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House bill would broaden Surface Transportation Board’s authority

Democrat-sponsored legislation would help STB respond faster to disputes or rail service issues

Hopper cars on a track. (Photo: Shutterstock/Around the World Photos)

Democrats on the U.S. House Transportation and Infrastructure Committee have introduced a bill to let certain shippers charge demurrage and help the Surface Transportation Board set minimum service delivery standards that would ensure efficient and timely rail service.

The Freight Rail Shipping Fair Market Act would require contracts to detail service standards and remedies, as well as guide STB on how to resolve complaints related to compliance with the common carrier obligation, a federal mandate that requires railroads to provide freight transportation at reasonable terms and conditions.

The bill would also enable private rail car owners or lessees, who are often shippers, to charge demurrage, or fees charged for holding on to rail cars for too long at origin or destination. That includes shippers transporting agricultural products or other commodities, according to a bill summary. Shippers have contended that they have been charged demurrage by a railroad even though they say it was the railroad that held onto the rail car for too long.

Other provisions include updating STB’s emergency powers so that it can be more responsive to urgent freight rail service problems, streamlining rate reviews to speed up the process and creating an 18-member board consisting of STB board members and freight and passenger rail representatives to look into related issues. The function of this board would be similar to one already existing just for freight rail.

The bill contains several proposed studies:

— An update by STB to study freight rail competition.

— Assessments by National Academies of the environmental benefits of freight and passenger rail and of data constraints that impede the flow of freight and add to supply chain inefficiency.

— Reviews by the Government Accountability Office of contractual restrictions between Class I and Class II and III railroads on interchange agreements and of STB’s ability to authorize penalties so that the report can inform an STB rulemaking on civil penalties.

— A report by STB, the Federal Railroad Administration and the Department of Homeland Security on the safety and regulatory challenges of freight car GPS and other telemetry systems that would provide the location of cargo.

Introducing the bill was Rep. Donald M. Payne Jr., D-N.J., chair of the Subcommittee on Railroads, Pipelines and Hazardous Materials. It is also backed by Reps. Peter DeFazio, D-Ore., chair of the House Committee on Transportation and Infrastructure; David Scott, D-Ga., chair of the House Committee on Agriculture; and Jim Costa, D-Calif., chair of the Subcommittee on Livestock and Foreign Agriculture. 

The subcommittee on railroads and pipelines had conducted several hearings earlier this year on the reauthorization of STB, and this bill builds upon the testimonies heard at those hearings.

“This bill will level the playing field and provide railroad customers — many of which are transporting key food and energy products — the service they deserve,” DeFazio said in a release. “This bill will also provide the tools and guidance the Surface Transportation Board needs to fulfill its mandate and better regulate disputes among Class I railroads and their customers, weed out unfair practices, and incentivize efficient operations. I look forward to putting these policies into action, empowering the Board, and boosting competition in the freight rail industry.” 

Shippers’ groups such as the National Grain and Feed Association, the American Chemistry Council, the Freight Rail Customer Alliance and the Private Railcar Food and Beverage Association applauded the bill.

“This important legislation contains many thoughtful solutions that complement and line up well with the much-needed reforms being considered by the STB,” said ACC President and CEO Chris Jahn in a release. “We urge Congress and the STB to work together on meaningful reforms that will incentivize the railroads to provide reliable and competitive service and hold them accountable when they fail to deliver.”

Meanwhile, the Association of American Railroads (AAR) said the bill could “further exacerbate current supply chain and service challenges” as well as threaten the long-term viability of freight rail. 

“Today’s STB is exercising its oversight authority vigorously. Almost half of the proposed bill is already the subject of ongoing Board proceedings, “AAR President and CEO Ian Jefferies said in a release Tuesday. “Congress should learn from lessons of the past:  more government control does not result in better railroads. 

“By virtue of today’s balanced regulatory framework, America’s freight railroads are, by virtually any measure, the best national freight rail system in the world. Now more than ever, we need that best-in-class system, and it is not the time for railroads to be hamstrung by excessive regulation.”

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Joanna Marsh

Joanna is a Washington, DC-based writer covering the freight railroad industry. She has worked for Argus Media as a contributing reporter for Argus Rail Business and as a market reporter for Argus Coal Daily.