. 11708, and voluntariness.

See

CN Comments 25-27, Nov. 12, 2019,

Final Offer Rate Rev.,

EP 755.

The Association of American Railroads (AAR) also called for the Board to investigate how to encourage parties to make greater use of its voluntary arbitration program in a separate proceeding.

See

AAR Comments 3, Feb. 13, 2020,

Hr'g on Revenue Adequacy,

84 FR 48982 (Sept. 17, 2019), EP 761.

In May 2020, the Board issued a decision that allowed for post-comment period ex parte discussions with stakeholders regarding FORR.

See Final Offer Rate Rev.,

EP 755 (STB served May 15, 2020). Noting that its arbitration program has gone unused, the Board expressed interest in exploring the issues raised in CN's comments, as well as whether and how its arbitration program at 49 CFR part 1108 could be modified to provide a practical and useful dispute resolution mechanism, particularly for stakeholders with smaller rate disputes.

Id.

at 2.

During ex parte discussions with the Board Members, certain Petitioners elaborated on the potential small rate case arbitration framework outlined in CN's comments. Some carriers argued that the Board should adopt changes to its existing arbitration process, such as allowing for a more flexible arbitrator selection process and for arbitration to have greater confidentiality protections.

See

CN, CSXT, NSR, & UP Ex Parte Meeting Mem. 1-2, July 8, 2020 (filing ID 300856)

Final Offer Rate Rev.,

EP 755; CN, CSXT, NSR, & UP Ex Parte Meeting Mem. 1-2, July 27, 2020 (filing ID 300928)

Final Offer Rate Rev.,

EP 755. Those carriers also suggested that the Board consider, among other things, creating an incentive for carriers to arbitrate by exempting them from FORR or other types of rate challenges if they agree to participate in arbitration.

See

CN, CSXT, NSR, & UP Ex Parte Meeting Mem. 2, July 10, 2020 (filing ID 300866)

Final Offer Rate Rev.,

EP 755. They indicated their intent to submit a proposal to the Board that could attract support from multiple stakeholders.

See

CN, CSXT, NSR, & UP Ex Parte Meeting Mem. 1-2, July 21, 2020 (filing ID 300901)

Final Offer Rate Rev.,

EP 755.

In their ex parte discussions with Board Members, shipper interests generally did not oppose an arbitration process provided it is fair, though most advocated in favor of the Board adopting FORR.

See, e.g.,

Olin Ex Parte Meeting Mem. 2, July 15, 2020 (filing ID 300883)

Final Offer Rate Rev.,

EP 755; American Chemistry Council Ex Parte Meeting Mem. 3, July 17, 2020 (filing ID 300897)

Final Offer Rate Rev.,

EP 755; Solvay America Inc. Ex Parte Meeting Mem. 1, July 22, 2020 (filing ID 300916)

Final Offer Rate Rev.,

EP 755.

On July 31, 2020, Petitioners filed the Petition, asking the Board to establish a new arbitration program for small rate cases. Petitioners argue that establishing a working arbitration program for small rate disputes may offer the best long-term way to resolve the recurring concern that even the Board's simplified rate review methodologies are insufficient in terms of flexibility, cost, and speed. (Pet. 1.) Petitioners propose certain changes from the Board's existing arbitration process at 49 CFR part 1108, which they assert would make their proposed arbitration program streamlined and more flexible than the existing process and thus incentivize both railroad and shipper participation. (

Id.

at 3.) Among these changes are delegating market dominance determinations to the arbitration panel, adding confidentiality protections, and allowing the use of arbitrators who are not on the Board-maintained roster. (

Id.

at 21.) Petitioners also claim that their proposed small rate case arbitration program is both low-cost and consistent with statutory and economic principles, which they claim distinguishes it from the FORR procedures proposed in Docket No. EP 755. (

Id.

at 4.)

On August 20, 2020, NGFA, Olin, AFPM, USDA, and Joint Shippers filed replies. NGFA and USDA state that they support the Board commencing a rulemaking proceeding on the Petition, subject to certain modifications and provided that the Board not delay implementation of FORR. (NGFA Reply 1; USDA Reply 1.)

Joint Shippers, Olin, and AFPM urge the Board to deny the Petition and focus on completing the proceeding in FORR. (Joint Shippers Reply 2-3; Olin Reply 1-2; AFPM Reply 5.) Though some reply commenters state that the Petitioners' proposal has elements worthy of consideration, (Joint Shippers Reply 3), and that a properly structured, efficient, and affordable arbitration approach could well be a preferred alternative to FORR in many circumstances, (USDA Reply 2), several reply commenters argue that Petitioners are attempting to either delay the Board's adoption of FORR or to avoid being subject to FORR if it is adopted. (Joint Shippers Reply 4-5; AFPM Reply 1, 4; Olin Reply 8-9; USDA 1;

see also

NGFA Reply 5 (objecting to allowing carriers to be exempt from the FORR process if they participate in the arbitration program).) Reply commenters also object to specific aspects of the proposal, such as the fact that shippers would be prohibited from challenging the rates under revenue adequacy principles, (

see

Joint Shippers Reply 4-5; Olin Reply 7-8), and that arbitration decisions would be confidential, (

see

USDA Reply 3; NGFA Reply 7-8).

NGFA explains that it had a series of initial discussions with representatives of the Petitioners prior to Petitioners' submission of the Petition and that, while those discussions were “constructive and conducted in good faith,” NGFA and the Petitioners were unable to reach a consensus on the proposal. (NGFA Reply 1-2.)

NGFA stated that it would not object to allowing Petitioners an opportunity to reply and inform the Board whether the carriers would be amenable to NGFA's proposed modifications, “as well as whether consideration and adoption of those changes would result in their electing not to participate in the [proposed program] if modified in certain respects.” (NGFA Reply 3.) The Board issued a decision on August 26, 2020, permitting Petitioners to submit a

supplemental pleading regarding the proposed modifications to the arbitration program suggested by NGFA and other parties. Other interested parties were also permitted to respond.

On September 10, 2020, Petitioners submitted a supplemental filing, as did AFPM, the Joint Shippers, and the U.S. Wheat Associates Transportation Working Group (U.S. Wheat).

In their supplemental filing, Petitioners state that they are agreeable to several modifications to the proposed program, but not to the core features of confidentiality, exemption from FORR, and a prohibition on revenue adequacy considerations. The shipper groups largely renew their previously stated objections.

U.S. Wheat did not submit a reply to the Petition but filed a response to the Board's August 26, 2020 decision. In its supplement, U.S. Wheat argues that there are several differences between Petitioners' proposed arbitration program and the Board's FORR proposal that make FORR more favorable to wheat shippers, such as the fact that FORR would be a public process, that the proposed arbitration program would take longer because of a party's ability to appeal to the Board, and that the proposed arbitration program would exclude the ability to raise claims based on the revenue adequacy constraint. (U.S. Wheat Suppl. 6-7.)

On January 25, 2021, Canadian Pacific (CP),

a Class I rail carrier, filed a letter stating that it supports the effort to find a “workable, reasonable, accessible arbitration program for small rate cases, and would participate in such a pilot program.” (CP Letter 1.)

According to CP, “Canadian Pacific” is a trade name under which Canadian Pacific Railway Company and its United States subsidiaries—Soo Line Railroad Company; Dakota, Minnesota & Eastern Railroad Corporation; Delaware and Hudson Railway Company, Inc.; and Central Maine & Quebec Railway US Inc.—operate. (CP Letter 1.)

The Proposed Rule

The Board has pursued different ways to improve its processes for rate relief, particularly for smaller cases.

See Final Offer Rate Rev.,

EP 755, slip op. at 3 (STB served Sept. 12, 2019);

Mkt. Dominance Streamlined Approach,

84 FR 48882 (Sept. 17, 2019), EP 756, slip op. at 3 n.5 (citing

Expanding Access to Rate Relief,

EP 665 (Sub-No. 2), slip op. at 10 (STB served Aug. 31, 2016). Based on one of the RRTF's recommendations, the Board proposed the FORR process. Here, Petitioners urge the Board to adopt their proposed voluntary arbitration program and exempt those carriers that choose to participate in the program from having their rates challenged under the FORR process, if that process is adopted.

Petitioners argue that their proposed arbitration program is the best path forward to provide meaningful access to rate review for small rate cases and that, with Petitioners' pledge to commit to the program for five years, the program would provide an available avenue to resolve small rate disputes. (Pet. 28.) As noted, they claim that their proposed arbitration program is both low-cost and consistent with statutory and economic principles, which they argue makes the program different from FORR. (Pet. 4.)

As noted above, several shipper interests generally oppose Petitioners' proposed arbitration program. Among their objections is the idea that carriers participating in arbitration would be exempt from FORR. (Joint Shippers Reply 4-5; AFPM Reply 1, 4; Olin Reply 8-9; AFPM Suppl. 1, 2; U.S. Wheat Suppl. 7.) The Joint Shippers argue that this condition would allow “a railroad to exempt itself from the FORR process simply by opting into the arbitration process and there would be nothing that a shipper who prefers FORR over arbitration could do about it.” (Joint Shippers Reply 4.) The Joint Shippers also argue that, if carriers are exempt from FORR, they will have no incentive to seek improvements to the arbitration program to ensure it is effective. (Joint Shippers Suppl. 5.) Olin argues that the “adequate justification” required for the grant of a rulemaking petition under the Board's regulations has not been presented by Petitioners here. (Olin Reply 8.)

AFPM and U.S. Wheat argue that FORR presents far greater potential for reducing regulatory burdens and increasing the accessibility of a remedy for unreasonable rail rates than the arbitration process outlined in the Petition. (AFPM Reply 1; U.S. Wheat Suppl. 6.)

AFPM and U.S. Wheat also take issue with the fact that only five of the seven Class I railroads have indicated they would participate. AFPM argues that this “would create a patchwork of inconsistent regulations.” (AFPM Reply 4.) U.S. Wheat states that it has a serious concern that the process would be unfair if the other two Class I carriers, BNSF Railway Company (BNSF) and CP do not participate, particularly since a large amount of U.S. Wheat's stakeholders' rail traffic moves on BNSF. (U.S. Wheat Suppl. 6.) These filings pre-dated CP's letter, described above, concerning its potential participation in an arbitration program. (CP Letter 1.)

APFM also objects to Petitioners submitting their Petition eight months after the comment period closed in

Final Offer Rate Review.

(APFM Reply 2-4.) However, the Board itself—prompted by comments filed in that proceeding by CN—stated that it was interested in exploring the possibility of modifying its arbitration procedures to increase their usefulness for stakeholders with smaller rate disputes and waived its prohibition on ex parte communications for that specific purpose.

Final Offer Rate Rev.,

EP 755, slip op. at 2-3 (STB served May 15, 2020). Moreover, the Board's regulations do not limit when petitions for rulemaking may be filed. 49 CFR 1110.2(b), (c).

NGFA believes that FORR and arbitration can be constructed in a way to coexist and complement one another. (NGFA Reply 2.) Although NGFA generally objects to exempting railroads that participate in arbitration from the FORR process, it proposes several alternatives to Petitioners' proposal. These alternatives, which contemplate some limited form of a FORR exemption, include the Board: (1) Setting the duration for the proposed arbitration program at two to three years, after which time, the Board would be required to conduct an assessment to determine whether the program is working as intended and whether the FORR exemption should be removed; (2) requiring a shipper to pursue its initial rate case against a carrier through arbitration but allow the shipper to utilize either FORR or arbitration for any subsequent rate cases; or (3) allowing a railroad to voluntarily decline to be subject to the FORR exemption. (NGFA Reply 5-6.)

USDA states that while an arbitration process could be useful, an arbitration program should complement FORR (rather than be a substitute), and it urges the Board to move forward expeditiously to finalize FORR and not allow the Petition to interfere with or delay that effort. (USDA Reply 1-2;

see also

Olin Reply 2 (arguing that the Board should adopt FORR now and consider implementing a new arbitration process later).) USDA argues that carriers will have no incentive to arbitrate without an effective rate review mechanism as a backstop. (USDA Reply 1;

see also

Olin Reply 9.)

In their supplemental filing, Petitioners argue that the voluntary nature of arbitration, as well as the efficiency, speed, low cost, and flexibility of the proposed program would make it a superior option to FORR, which they contend has various legal and procedural infirmities. (Pet'rs Suppl. 13-14.) Petitioners contend that it would not be reasonable for them to consent to participate in the proposed arbitration program without being exempt from FORR, and such an exemption appears to be central to their proposal. (

Id.

at 14.) Petitioners argue that their proposed program solves the very problem that the Board seeks to remedy with FORR. (

Id.

)

After careful consideration, the Board has determined to defer final action in the FORR docket to provide for parallel consideration of the voluntary, small rate case arbitration program proposed in this docket. This approach will

enable the Board and stakeholders to consider a new proposal for an arbitration process simultaneously along with the proposed rulemaking in

Final Offer Rate Review,

Docket No. EP 755. In order to consider the pros and cons of enacting an arbitration process that would effectively exempt participating carriers from FORR challenges, as Petitioners request, or enacting FORR and making it available regardless of whether or not the Board adopts a new arbitration program, as many shipper interests have urged, the Board has concluded that both the voluntary, small rate case arbitration program and FORR should be considered concurrently by the Board and stakeholders before final action is taken on either.

The arbitration proposal in the notice of proposed rulemaking (NPRM) here is modeled on some (but not all) aspects of Petitioners' proposal.

Congress required rate disputes be included as eligible for arbitration. 49 U.S.C. 10708(b);

see also

S. Rep. No. 114-52 at 7, 13. The Board has frequently stated that it favors the resolution of disputes through the use of mediation and arbitration procedures, in lieu of formal Board proceedings, “whenever possible.”

See

49 CFR 1108.2(a);

Bos. & Me. Corp.—Appl. for Adverse Discontinuance of Operating Auth.—Milford-Bennington R.R.,

AB 1256, slip op. at 10 (STB served Oct. 12, 2018). The Board finds it would be premature to discard the possibility of a voluntary, small rate case arbitration program without further exploring whether such an approach might be workable and the interplay of that approach with FORR.

Due to the potential interrelationship between the small rate case arbitration program proposed by Petitioners and FORR, the Board will post notice of this decision in Docket No. EP 755.

A voluntary arbitration program focused on the resolution of small rate disputes, as proposed below, could further the rail transportation policy of 49 U.S.C. 10101. Specifically, it could facilitate the expeditious handling and resolution of proceedings (49 U.S.C. 10101(15)); support fair and expeditious regulatory decisions when regulation is required (49 U.S.C. 10101(2)); and help to maintain reasonable rates where there is an absence of effective competition (49 U.S.C. 10101(6)). The proposed voluntary arbitration program could also complement congressional directives in the STB Reauthorization Act, which requires that the Board “maintain 1 or more simplified and expedited methods for determining the reasonableness of challenged rates in those cases in which a full stand-alone cost presentation is too costly, given the value of the case,” and that it “maintain procedures to ensure the expeditious handling of challenges to the reasonableness of railroad rates.” 49 U.S.C. 10701(d)(3), 10704(d). A voluntary arbitration program for small rate disputes could provide an additional option beyond the Board's existing formal rate reasonableness processes designed for relatively small disputes (

i.e.,

Three-Benchmark and Simplified Stand-Alone Cost (Simplified-SAC) tests).

In order to allow stakeholders to fully compare the arbitration and FORR proposals, as emphasized above, the Board is simultaneously with this NPRM issuing a supplemental notice of proposed rulemaking (

FORR SNPRM

), published elsewhere in this issue of the

Federal Register

, reflecting modifications in the FORR rule proposed in

Final Offer Rate Review,

EP 755 (STB served Sept. 12, 2019). In addition to noticing those modifications,

FORR SNPRM

addresses comments received by the Board in response to the original notice of proposed rulemaking and the ex parte meetings conducted in the FORR docket. Whether to adopt any voluntary rate review arbitration program, how such a program might interact with the process proposed in the FORR docket, and whether to adopt the proposed FORR process will be guided by the parallel consideration of both proposals.

Because the arbitration of disputes before the Board is voluntary, fundamental to the Board's determination whether to enact the arbitration proposal in this docket will be a commitment of all Class I carriers to agree to arbitrate disputes submitted to the program for a term of no less than five years. This initial commitment would promote the goal that shippers have similar access to rate review procedures. The importance of this initial commitment is amplified by the carriers' opposition to FORR and the likelihood that they would seek to challenge adoption of that process. (

See

Pet'rs Suppl. 13 (stating that the FORR process would be “subject to immediate legal challenges”).) If all Class I carriers consent to participate in this proposed arbitration program for five years, and the Board determines to adopt the program after stakeholder consideration and input, shippers served by Class I carriers would be afforded a new avenue for potential rate relief, and with the certainty of carrier engagement.

As stated in the FORR proceeding, rate cases filed to date indicate that complainants' rate concerns relate primarily to Class I carriers.

Final Offer Rate Rev.,

EP 755, slip op. at 16-17. While the Board views participation by the Class I carriers as particularly important, nothing in this proposal would prohibit Class II and Class III carriers from voluntarily participating in the arbitration process on a term basis. As explained below, Class II and Class III carriers would also be permitted to participate on a case-by-case basis.

Further, given the voluntary nature of the arbitration of rate disputes, any such program is not likely to succeed unless stakeholders find the program's important elements acceptable. Accordingly, the voluntary arbitration program being proposed here focuses on incentivizing railroad and shipper participation

and ensuring that the program is fair and balanced. To achieve this, the Board's proposal modifies aspects of the program proposed by Petitioners. Although Petitioners have “reserve[d] their right” not to participate in arbitration if any modifications are made to their proposal, (Pet. 21), certain elements of Petitioners' proposal would have made the program unbalanced or simply are not feasible. However, the program proposed here is based on law and sound policy and still includes features that carriers should find attractive. By the same token, the Board also views its proposed voluntary arbitration program as including features that shippers should find beneficial, particularly those shippers that consider the Board's current processes too expensive and time consuming given the size of their disputes.

Although the Board uses the term “shipper” throughout the decision for convenience, the Board has made clear that parties other than shippers have standing to bring rate challenges.

See Publ'n Requirements for Agri. Prods.,

EP 526 et al., slip op. at 7-8 (STB served Dec. 29, 2016). For this reason, the Board uses the term “shipper/complainant” in the proposed regulations.

See

below.

The Board will consider all comments received on the proposal set forth in this decision and the information gathered during any requested ex parte meetings in this docket,

along with the comments filed and ex parte discussions that have taken place in the FORR docket, before deciding its next actions with respect to both proceedings.

Pursuant to 49 CFR 1102.2(g), ex parte communications with Board Members in informal rulemaking proceedings are permitted after the issuance of a notice of proposed rulemaking and until 20 days before the deadline for reply comments.

The Board discusses below the significant features of the voluntary, small rate case arbitration program that it is proposing here. The proposed rule is set out below.

I. Authority for a Separate Small Rate Case Arbitration Program

The Petition calls for the Board to establish a new arbitration program under a new set of regulations at 49 CFR

part 1108a, which would function alongside the Board's existing regulations at 49 CFR part 1108. Petitioners argue that the Board may establish such a program pursuant to its general authority at 49 U.S.C. 1321, and that the program would therefore be “separate and distinct” from the requirements of 49 U.S.C. 11708. (Pet. 19, 22.)

Specifically, Petitioners contend that the Board has satisfied 49 U.S.C. 11708 through its most recent amendments to 49 CFR part 1108, and suggest that because the Board has one set of compliant procedures, it is now free to adopt procedures that “differ from the requirements” of 49 U.S.C. 11708. (

Id.

at 3, 19.) They argue that the specific elements of their proposed program will necessarily be legal so long as the parties voluntarily consent to the arbitration, and so long as the program “is limited to deciding issues within the Board's jurisdiction to decide.” (

Id.

at 19-20.)

(

see also

Joint Shippers Suppl. 15 (expressing support for NGFA's clarification).)

The Rate Increase Constraint was proposed by the RRTF.

See

RRTF Report 36-39. The Board held a hearing on revenue adequacy issues raised in the RRTF Report on December 12-13, 2019, and asked parties to address the RRTF recommendations—including the Rate Increase Constraint—in their written testimony and at the hearing.

See Hr'g on Revenue Adequacy,

Docket No. EP 761

et al.

(STB served Sept. 12, 2019).

In their supplemental filing, Petitioners do not agree with NGFA's suggestion that pending arbitrations be allowed to continue if there is a withdrawal for a change in the law. (Pet'rs Suppl. 12.) However, they do not object to shippers being allowed to challenge whether a change in the law constitutes a “material change,” and do not object to clarifying that, once a carrier has withdrawn from the proposed program, a shipper would be allowed to challenge under any of the Board's then-available rate-challenge methodologies, including FORR, if the Board were to adopt that process. (Pet'rs Suppl. 6-7.) Petitioners propose that any party would have five business days to challenge the withdrawal, and the carrier would have 14 calendar days to file a reply. (

Id.,

App. A at 5.) The Chairman or an administrative law judge (ALJ) would have 14 calendar days to issue a decision, and any pending arbitrations would be stayed until the withdrawal issue is resolved. (

Id.

)

The Board will propose a provision allowing any party to withdraw due to a material change in the law. It would be reasonable for a carrier or shipper to withdraw from the proposed program, including any pending arbitration disputes, should the Board materially change the rules of that program or one of its methodologies, which could inform the arbitrators' decision.

However,

the Board will propose that this withdrawal right would not apply to the adoption of a FORR process. In other words, carriers could not exercise the right to withdraw due to change in law if FORR is adopted at some point after the arbitration program has begun. Under the Board's proposal, carriers participating in the arbitration program would be exempt from FORR; as such, the potential subsequent adoption of FORR would not amount to such a regulatory change that would warrant allowing railroads the ability to reconsider their participation in the arbitration program.

Although Petitioners propose the change-in-law opt-out right only for Board-enacted changes to the regulatory scheme, the Board sees no reason that the right should not also apply if there is a change in law resulting from Congressional or judicial action.

Additionally, the proposed provision allowing for withdrawal where the Board materially changes an existing rate reasonableness methodology or creates a new rate reasonableness methodology would

not

be triggered where a litigant proposes and/or the arbitration panel adopts or applies any methodology—novel or otherwise—to resolve a particular arbitration brought under this proposed program. Nor would it be triggered where the arbitration panel adopts or applies such a methodology and its decision is affirmed by the Board under the limited grounds for appellate review described in Section XI,

infra.

As discussed in Section IX,

infra,

parties would be able to urge the arbitration panel to consider modified or entirely new rate review methodologies but, of course, would have to persuade the arbitrators that such methodologies comply with the statutory provisions governing both the panel's decision and reasonableness of rates.

The Board disagrees with NGFA's suggestion that, if the Rate Increase Constraint is formally adopted by the Board as a rate review methodology, it should also not be considered a change in law allowing carriers to opt out. Adoption of this constraint would constitute a significant change in the regulatory scheme for railroad rates and, as such, the Board agrees that carriers should be given the opportunity to withdraw from the proposed small rate case arbitration program if the change were adopted. Similarly, the Board also will not propose NGFA's suggestion that all pending arbitrations continue if a carrier withdraws from the program due to a change in law. A change in the law that occurs after an arbitration has begun could impact how a party would have pleaded its case or whether it would have even participated in arbitration to begin with; accordingly, where there is a change in law falling under the applicable provision, pending arbitrations should be terminated if a party exercises its withdrawal right. However, parties are invited to comment on whether the Board should instead allow pending arbitrations to proceed, so long as the change in law is not applied to such pending arbitrations.

The Board will also propose that, if a party seeks to withdraw from the small rate case arbitration program based on a change in the law, other parties be permitted to challenge the withdrawal on the ground that the change is not material.

See

proposed § 1108.23(c)(2)(ii). There are many scenarios in which the materiality of a change in the law could be in dispute. Petitioners state that they have no objection to this proposed modification. (Pet'rs Suppl. 6.) However, the Board will make some adjustments to Petitioners' proposed procedures for challenging materiality. Instead of permitting a party 30 days to withdraw due to a change in law, the Board will propose a 10-day window.

Parties should be able to decide whether to continue participating in the proposed small rate case arbitration program fairly quickly after a change in law is adopted. So that other parties are aware of a party's withdrawal, the Board will propose that it post a copy of the notice on its website and that the carrier serve a copy on any party with which it is currently engaged in arbitration.

Unless otherwise specified, any reference to “day” in the decision or regulations refers to calendar days.

Additionally, the Board will clarify that an objection to a party's withdrawal should be filed as a petition to the Board in a formal docket. Instead of providing five days for an opposing party to challenge a carrier's withdrawal due to a change in the law, the Board will propose a 10-day window. The Board will also propose that the withdrawing

party have five days to reply to the petition (instead of the 14 days proposed by Petitioners) and that the petition shall be resolved by the Board within 14 days from the filing deadline for the withdrawing party's reply. These timeframes are all reasonable and will provide for expeditious resolution of the relevant issues. The Board will also propose that such petitions be decided by the Board, rather than the Chairman or an ALJ, as the impacts of a decision regarding materiality could be widespread. The Board invites parties to comment on whether additional modifications are needed.

3. Case Volume

Petitioners propose that a railroad that has opted into the proposed small rate case arbitration program on a term basis may also withdraw its consent to arbitrate under the program if it faces more than 25 arbitrations in a rolling 12-month period, or more than 10 simultaneous arbitrations. (Pet. 18.) Petitioners note that they do not expect that volume, but they want to be able to reassess their long-term commitment to the program should they face so many simultaneous arbitrations. (

Id.

at 26.) Under their proposal, withdrawal would not affect arbitration disputes under the proposed program in which the parties have at least started their first mediation session,

but would result in the discontinuance of all disputes that have not yet progressed to that stage. In response, NGFA argues that withdrawal should not result in the dismissal of any pending arbitrations.

See infra

Section IV.B.

In its reply, NGFA does not specify if its objects to the termination of pending arbitrations based on withdrawal due to a change in the law or case volume. The Board assumes that it opposes termination of pending arbitrations in both instances.

The Board will not propose a right to withdraw from the arbitration program based on case volume but will instead propose limiting the number of arbitrations that a carrier can be subject to during a rolling 12-month period. Because participation in Board-sponsored arbitration is voluntary, as required under 49 U.S.C. 11708, and because this program would be new, it is reasonable that a carrier who has agreed to participate for a term of years only be required to arbitrate a certain number of cases. However, rather than allowing carriers that reach such a limit to withdraw from the program, the Board believes that it would be more appropriate for carriers to remain in the program but without having to face additional arbitrations. Accordingly, the Board will propose that arbitrations that would exceed the 25-cases/12-month limit would be postponed until such time as they would not exceed the 25-case/12-month limit. In addition, under the Board's proposal, cases will only count towards the 25-arbitration/12-month limit discussed above upon commencement of the first mediation session or, where one or both parties elect to forgo mediation (as discussed below in Section IV.B), submission of the joint notice of intent to arbitrate to the Board.

See infra

Section IV.C. The Board sees no reason an arbitration should count toward the case limit if it is concluded before parties have expended much time or resources.

Regarding the Petitioners' proposal to allow carriers to withdraw after reaching 10 simultaneous arbitrations, this strikes the Board as a far lesser threshold and a more likely occurrence. Accordingly, the Board will not include a right to withdraw for instances in which there are 10 simultaneous arbitrations (or require that any additional arbitrations above this amount be postponed). The one-case per shipper restriction (discussed below in Section III) and the 25-case limit within a 12-month period should be sufficient to ensure that a carrier is not inundated with arbitrations, while also providing shippers access to an alternative dispute resolution process.

To implement the 25-case/12-month limit, the Board will propose that where a carrier receives a notice of intent to arbitrate from a shipper that would initiate an arbitration exceeding the limit, the carrier may inform the Board's Office of Public Assistance, Governmental Affairs, and Compliance (OPAGAC), as well as inform the shipper who initiated the arbitration. Under the proposal, that arbitration (and any arbitrations that are subsequently initiated) would be postponed until the number of arbitrations is once again below the 25-case/12-month limit. OPAGAC would notify the shippers whose arbitrations are postponed.

III. One-Case Limit

Petitioners propose that a shipper not be permitted to bring more than one arbitration at a time against a participating railroad. (Pet. 11.) Petitioners contend that this limitation is needed to prevent shippers from avoiding the relief cap by splitting or “disaggregating” a case that could be brought as a single rate challenge into multiple cases. (

Id.

at 11, 27.) They propose that shippers would, however, be permitted to challenge rates for multiple traffic lanes in the same arbitration. (

Id.

at 11.) They propose that once the arbitration panel issues its decision, the shipper would be free to bring another small rate case arbitration against that same participating carrier. (

Id.

at App. A at 5.)

Olin and U.S. Wheat argue that the one-case limitation is one of several reasons why proceeding with FORR is preferable. (Olin Reply 11; U.S. Wheat Suppl. 7.) Olin notes that, because of this limitation, shippers would have to aggregate separate claims, yet the rate cap would apply regardless of whether a shipper is challenging a single rate or multiple rates, whereas the proposed FORR process includes no such limitations. (Olin Reply 11.) In their supplemental filing, Petitioners respond that shippers are not required to aggregate claims, and that the one-case limit is intended instead to prevent the improper disaggregation of large rate claims to take advantage of the arbitration process. (Pet'rs Suppl. 18-19.)

NGFA states that the Board should clarify that the one-case limit prevents the filing of an additional case against the same carrier only up until the point at which the original arbitration decision in the first case is issued, regardless of whether that decision is appealed. (NGFA Reply 12;

see also

Joint Shippers Suppl. 10.) The text of Petitioners' proposed regulations (which the Board includes in its proposal) states that the limit resets “when the arbitral panel issues its arbitration decision.” (Pet., App. A at 5.) Accordingly, NGFA's request for further clarification does not appear to be necessary. However, the Board will propose language stating that the limit also resets when an arbitration is withdrawn or dismissed, including instances in which the parties reach a settlement.

See

proposed § 1108.24(c).

The Board will propose a one-case limit as part of the proposed arbitration program. The Board has noted its concern about the possibility of shippers filing a number of small rate cases when it would be more appropriate for those rates to be challenged as part of one larger case.

See Simplified Standards,

EP 646 (Sub-No. 1), slip op. at 32-33 (“The Board has ample discretion to protect the integrity of its processes from abuse, and we should be able to readily detect and remedy improper attempts by a shipper to disaggregate a large claim into a number of smaller claims, as the shipper must bring these numerous smaller cases to the Board.”);

see also

E.I. DuPont de Nemours & Co.

CSX Transp., Inc.,

Docket No. NOR 42099 et al., slip op. at 3 (STB served Jan. 22, 2008). In those cases, the Board indicated that it would monitor shipper filings to ensure that no such abuse of its processes occurs. In the arbitration context, however, this would not be possible. As discussed below (

see infra

Section XI), arbitrations would be kept confidential from the Board (at least until an appeal), so the Board would be

unaware of what rates a shipper has currently challenged. It would also be impractical to leave such oversight to arbitration panels. Again, arbitrations would be confidential and presumably handled by different arbitration panels, making it difficult for any given panel to assess aggregation issues.

Concerns over disaggregation of rate challenges aside, a one-case limit would be beneficial by ensuring that more shippers have the opportunity to participate in the arbitration program. For example, if a single shipper were to file 25 rate arbitrations against a carrier simultaneously and thus reach the volume cap (discussed above), that would delay other shippers from pursuing their own arbitrations against that carrier because those cases would be postponed. In general, limiting the number of cases brought would also allow the Board and stakeholders to develop familiarity with the arbitration process gradually.

The Board acknowledges that a one-case per-carrier-limit would affect the relief available to shippers (at any given time) that want to bring multiple cases against the same carrier simultaneously. However, the Board anticipates that the shippers most likely to use this arbitration process, including its limitations on relief, may be less likely to bring multiple cases against the same carrier. As the Joint Shippers state, “many small shippers probably would not have enough qualifying captive lanes to bring multiple disputes.” (Joint Shippers Suppl. 6.) Moreover, shippers would still be able to arbitrate multiple cases against different carriers at the same time. Finally, for those shippers that want to bring multiple cases for rates charged by the same carrier, the Board's formal rate reasonableness procedures remain available, including those designed for smaller disputes.

However, the Board invites parties to comment on the impact and appropriateness of the proposed one-case limit and whether there are other methods of dealing with the issue of disaggregation. For example, other possible approaches include allowing a shipper to bring two (or more) concurrent arbitrations so long as the lanes at issue do not share facilities, or permitting a second arbitration to be brought after the close of the evidentiary record—rather than awaiting the decision of the arbitration panel—in a pending arbitration (thereby allowing a second arbitration to be brought sooner).

The Board notes that although shippers would not be able to challenge rates in simultaneous arbitrations under the one-case limit, there would be no limit on the number of rates they could challenge within a single arbitration, though the $4 million/two-year relief cap would apply. The Board further notes that shippers are not prohibited from challenging multiple rates charged by the same carrier in sequential arbitrations.

IV. Pre-Arbitration Procedures and Timelines

A. Initial Notice

Petitioners propose that a shipper wishing to arbitrate a small rate dispute using the proposed program submit to the participating carrier a written notice of its intent to arbitrate, which must include information sufficient to indicate the dispute's eligibility for arbitration.

The Board agrees, and it will propose that the arbitration process be initiated by a shipper's submission of a written notice (referred to herein as the Initial Notice) to the participating carrier that includes information demonstrating that the dispute qualifies for the proposed small rate case arbitration program. The Initial Notice would serve as the formal initiation of the arbitration process and would also ensure that shippers are participating in arbitration voluntarily, consistent with section 11708. (Carriers' voluntary participation would be evidenced through their opt-in notice,

see supra

Section II.A.)

However, unlike Petitioners' proposal, the Board will propose that the shipper also submit a copy of the Initial Notice to OPAGAC. This would allow OPAGAC, which oversees the agency's alternative dispute resolution processes, to be informed when the arbitration process is being used as it happens (rather than learning about it after the fact). As noted above, this would also help OPAGAC monitor the number of pending arbitrations to determine if the 25-cases/12-month limit has been reached.

However, specific information regarding pending arbitrations, including the identity of the parties, would not be disseminated within the Board beyond the alternative dispute resolution functions within OPAGAC. The Board will propose that the Initial Notice be submitted by email to

rcpa@stb.gov.

As noted above, in instances where the Initial Notice initiates an arbitration exceeding the 25-case/12-month cap, the Board will propose that the carrier may notify OPAGAC, as well as the shipper who submitted the Initial Notice to the carrier. Under the Board's proposal, OPAGAC would then confirm that the cap has been reached and inform the shipper (and any other subsequent shippers) that the arbitration is being postponed, along with an approximation of when the arbitration can proceed and instructions for reactivating the arbitration once the carrier is again below the cap.

The Board also will propose that OPAGAC provide a letter to the parties confirming initiation of the process. As discussed in more detail below, the Board will further propose that the Initial Notice and the OPAGAC confirmation letter be kept confidential.

B. Mediation

Petitioners propose that, following the shipper's submission of the Initial Notice, the parties then engage in pre-arbitration mediation, conducted outside of any Board process and directed by a mediator designated by the parties. Under Petitioners' proposal, the mediation period would be 30 calendar days, beginning on the date of the first mediation session. (Pet., App. A at 5.) Olin responds that requiring mediation would only serve to establish another roadblock to timely rate relief, and notes that the Board only proposed requiring mediation under the FORR process if both parties consent. (Olin Reply 10.) NGFA proposes that parties be allowed to agree by mutual consent to waive mediation. (NGFA Reply 9.) It also proposes that mediation last no more than 30 days, whereas Petitioners suggest that it last a minimum of 30 days. (

Id.

) Lastly, NGFA proposes that the Board liberally grant requests to extend the mediation period if the parties agree. (

Id.

) In its supplement, Petitioners agree with NGFA's proposed changes, but note their belief that it would not be necessary for the parties to obtain extensions of the mediation period from the Board. (Pet'rs Suppl. 5.)

The Board observes that a mediation requirement may help facilitate settlement. If a dispute can be settled through mediation, it would allow parties to avoid the expense of arbitration. However, the Board also agrees with several shipper interests that, in some instances, the parties may have already engaged in extensive negotiations and therefore may wish to proceed directly to arbitration. (NGFA Reply 9; Olin Reply 10.) The Board will propose allowing parties to engage in mediation prior to the arbitration phase if they mutually agree, but they will not be required to do so. If one or both parties decide that they do not want to mediate, they may proceed directly to arbitration. The Board notes that this approach does not mirror the proposal in FORR, where the agency is proposing that mediation be mandatory, consistent with existing rate reasonableness procedures used in adjudications before the Board.

See FORR SNPRM,

EP 755, slip op. at 38 (STB served Nov. 15, 2021). However, arbitration, like mediation, is itself a form of alternative dispute resolution, and requiring parties to engage serially in two forms of alternative dispute resolution as an alternative to adjudication could

discourage parties from using the arbitration process in some instances. In addition, allowing parties the option of bypassing mediation would expedite the process, which is one of the central goals of arbitration. Parties are invited to comment on whether, alternatively, the mediation phase should be eliminated entirely.

The Board also agrees that, as a default, a 30-day mediation period would provide sufficient time for the parties to mediate while also ensuring that the overall arbitration process progresses. Accordingly, the Board will propose that the default mediation period shall be 30 days, measured from the date of the first mediation session, but that the parties may agree to a longer or shorter mediation period. As for timing, the Petition does not state how long after the Initial Notice is filed that mediation should begin. Accordingly, the Board will propose that the parties would be required to schedule their first mediation session “promptly and in good faith” after the Initial Notice is submitted to the participating carrier.

See

proposed § 1108.25(b). Parties are invited to comment on whether a more defined period should be adopted. As for extensions of the mediation phase, because the mediation would not be conducted by the Board, there would be no need for the parties to seek Board approval of an extension of the mediation period.

C. Joint Notice To Arbitrate

Petitioners propose that, if mediation is unsuccessful, the parties submit to OPAGAC a joint notice of their intent to arbitrate under the proposed program. (Pet., App. A at 5.) The Board will propose that the parties file a joint notice to arbitrate (referred to herein as the Joint Notice)—which would include the basis for the Board's jurisdiction over the dispute and the basis for the parties' eligibility to participate in the proposed small rate case arbitration program

—with the Board when mediation is unsuccessful or if the parties do not agree to mediate. As with the Initial Notice, specific information regarding pending arbitrations that is contained in the Joint Notice, including the identity of the parties, would not be disseminated within the Board beyond the alternative dispute resolution functions within OPAGAC. The Board will also propose that the Initial Notice be submitted by email to

rcpa@stb.gov.

Because the Board will propose that parties not be required to participate in mediation, the Board does not propose to require that the parties state in the Joint Notice that they have engaged in mediation.

Petitioners further propose that the Joint Notice include “the parties' agreement to arbitrate under the rules of this part.” (Pet., App. A at 6.) It is unclear if the Petitioners intended for this requirement to simply mean a general statement that they agree to arbitrate or a written arbitration agreement, as is required in the existing arbitration regulations.

See

49 CFR 1108a.5(g). Regardless, the Board will not propose that either requirement be part of the Joint Notice, so as to maintain the confidentiality of the Joint Notice. (

See infra

Section XI-B.)

Petitioners also propose that the Joint Notice indicate the “requested relief,” which presumably would include whether the parties have agreed to a different relief cap than set forth in the regulations. (Pet., App. A at 5-6.) As discussed in Section IX below, the Board will propose a relief cap of $4 million per arbitration. The parties' decision on whether to agree to a different relief cap may not be known at the time they submit the Joint Notice. Accordingly, the Board will propose that any agreement to a different relief cap be noted in the confidential summary filed at the conclusion of the arbitration (

see infra

Section XI), rather than in the Joint Notice.

The Petition includes no deadline for filing the Joint Notice after mediation has concluded. The Board will propose that the Joint Notice be submitted not later than two business days following the end of mediation (even if mediation concludes before the end of the 30-day mediation period).

See

proposed § 1108.25(c)(1). This would ensure that the process under the arbitration program continues to move forward in a timely manner. The Board will propose that the Joint Notice be submitted by email to

rcpa@stb.gov.

V. Arbitration Panel Selection and Commencement

The Petition proposes that arbitration under the proposed program be conducted by a panel of three arbitrators, the selection of which would not be limited to the arbitration roster established at 49 CFR 1108.6(b). (Pet. 12.) Petitioners acknowledge that the existing arbitration program at part 1108 requires selection of an arbitrator from the Board's arbitration roster, but contend that permitting parties to select arbitrators not on the Board's roster would allow them to select an arbitrator with particular expertise in the market for the relevant commodity, an arbitrator with whom the party had a good experience in a previous non-rate arbitration, or another qualified individual that a party believes would be qualified to arbitrate the case, regardless of that person's inclusion on the Board's arbitration roster. (

Id.

at 23-24.) Petitioners believe that such flexibility would remove a potential barrier to parties wishing to arbitrate their rate dispute. (

Id.

at 24.)

Under Petitioners' proposal, each party would select one arbitrator, and the two party-selected arbitrators would then select the third arbitrator from a list compiled jointly by the parties. (

Id.

) The Petition proposes that each party may object to the other's selected arbitrator “for cause,” including, among other things, a conflict of interest or actual or perceived bias toward the objecting party. (

Id.

) The arbitrator selected by the two party-selected arbitrators would serve as the panel's lead arbitrator, and would be responsible for establishing all rules deemed necessary for each arbitration proceeding—including those with regard to discovery, the submission of evidence, and the treatment of confidential information—as well as generally ensuring that the arbitration procedures are followed. (

Id.,

App. A at 6-7.) Any disputes over the selection of party-appointed arbitrators or the lead arbitrator would be resolved by the Chairman. (

Id.

) These processes would also be used to replace an arbitrator unable to serve due to incapacitation. (Pet., App. A at 6-7.) Each party would pay the cost of its selected arbitrator, and the parties would share the cost of the lead arbitrator. (

Id.

)

Olin responds that the fact that the parties would have to pay for the arbitrators and could object to each other's arbitrators on grounds not provided for under the existing arbitration rules (such as “perceived bias or animosity” and “adverse business dealings”) make the proposed program inferior to FORR. (Olin Reply 11.) Similarly, U.S. Wheat argues that having to pay for arbitrators makes arbitration more costly than FORR. (U.S. Wheat Suppl. 6.)

A. Eligible Arbitrators

The Board agrees that permitting parties to select arbitrators who are not on the Board's arbitration roster may better incentivize parties to participate in the small rate case arbitration program, and so will propose allowing parties to select arbitrators not on the Board's roster. Although section 11708 provides for the selection of arbitrators possessing certain qualifications from the Board's arbitration roster as a default, that default applies only where the parties have not “otherwise agreed” to a different selection process. In other words, as Petitioners point out, section

11708 explicitly permits the use of non-roster arbitrators by mutual consent. The Board will propose requiring carriers and shippers to affirmatively state their agreement to potentially use non-roster arbitrators in their opt-in notice and the Initial Notice, respectively.

Under section 11708(f)(1), to be included on the Board's roster of arbitrators, a person must have “rail transportation, economic regulation, professional or business experience, including agriculture, in the private sector.” The Board's regulations further require that “[p]ersons seeking to be included on the roster must have training in dispute resolution and/or experience in arbitration or other forms of dispute resolution.” 49 CFR 1108.6(b). However, as discussed above, because parties would not have to select arbitrators from the Board's roster under the proposed program, these requirements would not necessarily apply to arbitrations under proposed 49 CFR part 1108, subpart B. Although the proposed regulations do not include specific qualification requirements for non-roster arbitrators, the Board invites comment on whether the 49 CFR 1108.6(b) qualifications (or others) should be required for arbitrators under the proposed program, particularly for the lead arbitrator in light of their responsibilities concerning discovery, evidence, and confidentiality.

B. Arbitrator Selection

The Board will propose allowing parties to object to the opposing side's selected arbitrator for cause. The bases for objection proposed by Petitioners would be consistent with section 11708. Moreover, because parties would not necessarily select arbitrators that have been approved by the Board via its roster, the parties should have the ability to seek to disqualify individuals where there are substantial and legitimate questions as to whether such persons can satisfy the independence requirements of section 11708(f)(2).

In response to Olin's concern, the Board will propose language that specifically ties for-cause objections to the independence requirements of section 11708(f)(2).

See

proposed § 1108.26(b)(1).

The Board notes that Petitioners propose that parties may choose party-appointed arbitrators “without limitation.” (Pet., App. A at 7.) Theoretically, this would allow a party to select one of its own employees. However, if a party were to do so, the opposing party could object and seek to have that individual stricken for cause over concerns about the individual's ability to “perform their duties with diligence, good faith, and in a manner consistent with the requirements of impartiality and independence.” Section 11708(f)(2). Nonetheless, the Board expects that for-cause challenges would be invoked rarely, such as when an arbitrator has financial ties to a party.

The Board will propose that any for-cause objections be ruled on by an ALJ rather than the Chairman.

This would help ensure that the Chairman does not become aware of the arbitration during its pendency. The ALJ would also be well-equipped to rule on this matter. The Board will propose that the hearing before the ALJ can still be held telephonically (or virtually) and under the same expedited timelines proposed by Petitioners. Parties raising objections would inform OPAGAC, which will then help arrange the hearing with the ALJ.

The Board has a Memorandum of Understanding with the Federal Mine Safety and Health Review Commission to employ the services of its ALJs on a case-by-case basis to perform discrete, Board-assigned functions such as adjudicating discovery disputes in pending Board cases.

The Board will propose that the ALJ's ruling on the objections be issued in a short, written order rather than a ruling during the telephonic or virtual conference. As discussed in more detail in the section on confidentiality,

see infra

Section XI, the Board will propose that the ALJ's order be deemed confidential. The Board also invites parties to propose alternative means of addressing for-cause objections, such as having the objections ruled on by one of the agency's directors or if they would prefer such rulings to be made by the Chairman.

Additionally, the Board will not include Petitioners' proposal that the Chairman select the lead arbitrator if the party-appointed arbitrators are unable to agree. Such a determination is best left to the party-appointed arbitrators and would ensure that the Chairman does not become aware of the arbitration during its pendency, as mentioned above. Accordingly, the Board will propose that, if the party-appointed arbitrators cannot agree, they shall select from the Board's roster of arbitrators using the alternating strike method set forth in 49 CFR 1108.6(c).

See

proposed § 1108.26(c)(2). Parties may suggest alternative methods in their comments.

C. Cost of Arbitrators

Under section 11708(f)(4), “[t]he parties shall share the costs incurred by the Board and arbitrators equally, with each party responsible for paying its own legal and other associated arbitration costs.” As such, the Board will propose that parties pay the cost for their own arbitrator, consistent with the requirements of 49 U.S.C. 11708(f)(4). Olin and U.S. Wheat argue that this is a cost that shippers would not incur in a FORR case. However, the Board notes that parties are required to pay the costs for arbitration under section 11708(f)(4) and 49 CFR part 1108, subpart A.

See

49 CFR 1108.12(b).

If the Board ultimately adopts this proposed arbitration program, it could consider the possibility of creating a system in which the agency pays the party-selected arbitrator's costs for parties that are able to demonstrate financial hardship.

The statute does not specify how “shar[ing] the costs . . . equally” would apply in arbitrations in which there are three or more parties. Under Petitioners' proposal, the shipper and defendant “carrier(s)” would each pay one-half of the cost of the lead arbitrator. This means that if a shipper challenges a multi-carrier rate, the shipper would bear 50% of the cost of the lead arbitrator while the defendant carriers would split the remaining 50% cost among themselves. However, this may be contrary to Congress' intent. For example, if a shipper challenges an interline rate by two carriers, “shar[ing] the costs . . . equally” could be interpreted as meaning that the parties should divide the costs three ways (with each party paying an equal third). Given the ambiguity in the statute, the Board will propose that parties to arbitration “will share the cost of the lead arbitrator equally,” mirroring the language from the statute.

See

proposed § 1108.26(c)(4). This language would give the parties in an arbitration with three or more parties flexibility to negotiate each party's share of the lead arbitrator's cost on either a per-side or per-party basis.

See

49 CFR 1108.12(b) (adopting the exact text of the statutory language regarding arbitration costs).

D. Selection Period

The Board will propose adopting Petitioners' suggested deadlines for arbitrator selection. (

See

proposed § 1108.26.) The Board acknowledges that 49 U.S.C. 11708(e)(1) states that “[a]n arbitrator or panel of arbitrators shall be selected not later than 14 days after the date of the Board's decision to initiate arbitration.” Under the proposed program, arbitrator selection may not be complete within 14 days if the parties choose to engage in mediation. However, 49 U.S.C. 11708(e)(4) permits the Board to extend the timelines upon the agreement of all parties in the dispute. Accordingly, the Board will propose that, as part of its opt-in notice, a railroad provide the Board with a statement that it agrees to extend the 14-day deadline in any arbitration brought under the program. In addition, the

Board will propose that a shipper include, as part of the Initial Notice that is served on the participating carrier and OPAGAC, a statement that it likewise agrees to extend the arbitrator selection deadline. The letter from OPAGAC confirming initiation of the arbitration process (

see supra

Section IV-A) would include a confirmation of the parties' agreement to an extension (as well as their agreement to allow for the selection of non-roster arbitrators).

E. Arbitration Commencement

The Board will propose that, within two business days after the arbitration panel is selected, the lead arbitrator shall commence the arbitration process in writing, consistent with Petitioners' proposal. (Pet., App. A at 7.) The Board notes that 49 U.S.C. 11708(c)(1)(D) requires that arbitration commence not later than 40 days after the date on which a written complaint is filed “or through other procedures adopted by the Board in a rulemaking proceeding.” Under the Board's proposal, it is possible that the arbitration phase may not begin within 40 days from the submission of the Initial Notice, due to the presumptive 30-day mediation requirement (which, again, the parties can forgo if they do not mutually consent). However, the Board finds no inconsistency with the 40-day statutory requirement, as it considers the mediation phase to be part of the overall “arbitration process.”

F. Arbitration Agreement

Petitioners propose a provision that would require that the rules of the Small Rate Case Arbitration Program be incorporated by reference into any arbitration agreement into which the parties enter. (Pet., App. A at 6 (proposed § 1108a.5(d)).) Petitioners' proposal appears to make the need for an arbitration agreement discretionary. However, an agreement signed by all participants to the arbitration helps ensure that the issues for the arbitration panel are clear and the participants take the time to familiarize themselves with the arbitration rules. Accordingly, the Board will propose a requirement that the parties, with the help of the arbitration panel, create a written arbitration agreement.

See

proposed § 1108.27(b). The Board has modeled this provision on the regulation from the existing arbitration process.

See

49 CFR 1108.5(g).

VI. Record-Building Procedures

Petitioners propose that, once the arbitrators are selected, there would be a 45-day period for the parties to engage in limited discovery and that the arbitration panel has discretion to set the schedule and prescribe the format of the parties' evidence. (Pet. 13, 15.) They also propose that the Board's Office of Economics (OE) provide unmasked confidential Carload Waybill Sample data—subject to certain commodity and time limitations—to each party within seven days of filing the Joint Notice with OPAGAC. (

Id.

at 13.)

A. Procedural Schedule

There appear to be several inconsistencies between what Petitioners propose in the body of their Petition and the text of their proposed regulations in Appendix A of their Petition regarding the procedural schedule for arbitration. For example, with respect to the 45-day discovery process, the Petition is unclear as to when that 45-day period would commence. (

Compare

Pet. 13 (the date on which the Joint Notice is filed)

with

Pet., App. A at 7 (the arbitration commencement date, which is two business days after the arbitration panel is appointed). With respect to terminology, the Petition refers to a 45-day period for discovery, (Pet. 13), but the proposed regulations themselves refer not to a discovery period but a 45-day “evidentiary phase,” (Pet., App. A at 7), which could presumably encompass more than just discovery (

e.g.,

submission of pleadings and evidence). In addition, Petitioners state that the procedural schedule for the submission of pleadings or evidence will be set by the “arbitration panel,” (Pet. 15), even though they have indicated that the “lead arbitrator” shall establish all rules deemed necessary for arbitration, including with regard to “the submission of evidence,” (Pet., App. A at 6-7).

The Board will propose a procedural schedule, consistent with section 11708, beginning with a 90-day evidentiary phase comprised of 45 days for discovery and an additional 45 days for the submission of pleadings or evidence. Although the arbitration panel may extend the “discovery sub-phase” upon request, the Board will propose that this would not automatically extend the entire evidentiary phase beyond 90 days.

See

proposed § 1108.27(c). In other words, if the “discovery sub-phase” were extended, the “submission sub-phase” would be correspondingly shortened. However, the parties may agree to extend the entire evidentiary phase or a party may request an extension from the arbitration panel.

Furthermore, the discovery/evidentiary phase would run from commencement of the arbitration (

i.e.,

two business days after the arbitration panel is appointed), not from the submission of the Joint Notice.

See

proposed § 1108.27(c)(2). This would ensure that the days needed for arbitration panel selection are not counted as part of the discovery/evidentiary phase. Accordingly, because the Board's proposed procedural schedule may not conclude within the timeline set forth in section 11708 if the parties engage in mediation, the Board will require carriers and shippers that utilize the proposed small rate case arbitration process to provide their consent to extend these deadlines in their opt-in notice and Initial Notice, respectively.

Petitioners propose that the evidentiary phase only be extended upon mutual agreement of the parties. (Pet., App. A at 7.) This may have been an effort by Petitioners to subject arbitration to rigid deadlines comparable to those proposed in

Final Offer Rate Review,

EP 755 (STB served Sept. 12, 2019). However, section 11708(e)(2) permits parties to make, and for the arbitration panel to grant, unilateral requests for an extension. In keeping with the statute, the Board will permit unilateral requests for extension, but notes its expectation that the arbitration panel will grant such extensions only in extraordinary circumstances and should attempt to adhere to the 90-day default evidentiary period set forth in the statute to the greatest extent practicable.

Olin states in its reply that Petitioners “seek to enable a defendant a fair opportunity to respond to the complainant shipper's case-in-chief, but fail to provide for shipper rebuttal and the right to be able to close the record,” as provided for under the proposed FORR process. (Olin Reply 12.) It is the Board's view that the lead arbitrator should set the schedule and format of the parties' evidence, as is currently provided for in the existing arbitration regulations.

See

49 CFR 1108.7(b). Arbitration is intended to be a flexible process, and the lead arbitrator will be able to set rules for the presentation that best suit the nature of the dispute, with the input of the parties. The lead arbitrator may, of course, confer with the other arbitrators on the panel regarding these matters.

B. Discovery Limits

The Board will propose limiting discovery to 20 written document requests, five interrogatories, and no depositions, as suggested by Petitioners. These limits would be broad enough to allow each party to obtain the information necessary to make its case to the arbitration panel, but not so broad as to place an extensive burden on the opposing party and necessitate a prolonged discovery phase.

Olin argues that discovery limitations are another instance where the proposed program would be inferior to the FORR

process which, as proposed, includes no limitations on discovery. (Olin Reply 11.) However, arbitration is intended to be a streamlined process that reduces the costs and time often associated with adjudication. The Board invites parties to comment on these proposed limits; in particular, parties are invited to comment on whether broader discovery should be allowed in light of the fact that the Board is proposing that shippers may use a non-streamlined presentation to establish market dominance.

See infra

Section VII.B.

Again, the Board will propose that the lead arbitrator—not the arbitration panel—be responsible for managing discovery, the submission of evidence, and the treatment of confidential information, consistent with the requirements of the existing arbitration process.

See

49 CFR 1108.7(b).

C. Waybill Data

Petitioners propose that each party in the arbitration automatically be given access to Waybill data that contains: (a) The most recent year, (b) movements with a revenue to variable cost (R/VC) ratio above 180%, (c) movements on the defendant carrier, and (d) movements with the same five-digit Standard Transportation Commodity Code (STCC) as the challenged movements. They propose that, should a party need more data than provided in this automatic release, it may “seek broader release of the STB Waybill Sample pursuant to existing procedures” or through discovery. (Pet. 13.)

The Joint Shippers respond that automatic release of Waybill data should not be limited to only one year. They note that the Board allows the release of up to four years of data in Three-Benchmark cases, as one year of data was deemed insufficient in those cases to provide a meaningful benchmark for comparison purposes. (Joint Shippers Suppl. 11.) The Joint Shippers also suggest that the Waybill data should not be limited to the same five-digit STCC as the commodity at issue. They note that some commodities, particularly chemicals, have similar characteristics and argue that guaranteeing access to Waybill Data at the two-digit STCC level will provide more relevant data for performing a comparative analysis. (

Id.

at 12.) The Joint Shippers further argue that the Waybill data should not be limited to only the defendant carrier but should be provided for all railroads, as limiting guaranteed access to only the defendant carrier's Waybill data could prevent shippers from relying on methodologies that consider movements on other railroads, including the ACC's proposed benchmarking methodology. (

Id.

) Finally, the Joint Shippers note that the carriers' suggestion that such Waybill data could be sought through the standard Waybill access procedures or discovery requests would “defeat the advantages of arbitration by adding to the time and expense.” (

Id.

)

In their supplemental filing, Petitioners state that they disagree that more Waybill data should be required as a matter of right. (Pet'rs Suppl. 18 n.27.)

1. Waybill Data: Time Period, Commodity, and Carrier

The Board will propose a provision that requires the automatic disclosure of confidential Waybill data to each party to an arbitration, but for the preceding four years rather than the one year proposed by Petitioners.

See

proposed § 1108.27(g). The Joint Shippers correctly point out that the Board allows parties in Three-Benchmark cases access to the unmasked Waybill Sample data of the defendant carrier for the four years that correspond with the most recently published Revenue Shortfall Allocation Methodology (RSAM) figures.

See Waybill Data Released in Three-Benchmark Rail Rate Procs.,

77 FR 15969 (March 19, 2021), EP 646 (Sub-No. 3) (STB served Mar. 12, 2012). As noted above, the arbitration panel would be required to consider the Board's methodologies for setting maximum lawful rates. Parties may wish to present arguments to the panel on what a reasonable rate would be under the Three-Benchmark methodology,

which would require the same access to the Waybill sample as permitted in such proceedings. Moreover, the Board has previously indicated that there are additional benefits to providing four years of data.

Waybill Data,

EP 646 (Sub-No. 3), slip op. at 5, 9 (finding that more years of data would increase the number of observations of comparable traffic and allow for an assessment of changes in railroad pricing over a period of years).

See Waybill Data,

EP 646 (Sub-No. 3), slip op. at 5 (“[A] party may, for example, select its comparison group from data across all four years and argue that a group selected from all four years is the most comparable to the movements at issue.”).

The Board will not, however, propose that the Waybill data that is automatically disclosed include commodities at the two-digit STCC level or railroads that are not parties to the arbitration. While arbitration disputes may involve attempts by shippers to demonstrate rate unreasonableness based on a comparison of rates between the arbitrating carrier and other carriers, not all arbitrations will involve such arguments. Given the importance of maintaining the confidentiality of the Waybill Sample, it would be imprudent to require the release of data that may not needed in some cases. Instead, if a party desires access to the Waybill Sample for data regarding other years, other commodity traffic of the defendant carrier, or other carriers, the Board will propose that the party file a request pursuant to 49 CFR 1244.9(b)(4). As with requests for Waybill data in other contexts,

see

49 CFR 1244.9(a), the Director of OE will determine if the request satisfies the requirements of § 1244.9(b)(4).

The Board does not permit complainants in Three Benchmark proceedings to include non-defendant carrier traffic in its comparison group.

See Simplified Standards,

EP 646 (Sub-No. 1), slip op. at 82-83. However, under the proposal here, shippers would be permitted to present new or modified rate reasonableness methodologies that consider additional market-based standards, among other factors. (

See infra

Section IX.A.1.)

See also Expanding Access to Rate Relief,

EP 665 (Sub-No. 2), slip op. at 14-15 (STB served Aug. 31, 2016) (seeking comment on whether to allow comparisons of non-defendant traffic). Accordingly, it is possible that requests for non-defendant carrier Waybill data could satisfy the criteria of 49 CFR 1244.9(b)(4), including that “[t]he STB Waybill Sample is the only single source of the data or obtaining the data from other sources is burdensome or costly, and the data is relevant to issues pending before the Board” or arbitration panel. 49 CFR 1244.9(b)(4)(i).

Whether determinations by the Director of OE for Waybill data under § 1244.9(b)(4) would be considered an “opinion” or “order” that must be made available for public inspection under the Freedom of Information Act (FOIA) is unclear.

See

5 U.S.C. 552(a)(2). The Board will propose that the Director's determinations would not be posted in a formal docket (as such determinations are for formal proceedings and “other user” requests), though parties are free to comment on whether or not publication is required under FOIA. It should be noted, however, that even if the Board were to conclude the Director's determinations do not need to be made public, such documents may nonetheless have to be made available in response to a FOIA request under 5 U.S.C. 552(a)(3). (

See infra

Section XI.B for further discussion of issues with confidentiality and FOIA in this proposed arbitration process.)

Lastly, the Board will not propose permitting shippers to obtain additional Waybill data through discovery, so that the Board can ensure that this data is properly protected.

2. Access to Waybill Data Under 49 CFR 1244.9

To effectuate both the automatic disclosure of confidential Waybill data and the potential release of additional Waybill data, the Board will propose

amending its existing Waybill access procedures.

See

below. The procedures, which are set forth at 49 CFR 1244.9, describe five categories of users that can request access to Waybill data and the procedures for each category of user to do so. While there is a category of user for “transportation practitioners, consulting firms, and law firms” to obtain access to Waybill data, they may only use this data “in preparing verified statements to be submitted in formal proceedings before the STB.” 49 CFR 1244.9(b)(4). The other available procedures similarly do not permit shippers to obtain such data for use in an arbitration.

Accordingly, the Board will propose modifying the language of § 1244.9(b)(4) to include parties to a small rate case arbitration as a category of user that may request and use such data in arbitrations under the proposed program.

Under 49 CFR 1244.9(b)(1), a railroad may obtain access to Waybill data for any traffic in which the carrier participated. Under 49 CFR 1244.9(c), “other users” may request access to the Waybill Sample, but that process requires the filing of a written request, publication of notice of the request in the

Federal Register

an opportunity for the carriers' whose data is being sought to file protests, a determination by the OE Director, and a right of parties to appeal the Director's decision. Even if such a request were processed on an expedited basis, it could take some months to reach a final resolution.

3. Other Issues Related to Waybill Data Disclosure

Petitioners propose that the Joint Notice be submitted to the Director of OE to facilitate timely preparation of the Waybill data. (Pet. 13;

id.,

App. A at 6.) The Board will propose that the Joint Notice be submitted to the Director, along with a letter containing the five-digit STCC information necessary for OE to produce the confidential Waybill Sample data subject to automatic disclosure, and that OE would provide this data within seven days.

Petitioners also propose that the parties to the arbitration would enter into a Confidentiality Agreement covering the arbitration generally, including access to the Waybill Sample. (Pet., App. A at 8.)

However, the release of confidential data from the Waybill Sample requires an agreement with the Board.

See

49 CFR 1244.9(b)(4)(v). Accordingly, the Board will propose that, as in formal proceedings and other waybill releases, OE provide to the parties a confidentiality agreement pursuant to 49 CFR 1244.9(b)(4)(v) that must be executed prior to release of any confidential Waybill data. Additionally, the Board will propose a requirement that the arbitrators sign their own agreement with the Board that would allow them to review confidential Waybill data that may be provided by the parties.

The proposed Confidentiality Agreement provided by Petitioners appears to be modeled on a frequently used protective order issued by the Board in adjudication and rulemaking proceedings in which information is filed under seal. (

See

Pet., App. B.)

D. Admissible Evidence

As discussed below (

see infra

Section VII.B), the Board will propose that evidence pertaining to product and geographic competition would be inadmissible, consistent with Board precedent regarding market dominance determinations.

Mkt. Dominance Determinations—Prod. & Geographic Competition,

3 S.T.B. 937, 948 (1998)

remanded sub nom. Ass'n of Am. R.Rs.

STB,

237 F.3d 676 (D.C. Cir. 2001),

pet. for review denied sub nom. Ass'n of Am. R.Rs.

STB,

306 F.3d 1108 (D.C. Cir. 2002). As noted below, (

see infra

Section XII), the Board will also propose that arbitration decisions be deemed non-precedential, and likewise inadmissible.

The Board will not, however, propose that evidence of revenue adequacy be inadmissible. As explained in detail below, (

see infra

Section VIII.A.2), the Board finds that section 11708 requires that shippers be allowed to submit, and arbitrators to consider, certain revenue adequacy evidence.

Petitioners include proposed regulatory language stating that non-precedential decisions include “non-precedential decisions of the Board or of prior arbitrations.” (Pet., App. A at 8 (proposed § 1108.27(e)(2)(ii)).) It is unclear to what “non-precedential decisions of the Board” is referring and the Board's proposal does not include this language.

VII. Market Dominance

A. Determination by the Arbitration Panel

The Petition proposes that, under the proposed program, the arbitration panel would determine whether the railroad has market dominance. Petitioners contend that a “significant drawback” of the existing arbitration requirements is that they require the Board to determine market dominance prior to the arbitrator considering rate reasonableness. (

See

Pet. 21-22.) They argue that, with respect to small rate cases, “having to put rate reasonableness on hold while the Board decides market dominance could cause a significant delay and creates a disincentive for shippers to arbitrate.” (

Id.

)

Section 11708 provides that, “with respect to rate disputes, [the Board] may make the voluntary and binding arbitration process available only to the relevant parties if the rail carrier has market dominance (as determined under section 10707).” 49 U.S.C. 11708(c)(1)(C). Section 10707 provides that where a shipper challenges a rail transportation rate subject to the Board's jurisdiction as being unreasonably high, “the Board shall determine whether the rail carrier proposing the rate has market dominance over the transportation to which the rate applies.” 49 U.S.C. 10707(b).

Petitioners argue that the Board is not prohibited from permitting the arbitration panel to determine market dominance in the small rate case arbitration program. Petitioners argue that while section 11708 instructs the Board to make arbitration available only where the railroad has market dominance, it does not prohibit the Board from delegating the market dominance decision to the arbitration panel, provided the parties have voluntarily consented to that arrangement. (Pet. 22.) Petitioners also contend that, even if section 11708 forbids such delegation, the Board may use its exemption authority under 49 U.S.C. 10502(a) to exempt small rate case arbitrations from that provision, on the ground that any such requirement is not necessary to carry out the rail transportation policy or protect shippers from an abuse of market power. (

Id.

)

Petitioners also contend that the Board is not constrained by section 11708 and may propose arbitration procedures that deviate from that statute under its general rulemaking authority at 49 U.S.C. 1321(a), (Pet. 22), but as noted earlier, the Board is proposing a small rate case arbitration program in this decision pursuant to the requirements of section 11708.

Olin objects to this aspect of the Petition, arguing, among other things, that the Board should not “create a whole new alternative arbitration rate relief program in conflict with, but separate from the rate arbitration rules established by the Board under § 11708.” (Olin Reply 10.) It notes that this is another reason why the proposed program should not supplant FORR, which avoids this problem by having the Board determine market dominance. (

Id.

)

The Board is skeptical of Petitioners' argument that, to the extent 49 U.S.C. 11708 prohibits the arbitration panel from determining market dominance in a rate arbitration, the Board could simply exempt parties from that provision pursuant to 49 U.S.C. 10502(a). Section 10502(a) authorizes the Board to exempt “person[s], class[es] of persons, or a transaction or service” from the provisions of U.S. Code title 49, subtitle IV, part A, under certain circumstances. From a practical

standpoint, Petitioners appear to suggest that the Board may eliminate altogether a jurisdictional requirement for rate cases that Congress carried over to the arbitration context. Regardless, the Board need not reach that argument, as it now concludes that section 11708 does not prohibit an arbitration panel from determining market dominance.

1. Arbitrators Can Determine Market Dominance.

As noted above, under 49 U.S.C. 11708(c)(1)(C), “with respect to rate disputes, [the Board] may make the voluntary and binding arbitration process available only to the relevant parties if the rail carrier has market dominance (as determined under section 10707).” In

Revisions Final Rule,

the Board adopted a final rule allowing parties to obtain the requisite market dominance determination by either requesting a ruling from the Board solely on the issue of market dominance or conceding market dominance and thereby “forgoing the need for a determination by the Board.”

Revisions Final Rule,

EP 730, slip op. at 6-7;

see also Revisions to Arbitration Procs.,

81 FR 30229 (May 16, 2016), EP 730, slip op. at 2-3 (STB served May 12, 2016). While the Board's decisions in that proceeding did not undertake a detailed analysis of whether section 11708 permitted an arbitrator or arbitration panel to determine market dominance, the Board did state that “the Board must determine if the rail carrier has market dominance before making the arbitration process available.”

Revisions to Arbitration Procs.,

EP 730, slip op. at 6;

see also

Joint Shippers Suppl. 4 (noting that the revenue adequacy constraint has long been established as a proper rate reasonableness standard by the Board).) Olin further notes that, by contrast, there is no such limit on revenue adequacy evidence under the proposed FORR process. (Olin Reply 11-12;

see also

U.S. Wheat Suppl. 7.) USDA argues that, if Petitioners insist on limiting arbitrators from considering evidence on revenue adequacy, then shippers should have the option to use FORR or arbitration. (USDA Reply 2.)

NGFA states that it takes no position on the proposed exclusion of revenue adequacy considerations though, as discussed above, it argues that if the Board adopts the Rate Increase Constraint, carriers that participate in the proposed small rate case arbitration program should not be permitted to withdraw from the program on that basis alone. (NGFA Reply 10-11, 13.) NGFA further argues that, if adopted, the Rate Increase Constraint should be available for consideration in arbitrations under the proposed small rate case program. (

Id.

at 11.)

In their supplemental filing, Petitioners reiterate their position that controversial issues like revenue adequacy should not be litigated for the first time in small case arbitrations with limited appellate rights. (Pet'rs Suppl. 2.) They emphasize that use of “any regulatory adequacy constraint” in rate reasonableness determinations, including ACC's proposed benchmark method, represents a “grave regulatory misstep.” (

Id.

at 15.) They further state that, even if revenue adequacy were a lawful method of constraining rates (which they claim it is not), the application of the concept is currently undefined, and allowing arbitrators to define it “risks departure from sound principles of rail transportation economics.” (

Id.

) As such, they reiterate that they will not agree to arbitrate rate disputes where shippers are permitted to use a revenue adequacy constraint. (

Id.

)

The Board finds that Petitioners have not sufficiently justified their proposed methodological and evidentiary restrictions pertaining to revenue adequacy, and they will not be included as part of the Board's proposal. Regarding the evidentiary restriction, the regulatory text proposed by Petitioners prohibiting “any evidence relat[ing]” to “the revenue adequacy of the defendant carrier,” (

see

Pet., App. A at 8 (proposed § 1108.27(e)(2)(iii)), conflicts with section 11708(c)(3)'s requirement that arbitrators give “due consideration to the need for differential pricing to permit a rail carrier to collect adequate revenues (as determined under section 10704(a)(2)).” It is unclear how the arbitrators could comply with their statutory obligations if absolutely prohibited from considering any evidence concerning revenue adequacy.

Petitioners' proposal that arbitrators be prohibited “from considering any type of system-wide revenue adequacy-based constraint” raises similar concerns.

For example, the Three-

Benchmark methodology uses the Revenue Shortfall Allocation Method (RSAM) benchmark to “account[ ] for a railroad's need to earn adequate revenues, as required by 49 U.S.C. 10704(a)(2).”

Rate Guidelines—Non-Coal Procs.,

1 S.T.B. 1004, 1027 (1996). Indeed, where the revenue a carrier collects from its captive traffic (

i.e.,

the R/VC

>180

benchmark) exceeds RSAM, use of the Three-Benchmark methodology may operate to constrain a carrier's rates based on its revenue requirements.

See id.

at 1043 (“The greater the difference between the two benchmarks [where RSAM is lower than R/VC

>180

benchmark], the greater the downward adjustment to the carrier's average rates on its >180 traffic that would still permit it to meet the RSAM revenue need standard.”) Under the regulatory language proposed by Petitioners, the use of RSAM—and hence the entire Three-Benchmark methodology—could arguably be considered outside the bounds of the arbitrators' consideration. Yet Petitioners appear to have no objection to arbitrators relying on the Three-Benchmark methodology for determining the reasonableness of the rate. By contrast, Petitioners object to the arbitrators considering ACC's proposed benchmark method despite it bearing certain similarities to the Three-Benchmark methodology.

Petitioners phrase this restriction more narrowly than their proposed evidentiary restriction, which would more broadly prohibit “any evidence relat[ing] to the revenue adequacy of the defendant carrier.” (

Pet.,

App. A at 8 (proposed § 1108.27(e)(2)(i).) However, when the two provisions are considered together, Petitioners appear to intend the restriction on “any system-wide revenue adequacy constraint” as a broad exclusion of any methodology involving revenue adequacy, as evidenced by their objection to the use of ACC's proposed benchmark method.

As ACC has described it, the benchmark method relies upon a model to predict competitive benchmark rates for captive rail movements using certain competitive rail movements, which are then—through application of a “multiplier”—adjusted to “determine the appropriate degree of differential pricing consistent with the Board's rail revenue adequacy standard.” Joint Shippers Comment 20, Nov. 12, 2019,

Final Offer Rate Rev.,

EP 755.

Additionally, it is possible that the market-based factors proposed by NGFA—which Petitioners agree arbitrators may consider—could require the consideration of the carrier's capital requirements, which in turn would also run afoul of Petitioners' proposed revenue adequacy prohibitions. Generally speaking, it is difficult to reconcile the methodological flexibility afforded to arbitrators by section 11708 (as attested to by Petitioners,

see supra

Section VIII.A.1) and section 11708's requirement that arbitrators consider the need for differential pricing to attain revenue adequacy with the seemingly expansive limitation on the use of “any system-wide revenue adequacy constraint” as proposed by Petitioners.

Accordingly, the Board's proposed regulations do not include a general prohibition on revenue adequacy evidence or methodologies. In addition, the Board will propose adding the phrase “as determined under section 10704(a)(2)” to Petitioners' suggested provision mandating that the arbitration panel consider the need for differential pricing to permit a rail carrier to collect adequate revenues.

Petitioners' provision is based on language taken directly from section 11708 but omits this phrase.

Compare

Pet., App. A at 9

with

49 U.S.C. 11708(c)(3). The reference to section 10704(a)(2) is specifically stated in the statute and therefore should not be excluded from the regulatory text.

See

proposed § 1108.29(b)(2).

B. Arbitration Decision Timeline

Petitioners propose that the arbitration panel issue its decision within 120 days, but again, propose varying starting points; they propose in the body of the Petition that this period would start on the date that the Joint Notice is filed, but propose in the appendix that it would start from the commencement of arbitration (

i.e.,

two business days after the arbitration panel is appointed).

The Board will propose that the arbitration panel issue its decision no later than 30 days after close of the evidentiary phase, rather than within 120 days from either the submission of the Joint Notice or commencement of arbitration.

See

proposed § 1108.27(c)(3). This accounts for the potential extension or shortening of the evidentiary phase deadline and comports with section 11708(e)(3), which requires that the arbitration panel shall issue a decision not later than 30 days after the date on which the evidentiary record is closed.

IX. Relief

Petitioners propose that any relief awarded in a single arbitration be capped at $4 million (indexed for inflation annually using the Consumer Price Index and a 2020 base year) over two years. (Pet. 11.) This monetary cap would apply to prospective relief, retroactive relief, or a combination of the two. (

Id.

) They further propose that any prospective relief in the form of rate prescriptions be limited to one year. (

Id.

) Petitioners state that a $4 million relief cap would capture the majority of potential rate litigants and that relief under the proposed program would be higher, on an annualized basis, than what was originally proposed in

Simplified Standards,

Docket No. EP 646 (Sub-No. 1). (Pet. 27 n.56.)

NGFA states that it agrees with the $4 million/two-year relief cap, but it stipulates that the cap should be reconsidered if the Board adopts a higher cap in FORR. (NGFA Reply 8-9.) Olin argues that the proposed one-year limit on rate prescriptions cuts in half the two-year limit on rate prescriptions proposed under FORR. (Olin Reply 11.) The Joint Shippers note this in their supplemental filing as well, pointing out that Petitioners fail to explain why prescriptive relief should be limited to one year. (Joint Shippers Suppl. 9.) While the Joint Shippers further note that complainants are entitled to four years of relief in any combination of reparations and prescription in a Three-Benchmark proceeding, they state that they do not oppose a general two-year relief period. (

Id.

)

A. Prescription Amount and Length

The Board will propose a relief cap of $4 million and a relief period of two years. An award of $4 million, covering a period of two years (applied to a combination of retroactive and prospective relief), should be of sufficient value to incentivize shippers to use the proposed program while also addressing the carriers' concern that the proposed program remains limited to only smaller rate disputes. The $4 million cap also parallels the relief that is proposed in the FORR process.

U.S. Wheat argues that the arbitration proposal appears to be a strategic move to stop any increase in the recovery cap in FORR. (U.S. Wheat Suppl. 7.) If the Board proceeds with FORR and considers raising the relief cap there, it can also address whether to make a corresponding change to the relief cap for the proposed small rate case arbitration program at that time.

The Board will not, however, propose a one-year cap on prescriptions. Here, Petitioners propose that the total relief period—which could include either reparations for past movements or a prescription for future movements, or both—should be two years. However, they also propose (without explanation) that any prescription be limited to a single year. The Joint Shippers correctly point out that this could unfairly limit a shipper's relief.

Thus, under the Board's proposal, the length of the prescription could be as long as the total period for relief, which here would be two years.

See

proposed § 1108.28(b). As the Joint Shippers note, this would be consistent with the Board's treatment of relief periods in other contexts.

See Rate Regulation Reforms,

78 FR 44459

(July 24, 2013), EP 715, slip op. at 22-25.

For example, if a shipper initiates arbitration immediately after a rate takes effect, the arbitration process lasts six months (consistent with the timelines proposed here), and the shipper is successful, it would receive six months of reparations for the period in which the arbitration was conducted. However, if there was a one-year prescription cap, the shipper would be artificially limited to 18 months of total relief even if it had successfully demonstrated that two years of relief was warranted.

B. Preclusive Effect of Arbitration Decision

Petitioners' proposed regulations would preclude shippers from bringing a rate complaint or other proceeding for the same traffic for the later of (a) two years from the filing of the joint notice to arbitrate or (b) expiration of any rate prescription imposed. (Pet., App. A at 9.) The Board notes that Petitioners' proposal does not seem to account for a situation in which the carrier increases the rate at issue after the arbitration decision. Specifically, if a shipper is unsuccessful in arbitration, Petitioners' proposal would preclude the shipper from challenging the rate for two years, even if the carrier were to raise the rate immediately after the panel rendered its decision. Under Board and court precedent, shippers that have lost a formal rate case may not challenge the same rate for the same traffic, but they may challenge a

new

rate for the same traffic.

See Mkt. Dominance Streamlined Approach,

EP 756, slip op. at 44 (citing

Burlington N. & Santa Fe Ry.

STB,

403 F.3d 771, 778 (D.C. Cir. 2005);

Intermountain Power Agency

Union Pac. R.R.,

NOR 42127, slip op. 4 (STB served Nov. 2, 2012)).

A similar situation would occur if the shipper is awarded a prescription shorter than two years. For example, if a shipper is awarded a six-month prescription, under Petitioners' proposal, the shipper would be barred from challenging the rate for the 18 months following expiration of the prescription even if the railroad increases the rate during those 18 months. This is again inconsistent with how the Board treats the effect of a rate decision in other contexts. With regard to Three-Benchmark proceedings, the Board has held that “[i]f . . . a carrier establishes a new common carrier rate once the rate prescription expires, and the new rate exceeds the inflation-adjusted challenged rate, the shipper may bring a new complaint against the newly established common carrier rate.”

Rate Regulation Reforms,

EP 715, slip op. at 12.

Accordingly, the Board will propose language that makes clear that the preclusive effect of an arbitration decision is terminated if the carrier increases the rate.

See

proposed § 1108.29(d)(3). Specifically, the proposed language would allow a shipper that has either lost an arbitration or prevailed in arbitration but exhausted its prescription to bring a new arbitration for the same traffic if the carrier increases the rate. This modification would ensure fairness and comport with precedent in other contexts, as noted above.

C. Agreements To Modify Relief Cap

The Board will propose permitting carriers and shippers to agree in an individual case to arbitrate under the proposed procedures for a lesser or higher amount and/or a shorter or longer relief period, not to exceed the $25 million cap or five-year period set forth in 49 U.S.C. 11708.

See

proposed § 1108.28(c). As noted above, the Board will propose that any such agreement be noted in the confidential summary that is filed at the conclusion of the arbitration.

See

proposed § 1108.29(e)(1).

X. Appeals and Enforcement

Petitioners propose that the Board include appellate procedures and standards. An appeal would be initiated by the appellant filing a notice, which would allow the Board to formally docket the proceeding. (Pet., App. A at 10.) Petitioners include a proposed notice of appeal form. (Pet., App. C.) This notice would provide only basic information about the appeal, including the date of the arbitration decision and the name of the appealing party; the opposing side would not be named. (

Id.

) The subsequent appellate procedures proposed by Petitioners would closely follow those of 49 CFR 1108.11. (Pet., App. A at 10.)

Petitioners further propose that the Board's standard of review for arbitration decisions would be limited to the same criteria as those governing the existing arbitration process in 49 CFR 1108.11(b). (Pet. 15.)

Petitioners propose that the Board's decision would be public, but that the Board should “maintain the confidentiality of the arbitration decision to the maximum extent possible” by redacting certain information. (Pet., App. A at 11 (proposed § 1108.31(d).)

Specifically, the Board would only review whether: (a) The decision is consistent with sound principles of rail regulation economics; (b) a clear abuse of arbitral authority or discretion occurred; (c) the decision directly contravenes statutory authority; or (d) the arbitral award limit was violated. 49 U.S.C. 11708(h).

Lastly, Petitioners propose that the Board's decision on appeal would be judicially reviewable under the Hobbs Act, 28 U.S.C. 2321 and 2342; stays of arbitration decisions would not be automatic, though could be sought pursuant to 49 CFR 1115.3(f); and enforcement of an arbitration decision would have to be sought in a court of appropriate jurisdiction under the Federal Arbitration Act, 9 U.S.C. 9-13. (Pet. 15.)

The Board will propose appellate and enforcement procedures similar to those proposed by Petitioners. Olin argues that the ability of parties to appeal to either the Board or a court serves as a “roadblock[ ] to relief with an extra layer of appeals than that provided under FORR.” (Olin Reply 11;

see also

U.S. Wheat Suppl. 6 (arguing that a railroad will probably always appeal if they lose a case).) However, section 11708(h) sets forth a party's right to appeal an arbitration decision to the Board, and the Board does not determine the federal courts' jurisdiction to review or enforce the Board's decisions. Moreover, the bases for appeal to the Board and the courts are both narrow, a fact which, when coupled with the many other benefits that small rate case arbitration could provide, outweighs this concern.

The Board will propose some modifications to the carriers' proposed confidentiality provisions relating to appeals of the arbitration decision, which are discussed in detail in the following section.

In addition, the Board will propose adding a provision stating that parties may seek judicial review of arbitration awards in a court of appropriate jurisdiction pursuant to the Federal Arbitration Act, 9 U.S.C. 9-13, in lieu of seeking Board review.

See

proposed § 1108.31(f).

This provision already exists for the current arbitration process.

See

49 CFR 1108.11(b)(1). The Federal Arbitration Act allows parties the right to seek: (i) An order confirming an arbitration award, or (ii) direct judicial review of an arbitration award for “egregious departures from the parties' agreed-upon arbitration.”

Hall St. Assocs., L.L.C.

Mattel, Inc.,

552 U.S. 576 (2008). The Board sees no reason to exclude arbitrations under the proposed program from the provisions of the Federal Arbitration Act.

It appears that Petitioners propose that the appealing party file its notice of appeal as a means of providing public notice that the appeal had become an official proceeding before the Board, given that they also propose that all filings to the Board concerning the arbitration be kept confidential. As discussed in the following section, the Board proposes that a public version of those filings must be submitted. Accordingly, a notice of appeal would be unnecessary.

Petitioners propose regulatory language stating that “A party to an arbitration proceeding under this part may appeal the arbitration decision only to the Board.” (Pet., App. A at 10.) As explained above, the Board will not include this in its proposed regulations.

Additionally, some courts have held that these provisions of the Federal Arbitration Act cannot be waived.

See In re Wal-Mart Wage & Hour Empl. Pracs. Litig.

Class Couns. & Party to Arb.,

737 F.3d 1262, 1267 (9th Cir. 2013) (“Just as the text of the [Federal Arbitration Act] compels the conclusion that the grounds for vacatur of an

arbitration award may not be supplemented, it also compels the conclusion that these grounds are not waivable, or subject to elimination by contract.”).

XI. Confidentiality

Petitioners characterize confidentiality as a “key requirement for future arbitrations.” (Pet. 22.) They contend that if arbitration decisions are made public, they could influence the marketplace and drive up the stakes for railroads with similarly situated customers and shippers that often move traffic over more than one railroad. (

Id.

at 22-23.) They suggest that this would be unfair given the expedited timelines of the proposed program and the limited grounds for appellate review. (

Id.

) They further contend that a confidential process would focus the parties on the present dispute without the risk of setting precedent in other cases or affecting the market expectations of other entities in the supply chain. (

Id.; see also

Pet'rs Suppl. 8-9 (“[Petitioners] believe that confidentiality of arbitration decisions will help railroads and shippers focus on a swift and amicable solution to the rate dispute at hand, without having to worry about broader implications.”)). Finally, they also contend that, under federal law, there is a presumption of privacy and confidentiality in arbitrations. (

Id.

(first citing

Stolt-Nielsen S.A.

AnimalFeeds Int'l Corp.,

559 U.S. 662, 686 (2010); and then citing

Janvey

Alguire,

847 F.3d 231, 248 (5th Cir. 2017)).)

As such, Petitioners propose that the “entirety of the arbitration process” be deemed confidential. (Pet. 16, 23;

id.,

App. A at 6-8.) They propose that confidentiality would be effectuated through a Confidentiality Agreement, and they include a proposed version of the Confidentiality Agreement with the Petition. (

Id.

at 16;

id.,

App. A at 8;

id.,

App. B.) Petitioners further propose that the arbitration decision would not be submitted to the Board as a matter of course, which is required under the existing arbitration program (49 CFR 1108.9(e)), though a copy would be provided to the Board in the event of an appeal. (Pet. 23, App. A at 9.) Petitioners also propose that under no circumstances would the Board make publicly available a redacted version of the arbitration decision, as currently required under 49 CFR 1108.9(g). (

Id.,

App. A at 9.)

Petitioners propose that, should there be an appeal, the notice of appeal would be formally docketed and made public, but that it would contain limited information. (

Id.

at 16;

id.,

App. A at 10.) Petitioners include a proposed version of the notice of appeal form with the Petition. (

Id.,

App. C.) Under Petitioners' proposal, parties would be required to file all appellate submissions—including the arbitration decision, the petition to vacate or modify the arbitration award, and any reply—under seal, and no public versions would be filed. (

Id.

at 16;

id.,

App. A at 9-11.) They further propose that the Board's appellate decision would be public but would require the Board to maintain the confidentiality of the arbitration decision to the “maximum extent possible,” with particular attention paid to “avoiding the disclosure of information that would have an effect or impact on the marketplace.” (

Id.,

App. A at 11.) In addition, they propose that in “no event” would the Board—in its decision “or otherwise”—disclose: “(i) the specific relief awarded by the arbitration panel, if any, or by the Board; or (ii) the Origin-Destination pair(s) involved in the arbitration.” (

Id.)

They also propose a procedure by which parties would have the opportunity to request redactions of the Board's decision prior to its public release. (

Id.)

To permit the Board to monitor the proposed small rate case arbitration program, Petitioners propose that the parties would submit a confidential summary to OPAGAC within 14 days after either receiving the arbitration decision, the dispute settles, or the dispute is withdrawn. (

Id.,

App. A at 9-10.) The Petition includes a provision for the Board to publish public quarterly reports on the final disposition of arbitrated rate disputes under the proposed program, using only the categories of information contained in the confidential summaries, and not disclosing the identity of the parties to the arbitration. (

Id.,

App. A at 10.) Petitioners propose that the summaries and quarterly reports include only: (i) The geographic region of the movement(s) at issue; (ii) the commodities at issue; (iii) the number of days from the commencement of the arbitration proceeding to the final arbitration decision; and (iv) a high-level, generic description of the resolution (

e.g.,

settled, withdrawn, dismissed on market dominance, or challenged rates found unreasonable/reasonable). (Pet. 16.)

The USDA and shipper interests object to the idea that arbitration decisions would be kept confidential. USDA states that Petitioners' rationale for keeping decisions confidential is “vague, unsupported by any data, and, therefore, highly speculative (at best).” (USDA Reply 2.) As noted above, it further states that “[t]he fact that transparency might `drive up the stakes' because railroads `may have similarly situated customers' (

i.e.,

other customers with unreasonable rates) should be a reason for transparency, not a reason for secrecy.” (

Id.

at 3.) NGFA also objects to keeping arbitration decisions confidential, which it notes is contrary to NGFA's own private arbitration program with BNSF and the regulations adopted by the Board in

Assessment of Mediation & Arbitration Procedures,

EP 699 (STB served May 13, 2013). (NGFA Reply 7-8);

see also

49 CFR 1108.9(e), (g). NGFA states that, in its experience, the prospect of a public decision often incentivizes parties to settle. (NGFA Reply 8;

see also

Joint Shippers Suppl. 9.)

Olin argues that in prior arbitration rulemakings, railroad interests opposed the idea of confidential arbitration decisions. (Olin Reply 5.) It claims the fact that FORR decisions would not be confidential is another reason why that approach is preferable to arbitration. (

Id.

at 12;

see also

U.S. Wheat Suppl. 6.) In their supplemental filing, the Joint Shippers argue that, if arbitration decisions are kept confidential and railroads who participate in arbitration are exempt from FORR, meaningful oversight would be nearly impossible. (Joint Shippers Suppl. 8-9.)

NGFA indicates, however, that it would support redacting confidential information from arbitration decisions, as provided in the Board's existing regulations. (

Id.

)

Petitioners reiterate the need for confidentiality in their supplemental filing. They argue that, without confidentiality, they would not be willing to submit a complex rate reasonableness claim to an arbitration panel using an expedited process with limited discovery and appellate rights. (Pet'rs Suppl. 7.) They contend that confidentiality is not a one-sided benefit to the railroads, as it creates an environment in which railroads are willing to agree to arbitrate small rate disputes quickly and with increased flexibility—the very result shippers have been requesting, and the Board has been seeking, for years. (

Id.

at 8.) They argue that if arbitration decisions were public, parties “would be motivated to throw the proverbial kitchen sink into the arbitration” rather than tailor the scope of litigation to the amount immediately in controversy (even if the decisions were deemed non-precedential). (

Id.

at 10.)

In response to NGFA's assertion that making arbitrations public is in the public interest, Petitioners argue that the public interest is better served by having an effective arbitration program, which can only be accomplished through confidentiality. (

Id.

) Petitioners

also arg

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