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Senate Railroad Reform Bill Waiting for a Ride

When it comes to moving new railroad reform legislation through Congress, it’s turning out to be a case of hurry up and wait.

Just days after it had been introduced, legislation that would expand the size of the Surface Transportation Board and augment its powers to regulate the railroad industry passed the Senate Commerce Committee on a voice vote on March 25.

US_Capitol_west_sideThe bill, which was introduced by the committee’s Chairman John Thune (R-S.D.) and its ranking minority member Bill Nelson (D-Fla.), has drawn widespread support from shipper groups and is not being opposed by the rail industry (AA, 3-31, P. 5).

Sen. Thune has indicated that he intends to attach the measure to the multi-year highway funding bill that both houses of Congress and the Obama Administration are continuing to wrangle over – without much apparent progress so far.

If Thune achieves his goal of attaching the bill to another piece of legislation, it would allow the House of Representatives – which has no similar rail reform legislation before it – to approve the bill when it votes on any highway funding proposal jointly adopted by negotiators from both houses in a conference committee report.

New Policies would Empower the Surface Transportation Board

As written, the Thune-Nelson bill would expand the membership of the STB from the current three commissioners to five in total.

In an effort to streamline and speed-up the process of making decisions in the areas of rail rates and competitive practices, the commissioners would be allowed to discuss issues with each other informally, ending current requirements for notice and public hearings.

The bill also proposes shorter timelines and streamlines the complicated procedures the STB uses in rail rate reviews, which can cost more than $3 million to litigate and take over three years to resolve.

Railroad Reform Legislation has been Well Received and Supported

The Association of American Railroads has said it will support the legislation, which leaves out a provision mandating reciprocal switching that was included in similar legislation introduced last year by the now-retired Sen. Jay Rockefeller (D-WV) that drew strenuous opposition from AAR.

Although there is no quid pro quo explicit or implicit, the railroads represented by AAR were happy when the Commerce Committee under Thune’s leadership voted to delay the imposition of expensive Positive Train Control technology on the railroads near the time the reform bill was offered.

In fact AAR actually praised and expressed gratitude to the committee for both pieces of legislation in the same press release. “We thank the leadership of the committee, and look forward to passage of these important measures by both the Senate and House in the year ahead,” AAR said.

“The STB reauthorization measure as passed [by the full Commerce Committee] takes into account the vital need for freight railroads to earn revenues that allow for billions of dollars in private spending each year to build, maintain and grow the nationwide rail network, so taxpayers don’t have to,” AAR added.

The American Short Line and Regional Railroad Association issued a somewhat ambivalently stated that it “appreciates the open door policy that has been maintained by the Senate Commerce Committee,” but did not declare outright whether it approves or disapproves of the legislation.

The growing number of shipper groups supporting the legislation have organized themselves into a new group called the Rail Customer Coalition (www.freightrailreform.com).

Reciprocal Switching Still an Issue for Railroads

Although left out of the Thune-Nelson bill, a request by shipper groups that the STB require reciprocal or competitive switching has been languishing at the board for more than four years.

The fact that this issue remains vitally important to shippers is underlined in remarks on the new coalition’s website written by Bruce Carlton, President of the National Industrial Transportation League.

One of the biggest challenges facing rail customers is that many have access to only one major railroad, which gives railroads unique pricing power that you don’t find in most other, more competitive markets, Carlton pointed out.

“That issue is challenging enough. But even worse, government policies actually block access to railroads in the event a competitive option is available nearby,” he said, “which has led to severe consequences for rail customers and our economy,”

Carlton argues that along with rising costs of shipping by rail and the recent record of poor service, this practice makes it harder for American businesses to compete in the global economy.

“In essence, this issue has reached a tipping point,” he warned. “The STB needs to move forward with competitive switching reform. Congress also needs to pass Senators Thune and Nelson’s bipartisan legislation that would reform the STB and make it more efficient.

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