Western Coal Traffic League pitches for new dispute policy

The Western Coal Traffic League (WCTL) told the U.S. Surface Transportation Board on May 17 that the board is on the right track with a new arbitration and mediation procedure that would be invoked in rate disputes between railroads and shippers, like the coal-fired utilities that the WCTL represents.

The board issued a Notice of Proposed Rulemaking (NPRM) on March 28 that proposes to revise the board’s existing rules governing the use of mediation and arbitration to resolve matters brought before the agency. The NPRM is in follow-up to the board’s initial August 2010 notice seeking comments on the use of revised mediation and arbitration procedures.

“The Board’s proposed NPRM rules generally are consistent with and address the views and concerns WCTL expressed in its Oct. 2010 Comments,” said the league comments. “Those comments urged the Board to use caution with the possible expanded use of the mandatory [alternative dispute resolution] ADR procedures that could lead to complex, costly, and uncertain litigation, delay proceedings, or involve processes that are skewed in favor of the railroads. In this respect, the proposed NPRM rules should not unduly harm or prejudice the rights of WCTL members in seeking resolution of complaints, and they might provide new opportunities for expedited resolution of disputes brought before the Board. However there are several matters involving the proposed rules which may require Board clarification and revision.”

WCTL said that, in any instance where mediation is requested by one or more parties, but not mutually agreed to by all parties to a dispute, that the board should give particular weight to the preferences of the complaining shipper. “The reason for granting this preference is to ensure that the shipper is not unduly pressured into mediation if it comes at the price of prejudicing its right to pursue a formal complaint or makes such complaint proceeding more expensive or lengthy,” it added.

The NPRM seeks to expand the current use of mediation employed in rate complaint cases to other formal disputes brought before the board, and to establish the rules and procedures governing such mediation. The league noted that the NPRM seeks to retain the board’s existing Stand Alone Cost (SAC) rate case mediation rules, mandating the use of mediation after the commencement of a SAC case. As WCTL said in 2010, league members that have brought maximum rate SAC cases generally have found the board’s current procedures requiring non-binding mediation at the outset of SAC proceedings useful, even if few cases ultimately have been successfully resolved under these procedures.

Perhaps recognizing that the board’s long-standing arbitration procedures have not been utilized in the decade since the process was first established, the NPRM rules seek to “jump start” arbitration in areas where arbitration might be useful and effective, and provide for a streamlined dispute resolution process, the league said.

The board proposal clarifies that the type of disputes that would be eligible for board-sponsored arbitration would include demurrage and accessorial charges, compensation for misrouting or mishandling of rail cars, redress for a carrier’s misapplication of its published rules and practices as applied to particular rail transportation, and other service-related matters. The list of eligible matters does not include rate cases, or other complex cases, except on petition.

For the reasons WCTL previously conveyed in 2010, and namely because the board’s existing arbitration rules are not well-suited for resolving complex cases, including large rate cases based on SAC, WCTL said it agreed that the arbitration program-eligible matters should be limited to less complex matters where board expertise and assistance is not necessary.

WCTL’s regular membership consists of shippers of coal mined west of the Mississippi River that is transported by rail. WCTL members ship and receive in excess of 140 million tons of coal by rail each year. WCTL members include: Ameren Energy Fuels and Services, Arizona Electric Power Cooperative, CLECO Corp., Austin Energy (City of Austin, Texas), CPS Energy, Entergy Services and Kansas City Power & Light.

UP offers its views on new policy

“In general, UP supports the Board’s efforts in encouraging parties to voluntarily agree to mediation or arbitration,” said the Union Pacific Railroad in its own May 17 comments. “UP, however, has a few reservations over the proposed mediation rules and has serious concerns over the proposed pre-dispute hybrid model and the other proposed  arbitration rules. Consequently, UP believes the proposed hybrid model and arbitration rules will discourage, rather than encourage, parties to use Board-sponsored arbitration.”

UP’s comments first addressed why the proposed pre-dispute hybrid model is ostensibley procedurally unfair and unjustified. Second, UP’s comments addressed several aspects of the NPRM that the railroad said warrant modification or clarification. Finally, UP’s comments addressed the essential features of a pre-dispute participant model if the board pursues that approach as an alternative to case-by-case arbitrations.

The UP said it supports alternative dispute resolution when the arbitration is voluntary and the governing procedures are reasonable and fair. “The pre-dispute hybrid model that imposes arbitration on Class I and II carriers but allows shippers and other parties to choose arbitration on a case-by-case basis, however, is procedurally unfair as well as unjustified,” it added. “The unfairness arises from the non-reciprocal participation requirements of the pre-dispute hybrid model that deny Class I and II carriers the same recourse and procedural protections provided to shippers or other parties. The hybrid model is unjustified because no evidence in the record supports imposing automatic arbitration on only Class I and II carriers.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.