News & Reviews News Wire House bill would expand STB’s authority over railroad service

House bill would expand STB’s authority over railroad service

By Bill Stephens | August 2, 2022

Association of American Railroads says STB reauthorization measure would threaten the viability of the freight railroads and exacerbate ongoing service problems

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A House bill to reauthorize the Surface Transportation Board would allow private car owners to charge railroads fees for delaying their cars. Here a utility-owned coal gondola rolls down Crawford Hill on BNSF Railway in Nebraska. (Bill Stephens)

WASHINGTON — The Surface Transportation Board would get more teeth under a shipper-friendly bill that would reauthorize the agency that regulates freight railroads.

The Freight Rail Shipping Fair Market Act, introduced Tuesday, would give regulators more authority to deal with service emergencies, require railroads to include service standards in contracts with customers, and give shippers the ability to slap fees on railroads that delay privately owned freight cars.

The measure also orders the STB to regularly reevaluate what commodities are exempt from regulation, sets minimum service standards for shipments moving under tariffs, and provides clearer direction to the STB regarding disputes over railroads’ common carrier obligations.

Rep. Donald M. Payne Jr., a New Jersey Democrat who is one of the chairs of the House Subcommittee on Railroads, Pipelines, and Hazardous Materials, accused freight railroads of placing profits ahead of service.

“My bill gives the Surface Transportation Board the power to prohibit rail rate increases during a rail emergency and resolve rail emergencies when they occur,” Payne said. “This bill will improve the speed and reliability of rail service and guarantee that freight rail shipping continues to improve in the future without unnecessary regulations.”

The bill’s sponsors say giving the STB a bigger toolbox would create incentives for Class I railroads to improve service.

But the Association of American Railroads said the measure, if passed, would threaten the viability of the freight railroads and exacerbate ongoing service problems.

“This imprudent proposal turns the clock back more than 40 years and reinstates an unbalanced regulatory framework that replaces free-market principles with unjustified government mandates,” said AAR President and CEO Ian Jefferies. “Since the industry was partially deregulated in 1980, freight railroads have invested nearly $760 billion to improve the safety, competitiveness and sustainability of their operations. Their ability to continue this level of spending is critical to meeting today’s and tomorrow’s freight demands. Safe, reliable, cost-effective and fuel-efficient freight rail transportation is essential to our future. Overreaching re-regulation will take us backward and won’t do a thing to solve current service challenges and supply chain problems.”

The American Short Line and Regional Railroad Association agreed, and said it could not support the bill despite the inclusion of funding for a study that would examine whether Class I railroads have taken steps to discourage interchange with short line and regional railroads. Overall, the bill would “insert aggressive government regulation into the complex, interconnected freight rail network, create an array of unintended consequences, and ultimately do more harm than good,” the ASLRRA said in a statement.

Rail shipper organizations, including the National Industrial Transportation League, welcomed the STB reauthorization bill.

“This bill is consistent with NITL’s longstanding policy goals and objectives by providing the Surface Transportation Board with enhanced tools to better hold the railroads accountable in providing reasonable service at reasonable rates,” Executive Director Nancy O’Liddy said. “Due to supply chain challenges complicated by railroad operation decisions, this bill also addresses the continued debilitating service problems being experienced by NITL members who move billions of dollars’ worth of freight on our nation’s rails.”

The Freight Rail Customer Alliance and the Private Railcar Food and Beverage Association issued similar statements backing the bill.

Herman Haksteen, president of the food and beverage group, says the bill will clarify railroads’ common carrier obligations, provide the STB with improved ways to determine if a railroad is meeting those obligations, and set service standards that can be enforced.

The American Chemistry Council, the trade group representing chemical producers, says the legislation comes at a critical time due to rail service problems. A recent survey of ACC members found that freight rail service has degraded with almost 40% of companies reporting that rail problems are worse this year compared to the third quarter of last year. The survey also found that 75% of companies have been forced to switch cargo from rail to truck because of rate and service issues.

Rail labor was encouraged that the bill aims to clarify railroads’ common carrier obligations.

“In their race to the bottom, Class I freight railroads have chased short-term profits to benefit their Wall Street investors while reducing the industry’s total workforce by 29% in the last six years, leading to widespread deterioration of rail service for customers, untenable working conditions for employees, and an unsustainable freight rail system for the American people. While customers, workers, and consumers suffer the consequences, the railroads are making record-breaking profits,” said Greg Regan, president of the Transportation Trades Department of the AFL-CIO.

Independent analyst Anthony B. Hatch says he expects the committee to advance the bill to the House floor, where it is unlikely to gain approval.

— Updated at 6 p.m. CDT to include reaction from ASLRRA; updated at 9:30 a.m. CDT on Aug. 3 with comment from TTD President Greg Regan; updated at 3:15 p.m. CDT with comment from American Chemistry Council.

7 thoughts on “House bill would expand STB’s authority over railroad service

  1. I’m not particularly fond of increasing government oversight powers, but I think we’re seeing a situation where all reasonable alternatives have been explored and found wanting. The RRs have repeatedly refused to play nice with their customers, regulators, and each other, and have fudged (or outright created) data and metrics to justify their arrogance. Now it’s the STB’s turn to say, “You wanna play hardball? OK, we’re gonna stick the bat up your …”

  2. This bill does need to become law. If nothing else it will show railroads the STB can and will demand better service and fair rates. The CEO’s need to know a hammer blow to the nose awaits. This is the only way to improve performance and rates. Remember the recent case of corn unit trains failures to arrive in Calif ? Once the STB really got hot and bothered UP was able to send 4 round trip trains of corn in a month when they had not been able to deliver one a month for months . Somebody was not watching the store and the STB’s actions will go a long way to help cure crappy service. Nothing else has worked.

  3. From another web site Let us face facts. The RRs in many places are a monoply. Using 2 RR for shipping is just a duopoly that is even worse as a monoply. . Any monoply need oversight be it either the US DOJ. Or in the case since the STB is the one for oversight. Any monoply can just say screw the customer. If the customer has no alternative but to use the monoply. Look at the mess in Texas with the utility providers.

  4. The problem with giving more “tools” to the STB is that it makes them more susceptible to ethics issues. They already deal with enough political junk already.

  5. Interesting read. I would need the full Bill proposal to accurately comment on the Bill itself.

    Of course the railroads will dismiss the Bill as an infringement into their operations. With that said, one only has to look at the operations of railroads since 2017 when CSX implemented PSR.

    PSR in and of itself isn’t necessarily bad. In many ways, it is similar to Six Sigma programs that uses data to solve problems, smooth out defects in processes and reduce waste. However, one of the challenges with PSR in a railroad setting is the focus on the most profitable route pairs. If the route pair does not meet specific criteria for operating ratios, that route is eliminated or significantly reduced in service. And that, is where issue with shippers comes into play.

    The issue with PSR is its implementation; scorched earth. In the drive for the lowest OR, and most likely the highest executive bonuses, the upper echelon executives cut the railroads to the bone. The operations are so lean there is no reserve on the body railroad.

    Which brings us to the Bill proposed by Payne, Jr. I believe the pendulum has swung about as far as it can to one direction. Perhaps the pendulum is starting to swing the other direction. (Remember, pendulums always cut both ways.)

    And one last comment, perhaps, just perhaps, this serves as a “Come to Jesus Epiphany” for the railroad executives. Maybe they can pivot back to common carrier service. I will wait for the outcome.

    1. Exactly. Well said Chris.

      Re-regulation has been about as obvious as tomorrow morning’s sunrise. Support reregulation or oppose re-regulation, either way, know this: it’s coming.

    2. I have seen Sick Sigma (spelling intentional) in action at three major corporations. It was a colossal flop in all three cases, just like most other management fads (e.g., TQM, Quality Circles, Quality is Free, etc.).

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