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NGFA urges STB to focus on providing grain shippers a workable procedure to challenge unreasonable rail rates

WASHINGTON, Nov. 21, 2016 — The NGFA earlier this month urged the federal Surface Transportation Board (STB) to refocus its efforts on creating a workable procedure that grain and agricultural shippers can use to challenge freight rail rates they believe are unreasonable.

The Association submitted its statement in response to the STB’s advance notice of proposed rulemaking requesting comments on establishing a new rate-challenge methodology that would be available to all commodities (including non-agricultural products), but only for a small subset of rate cases involving “very small disputes” – a phrase the agency did not define. The NGFA in particular objected to the STB’s proposal to broaden its original proceeding that focused solely on creating an accessible and workable process for grain shippers to challenge unreasonable rail rates of all sizes, noting that no other group – agricultural or non-agricultural – had advocated such a change in direction.

“The (STB) has elected to take its eye off the ball and divert its focus from resolving the primary problem identified by grain and other agricultural shippers – the uselessness of the (agency’s) existing rate rules and procedures to agricultural shippers, regardless of the size of a rate dispute, and hence their lack of access to a workable rate-challenge methodology,” the NGFA said. “We respectfully urge the (STB) to refocus its efforts in this proceeding…and return to the original task of creating an appropriate, workable and reasonably accessible rate-challenge methodology that grain and other agricultural shippers can utilize to challenge railroad rates they believe are unreasonable, regardless of the size of their potential case.”

Fourteen other prominent national agricultural producer, commodity and agribusiness associations, as well as the National Association of State Departments of Agriculture, joined as signatories in supporting the NGFA’s statement. Sixteen state and regional agribusiness associations affiliated with the NGFA also joined.

The NGFA and the other agricultural organizations pointed out several major reasons why rail grain movements were unique from non-agricultural commodities, such as coal and chemicals.

The NGFA’s statement also cited a 2015 study conducted by the National Academy of Sciences’ Transportation Research Board (TRB) that documented that rates for both small and large shipments of grain and oilseeds increased by more than 70 percent between 2002 and 2013, despite market factors that otherwise would have seemingly produced lower rates were it not for the market power exerted by rail carriers. The TRB study also found that while real rates for most commodities increased between 15 and 25 percent during that time span, grain rail rates increased by a whopping 40 percent.

The NGFA and other agricultural organizations also provided input on several specific aspects of the STB’s proposed concepts for creating a new rate-challenge methodology. View an outline of NGFA’s full comments online.

“We urge the STB to now move expeditiously to develop and propose rate-challenge methodology rules and procedures appropriate for grain and agricultural shippers,” the NGFA and other agricultural groups concluded.

View the full comments here.

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The NGFA, established in 1896, consists of more than 1,050 grain, feed, processing, exporting and other grain-related companies that operate more than 7,000 facilities and handle more than 70 percent of all U.S. grains and oilseeds. Its membership includes grain elevators; feed and feed ingredient manufacturers; biofuels companies; grain and oilseed processors and millers; exporters; livestock and poultry integrators; and associated firms that provide goods and services to the nation’s grain, feed and processing industry. The NGFA also consists of 29 affiliated State and Regional Grain and Feed Associations, and has strategic alliances with Pet Food Institute and North American Export Grain Association.

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