Market Matters Blog           08/08 11:34

   Cash Market Moves: House Proposes Bill to Strengthen STB Authority Over 
Railroads 

   The Freight Rail Shipping Fair Market Act was introduced in the U.S. House 
of Representatives, which would reauthorize the Surface Transportation Board.

Mary Kennedy
DTN Basis Analyst

   The Freight Rail Shipping Fair Market Act, introduced in the House, includes 
several updates that would provide fairer treatment for agricultural shippers. 
The most recent STB Reauthorization expired almost two years ago.

   On Aug. 2, Chair of the Subcommittee on Railroads, Pipelines and Hazardous 
Materials Donald M. Payne, Jr., D-N.J., Chair of the House Committee on 
Transportation and Infrastructure Peter DeFazio, D-Ore., Chair of the House 
Committee on Agriculture David Scott, D-Ga., and Chair of the Subcommittee on 
Livestock and Foreign Agriculture Jim Costa, D-Calif., introduced the Freight 
Rail Shipping Fair Market Act.

   This legislation will reauthorize the Surface Transportation Board (STB), 
the federal agency charged with the economic regulation of freight rail, and 
create a fair marketplace for the Class I freight railroads and their captured 
customers.

   Key components of the bill include:

   -- Strengthening the STB's authority to address rail service emergencies and 
requiring rail contracts to include service delivery standards and remedies, 
while leaving details to be privately negotiated between parties.

   -- Providing the STB with clear direction to resolve common carrier 
obligation complaints.

   -- Creates financial incentives for both railroads and their customers to 
efficiently move railcars.

   -- Supports freight railroad efforts to identify where freight is located on 
their systems while in transit.

   -- Adequately funds the STB to allow for quicker dispute resolution when 
petitioned.

   Industry groups applauded the introduction of the bill. The NGFA has been 
encouraging lawmakers to introduce and support a bill to reauthorize the STB 
and help address insufficient, unreliable freight rail service for the U.S. 
agricultural value chain. "NGFA members appreciate Chairman Payne, Chairman 
DeFazio, Chairman Scott and Chairman Costa for their leadership in responding 
to severe rail service issues that have caused supply chain disruptions, 
endangered the delivery of feed to livestock, led to grain processing 
facilities slowing and shutting down, and negatively impacted U.S. grain 
exports," NGFA President and CEO Mike Seyfert said.

   "The Freight Rail Shipping Fair Market Act would bolster the STB's existing 
authority to regulate railcar use by authorizing shippers to charge railroads 
demurrage to incentivize them to perform in the same way railroads incentivize 
their customers. The bill also would establish specific criteria for the STB to 
consider when determining whether a railroad is meeting its common carrier 
obligation to provide rail service. If the STB determined a carrier was not 
meeting its common carrier obligation, the bill would empower the STB to 
prescribe reasonable transit or cycle times or other service standards 
consistent with the needs and requirements of the shipper making the request. 
These policy measures, and several others included in this bill, are necessary 
to improve rail service for agricultural shippers," said Seyfert.

   However, there was backlash on the bill from the Association of American 
Railroads (AAR).

   "This imprudent proposal turns the clock back more than 40 years and 
reinstates an unbalanced regulatory framework that replaces free-market 
principles with unjustified government mandates," said AAR President and CEO 
Ian Jefferies. "Since the industry was partially deregulated in 1980, freight 
railroads have invested nearly $760 billion to improve the safety, 
competitiveness and sustainability of their operations. Their ability to 
continue this level of spending is critical to meeting today's and tomorrow's 
freight demands. Safe, reliable, cost-effective and fuel-efficient freight rail 
transportation is essential to our future. Overreaching reregulation will take 
us backward and won't do a thing to solve current service challenges and supply 
chain problems."

   However, industry groups have made it clear that this bill is necessary to 
protect shippers. Chris Jahn, president and CEO of the American Chemistry 
Council, said, "This important legislation contains many thoughtful solutions 
that complement the much-needed reforms being considered by the STB. We urge 
Congress and the STB to work together on meaningful reforms that will 
incentivize the railroads to provide reliable and competitive service and hold 
them accountable when they fail to deliver."

   Amid all of this, remember that the rail workers and railroads have yet to 
agree on a new contract. Hearings are currently taking place with the 
Presidential Emergency Board (PEB). Following the hearings, the PEB will issue 
recommendations for settlement of the national agreement dispute. A second 
30-day cooling off period will begin when those recommendations are issued, 
which should occur on or before Aug. 15. If nothing is decided by the second 
cooling off period, 115,000 rail workers could go on strike, hampering rail 
service just as harvest starts.

   Fact Sheet about the Freight Rail Shipping Fair Market Act: 
https://transportation.house.gov/imo/media/doc/Facts%20on%20Rail%20Service%20Leg
islation%202%20pages.pdf

   Letter from the NGFA and 88 other shipper groups of the  Agricultural 
Transportation Working Group: 
https://www.dtn.com/ag/assets/Ag-Transportation-Working-Group-Letter-in-Support.
pdf

   Statement from the AAR: 
https://www.aar.org/news/aar-statement-on-the-freight-rail-shipping-fair-market-
act/

   Mary Kennedy can be reached at mary.kennedy@dtn.com

   Follow her on Twitter @MaryCKenn




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