Railroaders place to shoot the shit.

The board determined the Class I's rates were "unreasonably high," although STB Commissioner Charles Nottingham dissented from the decision.

The new rates mean U.S. Magnesium could recoup up to $1 million over five years, according to the STB.

The decision was based on a rate challenge involving two movements of chlorine by tank car from Rowley, Utah, to Eloy, Ariz., and from Rowley to Sahuarita, Ariz. The STB determined that U.S. Magnesium's rate "comparison groups" were more similar to the traffic at issue, but agreed with UP that the new rates should reflect the differences between "contract vs. tariff rates," and increased the new maximum rates by 14.8 percent.

UP officials issued a statement expressing disappointment with the decision. The railroad plans to seek an appeal.

"The board concluded that a group of shipments consisting entirely of chlorine shipments was less comparable to the chlorine shipments in the case than a group consisting almost entirely of other commodities that are less-hazardous to the public and priced under different market conditions than chlorine," UP officials said.

In addition, the STB chose U.S. Magnesium's group of mostly non-chlorine shipments on the basis of a statistical analysis that the board "candidly admitted" might not be statistically valid and that resulted in a virtual "dead heat" between the competing groups, they said.

"This statistical analysis was never discussed by anyone in the record of the case, had never been proposed by the board in any other context and does not appear in the board's rules," UP officials said. "UP believes that a statistically insignificant exercise that produces a toss-up has no precedent in case law or rules, and contradicts the board's own findings that chlorine carries greater risks and moves in markets distinct from ammonia and other hazardous products."

(The preceding report appeared on the Web site www.progressiverailroading.com on February 1, 2010.)