Audit Faults Fee-Funded STB

Setting the stage for what has become an annual debate over how to fund the Surface Transportation Board, the Department of Transportation’s inspector general says it would be difficult for the board to cover the entire cost of its operations through user fees.

A new audit by DOT’s independent watchdog also found that the board lacks a good way to verify that the fees it charges cover the cost of providing services.

User fees covered 15.7% of STB’s annual operating costs during the two fiscal years ending Sept. 30, 1998, the IG found in a report issued Nov. 17. The $7.5 million in fees collected by the board range from the 8-cents-per-page fee for providing copies of tariffs and reports to the nearly $1 million charged to process a railroad merger application.

While the board handles few motor carrier issues in today’s deregulated environment, it does charge fees for several services provided to trucking companies and shippers. The board charged $2,800 per application for the pooling or division of non-rail traffic, for a total of $28,000, and $1,000 for each of the 11 declaratory orders it issued involving an existing rate.

Paying for the board’s operations — $16 million in the fiscal year that began Oct. 1 — is an annual debate involving DOT, STB and Congress. DOT has proposed annually since 1996 that the board be funded entirely through user fees. STB disagrees, and so far Congress has sided with the board.

The inspector general’s report gives the board ammunition in its ongoing budget squabbles with DOT. The auditors agreed with the board that STB has statutory authority to collect fees for services but needs an act of Congress to become self-sufficient. Because the board does not have an effective system for identifying and tracking the cost of its services, neither the auditors nor STB could determine the extent to which additional fees could be assessed for the rest of the board’s appropriations.

When the issue first arose in 1996, the board issued a proposed fee schedule that sent shippers, carriers and lawmakers through the roof. The fee schedule was an attempt by the board to illustrate the impact a user-fee-supported board would have on shippers, carriers and unions that use the board’s services. After negotiations with affected parties, the board issued its current fee schedule.

Supporting the board entirely through user fees could lead to fluctuations in its budget, the auditors said, making it difficult to maintain a skilled staff in the face of potentially varying demands for STB services. The IG said a fluctuating budget might also reduce STB’s effectiveness as a deterrent to anticompetitive activity, regardless of the number of complaints addressed, and might lead to high fees that would make it difficult for small shippers to obtain regulatory relief.

A DOT spokesman declined to comment on the audit, saying the department has yet to decide whether it will again recommend that STB be supported entirely by fees. An STB spokesman said the board would not comment until it had completed its review of the audit.

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