Transportation Regulation

Shippers Want Congress to Act on Rail Reform

By Steven Johnson | ECT Staff Writer Published: July 22nd, 2014

A coalition of shippers, including NRECA, has renewed a years-long call for Congress to act on what it regards as excessive rates and subpar service in the nation’s freight rail system.

Shipping groups are again asking Congress to rebalance a regulatory system they say is skewed toward freight rail interests. (Photo By: iStockphoto)

Shipping groups are again asking Congress to rebalance a regulatory system they say is skewed toward freight rail interests. (Photo By: iStockphoto)

In a letter to congressional leaders, 24 trade organizations outlined a series of reforms they say will inject competition into the industry and break down regulatory hurdles that aggrieved shippers face.

NRECA CEO Jo Ann Emerson said the letter “highlights action needed to increase rail competition, break the railroad’s unprecedented market power and ensure the Surface Transportation Board takes action to protect rail customers.”

The July 10 letter was addressed to Senate Commerce Committee Chairman John D. Rockefeller IV, D-W.Va., and Sen. John Thune, R-S.D., the ranking committee member. It also went to Sens. Richard Blumenthal, D-Conn., and Roy Blunt, R-Mo., the chairman and ranking member of the Subcommittee on Surface Transportation.

More than 75 percent of all U.S. rail stations are served by a single railroad, the groups said. Many electric cooperatives are beholden to one carrier and regularly pay at least twice as much for coal hauling as customers who have competing railroads.

“Unreasonable rate increases, service breakdowns, and diminishing competition all act as headwinds on the many industries that require rail to do business in the United States,” the groups said.

Among the trade groups’ recommendations is overhauling the STB, the three-member body that oversees the freight railroad industry. The board has long been seen as a stumbling block for shippers who feel they don’t have a fair shake at challenging railroad rates.

In one current case, Basin Electric Power Cooperative has spent more than $9 million and invested 10 years in contesting rates imposed unilaterally by BNSF Railway Co.

The groups also want STB to throw out an annual calculation it uses to determine railroad profitability, saying it’s outdated in light of record shareholder returns and capital investments.

Other proposals include changing the STB’s rate challenge process and giving shippers more options by rewriting rules that govern switching carload freight between carriers.

Rail customers have been fighting the power of the freight carriers for more than a decade.

In 2005, Rockefeller introduced pro-competition legislation backed by NRECA and other shippers, and steered it through the Commerce Committee in December 2009.

But he has been unable to put together a coalition for floor action, while shippers continue to be frustrated by STB rulings on coal dust and related issues.

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