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WASHINGTON (Oct. 21, 2016) – The American Chemistry Council (ACC) is calling on the Surface Transportation Board (STB) to set aside a highly flawed report performed by InterVISTAS regarding the Board’s current rate review policies. ACC recently sent a letter to the STB detailing several troubling issues with the report.

“ACC strongly urges the STB to dismiss this faulty report, which failed to follow the Board’s direction and was performed by a consultant that has a history of working on behalf of the railroads,” said Cal Dooley, President and CEO of ACC. “The effort to improve the integrity of the STB’s rate review process is too vital to be undermined by such an incomplete and poorly-developed report.”

Out of Step with Expert Analysis 
The InterVISTAS report’s conclusions stand in stark contrast to the objective and transparent approach the National Academy of Sciences’ Transportation Research Board used to develop its report, Modernizing Freight Rail Regulation. An independent panel of transportation experts and economists conducted the NAS report with input from a broad range of stakeholders. The InterVISTAS report, on the other hand, was conducted without stakeholder input and prepared by a consulting agency with a history of representing railroad interests.  

The conclusions of the InterVISTAS reports diverge greatly from the NAS report, which concluded that “Faster, sounder, more transparent and more economical methods are available for resolving rate disputes and could give more shippers the opportunity to pursue rate relief.” In contrast, the InterVISTAS report supports maintaining the Board’s current system, which has been nearly universally criticized as being unnecessarily complex and too costly. In fact, the only group that appears to support the status quo is the railroad industry, which has a vested interest in maintaining a system that is virtually inaccessible to rail shippers.

Flawed Methodologies and Conclusions
The InterVISTAS report also did not fully address the questions and issues that the STB clearly spelled out. “InterVISTAS failed to undertake a comprehensive assessment of the Board’s arcane rate review procedures and ignored alternative methodologies that may be less burdensome and more economically sound,” Dooley explained.

The report’s analysis provided an incomplete assessment of the STB’s current methodologies, including stand-alone cost (SAC). For instance, the NAS report rigorously analyzed rate benchmarking as a viable alternative to SAC methodology; in stark contrast, InterVISTAS did not even take the time to investigate the concept.  

Furthermore, when examining rate review issues, the STB has an obligation to ensure that a railroad can make sufficient profit while also ensuring that rail customers that lack competitive options are not charged unreasonably high rates. Despite clear direction from the STB, InterVISTAS conducted its report by focusing on rail profitability, while disregarding the need to justify high rates entirely. This one-sided approach is more evidence that InterVISTAS conducted its report through the narrow lens of the railroad perspective at the expense of the perspective of rail customers.  

“It is very disappointing that the STB utilized its scarce resources to hire a rail industry consultant to create a report defending policies that Board Members themselves have indicated require significant reform,” said Dooley. “In light of the many troubling shortcomings of the InterVISTAS report, we strongly urge the STB to put it aside and instead focus on the sound analysis provided by the NAS to help guide the Board’s efforts to improve its rate review process.” 


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