AAR petitions STB to incorporate cost-benefit analysis into rulemaking proceedings

With a focus on getting the Surface Transportation Board (STB) to incorporate cost-benefit analysis (CBA) into rulemaking proceedings, the Association of American Railroads (AAR) stated its case last week for why such action is needed.

In its petition for rulemaking submitted by AAR attorneys to the STB’s Office of Proceedings on March 14, AAR said that “in the spirit of good government such analysis should include the most current and reliable data possible and that the [STB] should consider the cumulative impact of regulations when proposing and adopting new rules.”

And it added that even though these practices are required by law at executive agencies, current administrative law does not require independent agencies like the STB to do these basic analyses. But with the now having two new members,  noted the AAR, who, along with Chairman Ann Begeman, seek agency reforms – would have access to better information and could have substantially greater confidence in critical rulemaking decisions if cost-benefit analyses were performed, adding that this approach would help guarantee that rulemakings comply with the law and will withstand judicial scrutiny.

“Cost-benefit analysis would be a critical tool in fostering sound regulation and supports the Board’s efforts toward achieving its goals, including its mission to facilitate a fluid and reliable rail network,” said Ian Jefferies, president and CEO of the AAR, in a statement. “By adopting the process improvements sought in our petition, we believe the STB would be better positioned to meet its statutory mandate and bring its practices more in line with the spirit of past Executive Orders, which the Board has largely acknowledged to date.”

Ted Greener, AAR executive director of public affairs, told LM that, as outlined in the AAR filing, CBA is needed to bring the STB in line with other government agencies, in that it would give the Board a valuable tool that can help the Board fulfill its statutory mandates to “minimize the need for Federal regulatory control over the rail transportation system, foster sound economic conditions in transportation, and ensure effective competition and coordination between rail carriers and other modes.”

“As we note in the filing, this would help better inform significant rulemaking proceedings, such as the 2016 forced switching NPRM,” said Greener.

When asked what are the current challenges, or pain points, are for the railroads under the current framework, Greener explained that the two related recommendations noted in the filing-that analysis be rooted in the most current and complete data, and that the Board consider the cumulative impact of regulation – would be the best area for reform to address shortcomings in proposed regulation.

“The 2016 NPRM on switching, for instance, is already dated and it relies on further-dated data,” he said. “It is hard to make sound decisions if the Board does not have the most current data.”

Should CBA become part of STB rulemaking proceedings, Greener said it would work the same as all executive agencies conducting the analysis, quantifying the costs and benefits of regulations.

The AAR executive cited a paper by Jerry Ellig, Research Professor, George Washington University Regulatory Studies Center, included in the filing, in which he explained that CBA: “is the tool that helps agencies identify whether alternative regulatory proposals are likely to solve a real problem and at what cost.”

And he also pointed to FCC Chairman Ajit Pai’s 2017 comments, when he said that it is not possible to do evidence-based, data-driven regulation without assessing both costs and benefits and, without being as quantitative as possible.