AAR requests STB implement Cost-Benefit Analysis in Rulemaking Proceedings

The Association of American Railroads (AAR) today petitioned the Surface Transportation Board (STB) to incorporate cost-benefit analysis into rulemaking proceedings. AAR urged that, in the spirit of good government, such analysis should include the most current and reliable data possible, and that the Board should consider the cumulative impact of regulations when proposing and adopting new rules.

While 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 – a reality the AAR petition acknowledges. However, the AAR argues that the STB – recently equipped with two new members, who, along with Chairman 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. 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. “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.”

AAR argues that by incorporating cost-benefit analysis moving forward, the Board would put itself in good company with other independent agencies that also have the power to substantially impact national commerce, such as the Federal Communications Commission. Codifying the proposed requirements would also align the Board with a method favored by U.S. presidents of both political parties, as well as most regulatory experts from across the ideological spectrum.

There should be no principled objection to a process that is already widely used in rulemaking, and the AAR notes in its filing that implementation is highly feasible, as “stakeholders and outside experts already disclose significant public information, and parties participating in a proceeding are more than capable of submitting to the Board up-to-date and reliable information to make decisions that reflect economic conditions in the real world.”

Ultimately, AAR believes that adopting the petition would simply ensure that rulemakers charged with the critical mission of ensuring a viable and competitive freight rail transportation system understand the costs and benefits of various proposed courses of action.