Freight rail mergers and acquisitions. Disagreements over rail rates. There is a federal agency that oversees these and a host of other issues: the Surface Transportation Board.
The STB is an independent agency separate from the U.S. Department of Transportation. The board primarily oversees economic regulations related to the railroads, although it also has some jurisdiction over pipelines and certain motor carrier-related functions.
For the railroads, STB’s economic oversight includes railroad rates and rail service issues. This includes mergers, line sales, line construction and line abandonments. But STB also has jurisdiction over certain passenger rail matters, the intercity bus industry and the rate regulation of noncontiguous domestic water transportation, according to STB’s website.
The board can consist of up to five bipartisan members who are appointed by the president and confirmed by the Senate. The agency also has about 150 employees working full time to support its functions. Each board member has a two-term limit, and each term lasts five years. A board member may remain in office for one additional year while awaiting a successor.
19th century origins
The STB has been around since Jan. 1, 1996. It is the successor of the Interstate Commerce Commission (ICC), which existed from 1887 to 1995 until a 1995 congressional act abolished the agency as many of the ICC’s functions were transitioned to other federal bodies.
The STB was administratively aligned with the U.S. Department of Transportation from 1996 to December 2015. From December 2015 to the present, STB has functioned as an independent agency following the STB Reauthorization Act of 2015.
According to the 2015 act, the present-day board resolves disputes between shippers and carriers or between carriers; conducts proceedings to consider, adopt or modify rules or policies that have broad applicability; provides informal assistance to shippers or carriers seeking to assert their rights or resolve disputes with a carrier; collects carrier and industry information, such as employment and wage data, and makes it publicly available; monitors carrier activities and industry performance; and issues reports to Congress. The board also can enforce carrier compliance.
The board also has exclusive jurisdiction over railroad mergers, while anti-competitive issues involving the railroads may be subject to regulation from the U.S. Department of Justice or the Federal Trade Commission..
The board performs these actions via proceedings where parties file testimony. A public comment period may also be part of the proceeding.
Small, but mighty
The STB may slightly grow its headcount of 150 full-time employees in the coming months.
But observers have questioned whether significantly more staff is needed since the board has a lot on its plate. Pending acquisitions of Kansas City Southern and Pan Am Railways, Amtrak’s plans to restore Gulf Coast service, and rate and service issues such as reciprocal switching and the application of demurrage and accessorial charges are just the tip of the iceberg when it comes to the issues currently facing the board.
As a result, observers have noted that it can take months, if not a year or more, for the board to rule on matters brought up by customers, other railroads or rail labor because of the work involved in addressing those major issues.
Furthermore, the other reason why STB deliberates carefully — and slowly — is that it needs to consider how the decisions it makes now could affect future outcomes. For instance, if efforts to acquire KCS result in more consolidation of the Class I railroads, how would that affect the regulatory environment afterward should there be only two or three Class I railroads remaining, observers have asked.
An example of the weight of STB’s regulatory responsibility already exists: an executive order from the Biden administration charged STB’s chairman to address rail competition as it mulls issues such as ensuring competitive access and making sure Amtrak meets on-time performance requirements, as well as determining whether an M&A is in the public interest.