The Senate Commerce, Science and Transportation Committee on Sept. 17 approved by voice vote rail legislation that would strengthen and improve the operation of the federal Surface Transportation Board (STB) and, among other things, give it new authority to investigate rail practices alleged to be unreasonable without having to wait for the filing of a formal complaint by a rail customer.
The legislation (S. 2777) would reauthorize the STB – the federal regulatory agency responsible for overseeing freight railroads – and authorize federal funding of its operations through fiscal year 2019. The bill was introduced by Sens. Jay Rockefeller, D-W.Va., and John Thune, R-S.D., who serve as the chairman and ranking member, respectively, of the Senate committee, which has jurisdiction over freight rail issues.
During the bill’s consideration, six senators echoed various concerns over the bill raised by railroads. Sen. Roy Blunt, R-Mo., was most specific, voicing concerns over how quickly the bill – it was introduced last week – was being considered by the committee, and whether it would have a negative impacts on rail investment (including the requirement for railroads to install positive train control safety technology). Sen. Claire McCaskill, R-Mo., said she shared some of the railroads’ concerns. Meanwhile, Sen. Dan Coats, R-Ind., while supporting advancement of the bill, associated himself with Blunt’s remarks, and said he wanted to dig into the issues further. Sens. Deb Fisher, R-Neb., and Kelly Ayotte, R-N.H., made similar remarks reflecting railroads’ positions.
Prior to the Senate committee’s consideration, the Association of American Railroads (AAR) issued a statement alleging that the bill would “harm freight railroads and the communities that depend on them” by imposing “onerous new requirements and controls…” that “could erode the ability of railroads to continue their record infrastructure investments.” The AAR concluded by stating, “The United States has the safest, most productive and efficient freight rail system in the world thanks in large measure to smart and balanced federal regulations that protect rail customers while allowing railroads to operate in the free market like other business. Interfering with this balanced system of rail regulation could shrink rail investment at a time when the nation needs railroads more than ever.”
NGFA Spearheads Ag Letter to Senators: To counter the railroads’ message, the NGFA authored and spearheaded a letter co-signed by 36 other national and state agricultural producer and agribusiness organizations commending Rockefeller and Thune for introducing and moving the bill through the committee.
The NGFA-authored letter noted how severe rail service disruptions and other challenges facing those in agriculture over the last year had brought the constructive role that the STB can play into sharp focus. The NGFA and other agricultural organizations in particular cited as a constructive step the bill’s provisions that would expressly authorize the STB to initiate an investigation of rail practices – except for rate complaints – on its own initiative, without having to wait for the filing of a formal complaint by a freight rail user or group of users.
The agricultural groups also highlighted the reforms viewed as important to increasing the effectiveness of the agency in providing regulatory oversight of freight railroads. The groups noted that the legislation would “make an important contribution…by strengthening the independence of the STB, improving how it functions (including allowing much-needed ongoing dialogue amongst Board members); requiring more transparency concerning the status of its proceedings and the nature and disposition of complaints brought before the agency; and providing for a voluntary arbitration process for disputes involving unreasonable rail rates, unreasonable rail practices and compliance with rail carriers’ common-carrier service obligations – with binding outcomes if utilized – that also recognizes and provides for the existence of private-sector arbitration systems for resolving such disputes.”
The groups concluded by expressing their commitment to working with senators to secure eventual enactment of S. 2777. It is unlikely the bill will be considered on the Senate floor until a post-election session, at the earliest. And there are no plans by the House Transportation and Infrastructure Committee to consider such a bill unless and until the Senate acts.
Background – What the Bill Would Do: For rail shippers and receivers, one of the major improvements contained in the bill is the express authority it would provide to the STB to initiate investigations of rail practices – except for allegations involving unreasonable rail rates – without having to wait for the filing of a formal complaint by a freight rail user or group of users. Current law allows the STB to initiate an investigation only if it receives a formal complaint filed by one or more rail users, which many are reluctant to do given the time, cost and potential for retaliation.
Other important sections of the bill for rail users include provisions that would call on the STB to:
- Determine whether to issue a proposed rule on competitive switching as part of its ongoing proceeding (on which the NGFA is involved heavily).
- Review the methodology the agency uses to determine whether Class I railroads are revenue adequate. Such determinations are important, given the STB’s dual statutory mandate to protect rail shippers from high freight rates and other abusive actions by railroads, while also ensuring that rail carriers earn adequate revenues. Accordingly, once a railroad achieves revenue adequacy, there is less need for the agency to implement policies and rules, such as rate reasonableness rules that emphasize railroad revenues over shipper protections.
- Provide for a voluntary arbitration process for disputes involving alleged unreasonable rail rates, unreasonable rail practices and violations of rail carriers’ common-carrier service obligations – with binding outcomes if arbitration is utilized. This provision also expressly recognizes and provides for the existence of private-sector arbitration systems – such as the one operated by the NGFA – for resolving such disputes.
- In addition, the bill would clarify and enhance the STB’s status as an independent agency, including a ban on any other department or agency requiring the STB to submit its budget estimates or requests, legislative recommendations, testimony or comments on legislation for review or clearance in advance of being submitted to Congress and the White House Office of Management and Budget. It also would:
- Expand the current STB from three members to five.
- Allow commissioners to discuss and collaborate on issues with one another without calling a public meeting, so long as at least three STB members and the agency’s general counsel were present. A summary containing the names of participants and the matters discussed at such meetings would need to be posted within two business days after such a meeting, unless it involved an ongoing STB proceeding. Currently, STB commissioners are not allowed to talk with one another unless they convene a public meeting.
- Require that the STB compile and post quarterly on its website a list of formal and informal complaints it receives from rail users – and how they were resolved – while protecting the identity of the submitting party.
- Require the STB to submit reports to the committees of jurisdiction in the House and Senate on the agency’s progress in addressing unfinished regulatory proceedings.