Rail Customers Seek Speedy Reforms

Freight railroad customers want the Surface Transportation Board to step up the pace of planned regulatory reforms, even as the rail industry wants those changes pulled back.

Coal shippers want federal regulators to move ahead with several important regulatory changes. (Photo By: Getty Images/iStockphoto)

Coal shippers want federal regulators to move ahead with several important regulatory changes. (Photo By: Getty Images/iStockphoto)

"The Board is already engaged on a path to beneficial regulatory reform. What the railroads propose is simply the elimination of regulation for their financial benefit at the expense of rail-dependent, captive shippers," said Anne Warner, executive director of the Freight Rail Customer Alliance, which includes co-ops and other shippers.

Shippers and carriers have had decades-long disputes at the three-member STB, which oversees the freight rail business.

Those differences have sharpened in recent months for two reasons—the board's decision to slow reforms pending its expansion to five members and President Trump's February executive order aimed at cutting back regulations.

Following the executive order, the Association of American Railroads asked the STB to withdraw several proposed regulations, including an important reciprocal switching rulemaking that co-ops have sought for years.

That change would enable a shipper served by a single carrier to switch freight to a second railroad, if there is a junction within a specified distance. The current lack of competition artificially raises the costs of hauling goods and commodities such as coal, shippers say.

The rail industry has vigorously opposed attempts to require competitive switching, but Warner said in a filing that the rulemaking is beneficial and should proceed.

"A prime virtue of reciprocal switching is that it would allow competition to displace rate regulation, and should be embraced for that reason as an example of efficient regulatory reform," she said.

Warner also dismissed the industry's attempt to limit the scope of a performance reporting system that the STB created following missed and delayed shipments of chemicals, coal and agricultural commodities.

"Service is ultimately local, and shippers, as well as the Board itself, should be able to know if a particular area, corridor, or type of freight is receiving deficient service," she said.

In a separate filing, the Western Coal Traffic League urged the STB to move ahead with regulatory changes. Self-imposed delays pending expansion of the board "are particularly unfair to shippers," according to the league, whose membership includes several G&Ts.

"The proceedings the Board has decided to put on indefinite hold are the most consequential ones to shippers, as they address bottom line issues involving how much shippers should reasonably pay for railroad transportation."