Shippers aren’t waiting for the Surface Transportation Board to address railroad customer pricing concerns and carriers’ ability to make enough money to invest in their networks.
That’s likely a very wise move. Although STB Chairman Daniel R. Elliott said in late May the railroad regulation agency would announce efforts toward a compromise by the end of September, the STB’s record of punting difficult decisions dampens expectations that the action, if not just a report, will shake up the status quo.
The scenario is similar in Congress. Shippers’ efforts to push legislation to curb rail pricing power have faltered, as a rail-sympathetic House has blocked the efforts of their defenders, Sens. Jay Rockefeller, D-W.Va., Herb Kohl, D-Wis., Al Franken, D-Minn., and Kay Bailey Hutchison, R-Texas. Perhaps that’s why shippers are taking more of a backdoor approach by lobbying Congress to order a study of rural shippers reliant on a single rail line as part of the farm bill.
The Senate amendment, introduced by Sens. Amy Klobuchar, D-Minn, and John Hoeven, R-N.D., would require the departments of Agriculture and Transportation to update their rural transportation issues, including those relating to rail pricing. A 2010 USDA study, ordered through a previous farm bill, found “considerable evidence” railroad companies were charging shippers excessive fuel surcharges, and that rail competition shrank nearly 75 percent in agriculture areas between 1992 and 2007.
The findings helped lead to a two-day hearing in the Senate Commerce Committee in September 2010, and the subsequent release of a report criticizing carriers for high rates and calling for reform of railroad deregulation. On the heels of the hearing, the National Industrial Transportation League, the United States’ largest shipper group, filed a petition for more competitive switching rules, only to see the STB defer the decision, citing the need to address the issue through a broader approach on rail competition.
Railroads argue such re-regulation efforts would impede their ability to earn enough money to maintain and expand their networks. They point to a DOT study that forecasts an 88 percent rise in freight rail demand by 2035.
Aside from allowing Senate supporters to rake the railroads over the coals, the farm bill amendment would require the secretary of agriculture to participate in STB policy proceedings relating to freight policy. The potential oversight would help harness sympathy for agriculture shippers who are driving the U.S. economic recovery through their robust exports.
Language to boost the STB’s power so the agency could address more complaints against the railroads was left out of the recently passed surface transportation bill, said Bob Szabo, executive director of Consumers United for Rail Equity. The head of the shipper coalition said the STB, which has $28 million in revenue and a 142-person staff, needs more resources to take on more complaints and rule on them more quickly. The STB asked for about $34.6 million for fiscal 2013, but President Obama’s budget only calls for $30 million.
If the House introduces a rail bill, as Rep. John Mica, R-Fla., has signaled, there might be a chance to give the STB more resources. Anything that addresses railroad pricing reform is unlikely, and not just because the bill probably will focus on reforming Amtrak. Besides, the House Transportation and Infrastructure Committee chairman is a major proponent for railroads and his constituency includes CSX Transportation.