Rail and shipper interests begin to weigh in on STB reauthorization bill

By Jeff Stagl, Managing Editor

The long-anticipated "balanced competition" bill now resides in the Senate. On Dec. 17, Sen. John "Jay" Rockefeller (D-W.Va.) introduced the Surface Transportation Board Reauthorization Act of 2009 (S. 2889).

Co-sponsored by Sens. Kay Bailey Hutchison (R-Texas), Frank Lautenberg (D-N.J.), John Thune (R-S.D.) and Byron Dorgan (D-N.D.), the bill aims to increase rail competition, strengthen federal oversight of railroads and improve rail shippers' access to regulatory relief. S. 2889 would require major railroads to quote "bottleneck" rates, set standards for reciprocal switching and terminal access rates, and create a process for challenging paper barriers.

In addition, the bill proposes to strengthen the STB's oversight of the rail industry by updating rail transportation policy, providing the board independent investigative authority and creating a rail customer advocate to help resolve disputes. The legislation also would improve rate complaint processes, require railroads to provide service standards to shippers and set lower STB fees for filing complaints.

Crafted after "extensive bipartisan work with all stakeholders," S. 2889 represents the first comprehensive reauthorization of the STB since it was established under the ICC Termination Act of 1995, and the first significant rail competition reform policy in 30 years, according to Rockefeller, who chairs the Senate Committee on Commerce, Science and Transportation that drafted the legislation.

"For a quarter of a century, I have worked to enact needed rail legislation that would provide real reform and address shippers' problems," he said in a prepared statement.

Rockefeller plans to continue working with Sen. Herb Kohl (D-Wis.) to add antitrust reforms to the bill as it moves to the floor. Kohl believes that when the full Senate considers the bill sometime early this year, it will include a repeal of railroads' antitrust exemption, which "is wholly undeserved, shared by virtually no other industry and clearly anti-competitive," he said in a prepared statement.

However, the potential antitrust provision concerns Association of American Railroads (AAR) officials. The bill would require Class Is to "open their privately owned and maintained rail networks," said AAR President and Chief Executive Officer Edward Hamberger in a prepared statement.

"We will remain engaged with the commerce committee, Congress and the Administration to craft final legislation that ensures railroads can continue to make the investments that sustain a healthy national rail network," he said.

Antitrust measures a must, shipper groups say

On the contrary, American Chemistry Council officials believe the bill must include antitrust measures and boost rail competition.

"We are troubled by provisions that require captive shippers to pay an unwarranted rate contribution for partial access to another railroad's services, thus reducing the likelihood of truly competitive rail service," they said in a prepared statement.

Consumers United for Rail Equity officials — who long have advocated more rail competition — agree that "there is still much work to be done" to ensure shipper-oriented reforms are included in S. 2889.

For the National Grain and Feed Association (NGFA), the bill doesn't contain all the U.S. rail policy changes it advocates, but it provides some "meaningful corrections" to current law and "hopefully will set the stage for a more balanced regulatory environment," said President Kendell Keith in a prepared statement.

NGFA anticipates an opportunity to seek further bill enhancements on the Senate floor and in the House, where the House Transportation and Infrastructure Committee is expected to develop its own version of rail reform legislation later this year, said Keith.

Meanwhile, the National Industrial Transportation League's rail transportation committee will conduct a meeting Jan. 12 to "discern, dissect and debate the bill's provisions, and determine how they will affect shippers' business," says President Bruce Carlton.

"We'll comment after that," he says.

Two Robert W. Baird & Co. Inc. analysts didn't wait to provide commentary. In a legislation analysis released Dec. 18, Jon Lagenfeld and Benjamin Hartford said ambiguity that surrounds S. 2889, both in the timing of its passage and ultimate impact to the rail industry, needs to be addressed. The bill contains a number of rail operating practice studies that "could drag 12 to 24 months beyond the bill's passage," which isn't expected until mid-2010, resulting in "uncertainty for the industry that could linger for multiple years," they wrote.