‘More needs to be done to promote freight rail competition’

U.S. Sens. Tammy Baldwin, D-Wis., and Shelley Moore Capito, R-W.Va., want the Surface Transportation Board to press on with a rulemaking they say could enable shippers to receive better rail service and make the U.S. rail network more resilient.

The two senators sent a letter to STB Chairman Marty Oberman dated Monday asking him to “move swiftly” on regulation for reciprocal switching.

Reciprocal switching is a process that would grant a shipper with access to the network of another Class I railroad at an interchange, with the idea that the shipment would continue on the network of the competing Class I railroad because of lackluster service on the originating Class I railroad.

STB’s proposed rulemaking, released early last month, would establish standards that would reflect a minimal level of rail service below which a shipper could seek relief.

“This rulemaking is long overdue. We have been concerned about the prolonged service challenges facing many rail shippers in recent years and have appreciated the efforts taken by the Board to date to require service improvement plans and increased data reporting. However, ensuring that the freight rail system works for all stakeholders will require more than just additional reporting,” the senators said in their letter to Oberman. They also noted that freight rail moves roughly a third of U.S. exports by volume 28% of freight movement by ton-miles.

“This proposed rulemaking is an appropriate next step that will improve rail service, and we encourage you to move ahead with the final rule. We also believe more may be needed and ask that you continue engaging with shippers as stakeholder comments are reviewed and the Board considers next actions,” they continued.

STB will be taking comments on the proposed rulemaking through Nov. 7, with reply comments due by Dec. 6 to better define what should constitute “reasonable” rail service. The dates are actually a 15-day extension from STB’s original submission dates, per a request by the Association of American Railroads to extend the commenting period.

The proposed rule for reciprocal switching compels the Class I railroads to submit first-mile and last-mile data that would help shippers and the broader public understand whether the railroads are meeting certain rail service levels. If a railroad doesn’t meet those levels, it could prompt a shipper to move forward with a request for reciprocal switching.

Yet the senators also say the rulemaking should be just the first step in advancing rail competition. Capito and Baldwin — Baldwin had co-introduced the Reliable Rail Service Act this past summer — also want STB to guarantee that the railroads can consistently meet certain service thresholds.

Shippers said in Monday’s announcement about the senators’ letter that Congress still needs to clarify what constitutes as sufficient service under the common carrier obligation, which, per federal code, binds railroads to transport any freight that has been properly tendered on reasonable terms and conditions. Shippers are also seeking Congress to allow for reverse demurrage, where railroads could be penalized for holding shippers’ private rail cars, and enable all commodities access to regulatory relief.

“While we are supportive of the Board’s efforts with this rule, we believe more needs to be done to promote freight rail competition. For example, the Board should move forward with its consideration of a phased-in approach of raising the success rate to levels that ensure shippers and their customers are given the certainty they need to conduct their operations. Further, ensuring that the data provisions in the rule are implemented appropriately will be critical for shippers to be given the intended levels of transparency for their rail service,” the senators said.

“Persistent, inadequate rail service not only harms the rail shipper, it also impacts the entire country’s economy. With billions of dollars of commerce relying on rail service every year, the competitiveness of the U.S. economy depends on having an effective and reliable rail network,” the senators said.

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