BP Amoco Withdraws Small Shipment Rate Complaint

Date: Jun 27, 2005

Only a month after filing the first small shipments rate complaint since the STB in 1996 adopted procedures to address rate complaints which do not warrant the expense of a stand-alone cost proceeding, and three weeks after the STB issued its procedural order, BP Amoco has withdrawn it rate complaint against NS.

The first phase of this proceeding entailed mediation, requested by BP and agreed to by NS on condition that mediation was non-binding. The settlement terms are confidential. Accordingly, it is not known if BP achieved a meaningful benefit, if the mediation may have revealed a weakness in its case causing BP to retreat to the contract offer from NS, if the latter was still open (we certainly don't expect NS would have caved-in after several mediation meetings), or if the outcome was in-between.

The small shipments rate analysis relies upon three rate (revenue-to-variable cost) benchmarks, two published by the STB and one utilizing confidential waybill data to be made available to complainants after filing the case to assess rates on comparable traffic. As a result of the procedural order issued by the STB, this case offers insight into the process to determine the comparable traffic group. The early disposition of the case leaves open the question of how the STB will treat two other critical issues. One is how the STB will adjudicate the threshold issue of whether the complaint does not warrant a full SAC case and so qualifies for the small shipment rate procedure. NS had stated that it would not contest BP Amoco on this determination. The other open question is how the STB will weigh the three comparative factors.

Another small shipments rate case is understood to be in the offing, and will bear watching when it is filed.

For more information, please contact Marty Bercovici at 202-434-4144 or bercovici@khlaw.com.