Rail reform bill passes Senate Committee
A bill containing a proposal for the most significant reregulation of the railroad industry since the 1980 Staggers Act was approved by the U.S. Senate Committee on Commerce, Science, and Transportation Thursday.
Sponsors of the legislation say the Surface Transportation Board Reauthorization Act of 2009 (S.2889) aims to increase rail competition, strengthen federal oversight, and improve shippers' access to regulatory relief.
“It’s an emotional day for me,” said Sen. John D. 'Jay' Rockefeller IV, D-W.V., chairman of the committee and sponsor of the law. “I started on this 25 years ago and I’ve gotten nowhere since then. West Virginia coal and chemical companies mostly were being affected by higher rates if they had only a single line going into the plants. Again and again I was told that the two biggest factors pushing their operations overseas were energy costs and transportation costs and now we are finally going to do something about that.”
The bill has bipartisan support, cosponsored by ranking member Kay Bailey Hutchison, R-Texas, Frank Lautenberg, D-N.J.; John Thune, R-S.D.; and Byron Dorgan, D-N.D. The committee said it would comprehensively update and improve the railroad industry and address longstanding competitive imbalances for shippers.
(A summary of the bill prepared by the committee ishere.)
Rockefeller’s committee said the bill would increase competition by:
' Requiring major railroads to quote 'bottleneck rates' and direct the STB to establish a new rate reasonableness process for bottleneck rates. This would benefit captive shippers have more than one railroad that serves them at their origin and/or destination points, but have at least one portion of a rail movement for which no alternative rail route is available. The committee said requiring a railroad to quote a rate for this bottleneck segment will give captive shippers access to a second railroad and more competitive rates and service.
' Setting standards for 'reciprocal switching' and 'terminal access' rates. The STB Act would overturn a mid-1980s ICC decision called “Midtec” that the committee said has stifled captive shippers from bringing cases to resolve reciprocal switching and terminal access concerns because they are required to prove that a railroad is engaged in anticompetitive conduct.
' Heightening standards for the review of “paper barriers” — contractual agreements entered into between railroads that can impede competition and authorize the STB to address any that are found unlawful.
The bill proposes to increase STB scrutiny of future railroad mergers, and give the board independent investigative authority, where today it can only initiate an investigation upon formal complaint.
The STB would also become a fully independent agency, removing it from the jurisdiction of the Department of Transportation and boost its membership from three to five commissioners.
An STB Office of Public Assistance, Governmental Affairs, and Compliance would assist shippers with complaints regarding railroad service and rates and authorize it to mediate rail disputes, monitor rail carrier operations, ensure legal compliance, and facilitate communication among stakeholders.
Also proposed is a rail customer advocate and ombudsman to help rail customers resolve rail service and rate issues.
The bill would allow certain complaints to be resolved through binding arbitration and expand access to expedited review for complaints regarding the reasonableness of rates charged by a railroad with market dominance.
Rockefeller emphasized the proposed law is a compromise.
“This is a bill that says to the railroads you are not going to get everything you want, but I really believe in your future. I believe they are the cleanest, the fastest, the most efficient way to move people, products, goods. They have an unlimited future. I also said to the shippers that you have been suffering for years and years and you ware not going to get everything you want. And we came to an agreement, ” he said.
“It’s been very tough negotiations. I have been working carefully on the health care bill, I think this is a tougher negotiation,” Rockefeller said. “There are fewer issues, but they are so deeply imbedded.”
“The bill strikes an important balance for both the shippers and industry, especially the new arbitration provision that allows smaller shippers to raise legitimate complaints and seek a remedy through the STB,' Hutchison said.
The bill does not include a measure to eliminate protections railroads enjoy from antitrust laws. Earlier this year Sen. Herb Kohl, D-Wis., chairman of the Judiciary Committee’s Antitrust Subcommittee, agreed to postpone this action on a railroad antitrust bill with he and Rockefeller saying they were working on “harmonizing” their rail reform efforts.
Robert Szabo, executive director and counsel for Consumers United for Rail Equity (CURE), a coalition of freight rail customers, said, “we did not get everything we wanted in this bill, but we think it is a very good bill and we look forward to working that the issues remaining addressed fairly.”
He said Rockefeller indicated during the mark-up that he would negotiate with Kohl and Sen. Amy Klobuchar, D-Minn., a member of both the Commerce and Judiciary committees, and others to include antitrust provisions in the legislation.
The National Industrial Transportation League held a briefing for members Thursday afternoon to fill them in on details of the legislation, and its railroad committee is planning a meeting on January 12 in Atlanta to discuss the legislation.
Bruce Carlton, NIT League president, cautioned this week’s introduction and approval by the Senate Commerce committee is just the beginning of a long legislative process, but noted the proposal was of “historic proportion” and “a little bit like Halley’s comet — it comes around very infrequently.”
Edward R. Hamberger, president of the Association of American Railroads, said the bill would be the most significant rewrite of the railroad industry's regulatory system in the last three decades” and that “privately owned and maintained rail networks and would face vastly expanded government involvement.”
'We continue to have concerns about certain provisions in the bill, particularly the nature and scope of the antitrust provision that may be added at a later date,” he said. ' Chris Dupin