The STB in December 2022 issued and adopted a final rule in Docket No. EP 755, Final Offer Rate Review, “creating a new procedure for shippers to challenge railroad rates.” Then-Board Member Patrick J. Fuchs and Board Member Michelle A. Schultz dissented. Union Pacific and the Association of American Railroads appealed the rule.
The Court of Appeals in August 2024 found that the STB “lacked the statutory authority to prescribe rates through FORR and that FORR ran afoul of certain requirements for formal adjudications under the Administrative Procedure Act (APA),” according to the STB.
The Board in November 2024 filed a petition for panel rehearing and rehearing en banc, challenging only the court’s finding that the FORR process was subject to the APA’s requirements for formal adjudications. The petition did not challenge the court’s finding that the Board lacked the statutory authority under 49 U.S.C. 10704(a) to implement FORR, according to the STB.
The STB’s petition for panel rehearing and rehearing en banc was denied. Neither the Board nor any other party sought certiorari prior to the March 10, 2025, deadline. On March 14, the Board elected to end litigation on the rule, and Fuchs said he intended to offer a draft action regarding the FORR docket for consideration by the full Board in April.
The STB’s May 30 decision in Docket No. EP 755, Final Offer Rate Review, was unanimous, with Board Member Robert E. Primus concurring.
Railway Age Capitol Hill Contributing Editor Frank N. Wilner, who writes extensively on captive shipper rate challenges in his book, “Railroads & Economic Regulation,” commented:
“Clearly, the Board is at a deadlock and withdrawal of the rule makes practical sense as it is unlikely it can be repaired as an STB majority to do so does not exist. When the Board issued that Final Rule in 2022 (now voided by the courts), then-Chairperson Martin J. Oberman and fellow Democrats Karen J. Hedlund and Robert E Primus formed a majority, with Republican members Patrick J. Fuchs and Michelle A. Schultz dissenting. With Oberman gone and his seat vacant, the Board is at a 2-2 deadlock, and Hedlund and Primus appear to recognize there are better battles to be fought and concurred in the rule’s withdrawal. Fuchs, who now controls the docket, made clear in his 2022 dissent to the Final Rule that ‘FORR reduces the agency to mere passive, all-or-nothing selections based only on litigants’ methodologies and proposed remedies.’ Game, set, match.
“Primus, with a history of harshly lecturing those with whom he does not agree, did not retreat quietly. In a separate concurring opinion, he tagged the appellate decision as ‘narrow and woefully incorrect’ and ‘myopic.’”
“The Board has been struggling for decades to construct various simplified methods by which rail-captive shippers might challenge as ‘unreasonable’ rail rates they dislike. As a senior Senate Commerce Committee staff member in 2015, Fuchs drafted—as part of a Surface Transportation Board Reauthorization Act—instructions to the STB to do so with greater haste. It will now be up to Fuchs, as chairperson, to do so,” Wilner said. “Given what we know of Fuchs and his approach to economic regulation, it is reasonable to expect a more market-based approach rather than one of command-and-control.”
