legislative

Rail Reform Issue Page

Rail Reform

Having a fully staffed U.S. Surface Transportation Board (STB) is of paramount importance for chemical distributors. The STB makes critical decisions for rail customers that impact their daily operations and their bottom lines NACD supports efforts that serve to promote greater freight rail competition and improve the efficiency and effectiveness of the STB.

Background

Since the passage of the Staggers Rail Act of 1980, freight traffic has nearly doubled, investment in rail infrastructure has increased, and the economic strength of railroads has greatly improved. At the same time, the rail industry has consolidated, reducing the number of Class I railroads from 26 to seven, with only four dominating the market causing most shippers to lack access to competitive rail service. 

Unfortunately, STB’s existing rules impose such high regulatory hurdles that no rail customer has ever been able to request switching successfully. Shippers remain captive to their railroad, even when that railroad offers non-competitive rates or, as seen recently with CSX and Union Pacific’s widespread disruptions, fails to provide acceptable service. A shipper that lacks competitive transportation service has little recourse in the face of soaring rates. Filing a rate challenge with the STB is complex and expensive, with some rate cases costing in the millions and taking more than three years to resolve. Very few rate cases are undertaken.

NACD Supports:

  • NACD supports efforts that serve to promote greater freight rail competition and improve the efficiency and effectiveness of the Surface Transportation Board (STB).
  • Urging President Biden and Congress to nominate and confirm new reform-minded STB members and a permanent Chair, resulting in a fully staffed STB, who are committed to moving forward on freight reforms;
  • Improving STB’s rate-reasonableness standards to ensure efficient and appropriate relief is available in rate cases.
  • Streamlining overly burdensome STB procedures to allow customers to request competitive switching successfully, speed up the resolution of cases, and minimize costs;
  • Prohibiting railroads from “bundling” contract rates that effectively prevent rate challenges; and
  • Commercially fair, transparent, and reciprocal treatment of rail demurrage and accessorial charges.

Latest Action

In 2015, the Surface Transportation Board Reauthorization Act of 2015, supported by NACD, was signed into law. This legislation establishes the STB as a wholly independent federal agency; expands the STB membership from three to five board members; authorizes the STB to investigate issues of national or regional significance; requires the board to establish regulations governing such investigations; directs the STB to modify its voluntary arbitration process, including increases maximum damage awards; and shortens the timelines applicable to large rate case proceedings.

As of November 2020, five STB members have been nominated and confirmed — Chairman Ann Begeman, Patrick Fuchs, Martin Oberman, Robert Primus, and Michelle Schultz. This is the first time since the STB’s expansion that there has been a full board. The STB has started to review and evaluate commercial fairness and reciprocity issues such as demurrage and accessorial charges across the industry.[1]


[1] Surface Transportation Board, Non-Docketed Public Correspondence," prod.stb.gov, STB, February 11, 2021, https://prod.stb.gov/news-communications/non-docketed-public-correspondence/.

NACD Resources

 

For further questions about NACD’s Rail Reform Issue Page please contact Erin Getz, Manager of Legislative Affairs at egetz@nacd.com.