What do a crushed stone supplier in Texas, automobile producers across the U.S. and the Washington state potato industry have in common? They all want regulators to oversee their shipments with railroads.
So do steel shippers, cement makers, Midwest grain and oilseeds growers, packaging suppliers and movers of forestry or paper products.
But they all are operating in cargo categories the Surface Transportation Board exempts from its regulatory process, and the rail customers can’t take complaints over pricing or service to the agency. It’s up to those shippers and carriers to work out problems in a free market the shippers say isn’t much of a free market for them.
The board will hold a public hearing on Feb. 24 on cargo exemptions the STB and its predecessor agency have maintained for decades. And, after falling short in legislative efforts in Congress last year, shippers this year are pressing hard on the regulatory front.
Railroads and their allies are pushing back to head off tighter regulation on exempt bulk and intermodal shipments, so both sides are lining up lawyers to fill the agency’s comment docket with arguments.
The STB asked for comments on whether it should revisit its hands-off treatment of many cargoes as a first move toward what could be the biggest shift in rail regulatory policy in the agency’s history. It also would be the first substantial tightening of federal rail oversight since deregulation in 1980.
The board will hold a separate hearing June 22 — postponed from May 3 — on the state of competition in the rail industry. That could amount to a wholesale review of deregulation, which railroads and many industry observers say was a huge success that brought their industry back from a ruinous period. But many shippers say the period of railroad resurgence has left many of them captive to single-carrier service with no competition in freight rates.
“Because of the exemption for potatoes, we have no means available for the (STB) to hear our grievances,” Matt Harris, trade director for the Washington State Potato Commission, told the board.
The competition that once existed among railroads is gone after an era of mergers, “and some railroads have abused their market power,” Texas Crushed Stone President William Snead said. He asked the STB to lift its exemption of aggregate materials, because “we need the ability to go the board and seek relief.”
Automakers want the board to stop exempting cars and parts, saying so many vehicle plants are captive to a single railroad that they have no way to contest railroads’ power over freight pricing. AK Steel hopes exemptions will be lifted on input scrap and coke, plus the steel slab and sheet the West Chester, Ohio-based company produces.
The National Industrial Transportation League and Consumers United for Rail Equity — both of which pushed for Congress to enact a tougher rail regulation law in the last Congress — argue broadly all exemptions need reviewing since rail and truck market conditions have changed dramatically in recent decades.
Side Bar: DOT Stacks Up for Intermodal.
The Intermodal Association of North America, the Department of Transportation and container-handling giants joined railroads in trying to fend off any new regulation of rails’ container and trailer traffic.
Carriers also think the other exemptions should remain, saying competition among railroads for many shipments and from truckers means shippers have options. “The board has no basis for revisiting the policy judgment that produced the commodity, boxcar and intermodal exemptions,” Union Pacific Railroad said.
“The exemptions are effective, have worked exactly as intended by Congress and benefit both railroads and shippers,” Richard Timmons, president of the American Short Line and Regional Railroad Association, told the STB. And, because small carriers specialize more in the boxcar and commodity shipments than long-haul rail lines that also have big intermodal networks, any STB limits to the exemptions would “have a disproportionately adverse effect on small railroads,” he said.
Edward Hamberger, president and CEO of the Association of American Railroads, insists the railroads have the law on their side. “Competition is the determinant of whether particular rail traffic or services should be exempt from board regulation ... and there is ample evidence that competition has remained strong overall where exemptions had been previously granted,” he said in comments to the board.
Contact John D. Boyd at email@example.com.