Freight railways defend ‘balanced’ oversight rules

The group that lobbies for freight rail companies defended the federal government’s regulatory system for the industry as “balanced” amid bipartisan criticism from a Senate committee on Wednesday. 

Senators on the Commerce, Science and Transportation Committee were pushing to make changes to rules that have been in place since the 1980s that allow freight rail companies to charge higher rates to so-called captive shippers to maintain “adequate revenues.”

Association of American Railroads (AAR) President Edward Hamberger told the panel that the regulatory framework has been working for several decades and did not need to be changed now. 

{mosads}“Today’s balanced regulatory system protects shippers and enables the rail industry to continue refining itself to work more efficiently for its customers,” he said. “If the economic foundation of the industry is undercut, the rail industry’s two key pillars of safety and capacity will be eroded.”

The freight rail pricing rules at issue, known as “Railroad Revenue Adequacy,” are governed under a provision of a 1980 law known as the Staggers Act. 

They apply to the largest freight rail companies that are regulated by the Transportation department, known as Class 1 railroads. The classification covers Amtrak, BNSF Railway, CSX Transportation, Norfolk Southern Railway and other companies.

Senators on the committee said Wednesday that conditions the pricing rules were intended to address are no longer present. 

“The rail industry looks far different than it did 30 years ago,” Senate Commerce Committee Chairman Jay Rockefeller (D-W.Va.) said. “Competition in the industry has decreased. Before enactment of the Staggers Act in 1980, there were approximately 40 large railroad companies. Today, there are seven.” 

Rockefeller added that the law was not intended to guarantee a specific level of profitability for freight rail companies. 

“The Staggers Act also sought to provide, and I quote, ‘the opportunity for railroads to obtain adequate earnings to restore, maintain and improve their physical facilities while achieving the financial stability of the national rail system,’” he said. “Well make no mistake — in that regard — the Staggers Act has worked.”

Republicans on the committee said the freight rail shipping rules were harming small business. 

“Since the beginning of this year, South Dakota and many other states have been particularly challenged by rail service delays, network congestion and locomotive and railcar shortages, which have affected a wide range of shippers, including the agricultural community,” the top ranking Republican on the panel, Sen. John Thune (R-S.D.) said. 

“From farmers and grain elevators, to auto manufacturers, energy providers, and retailers of all kinds, rail transportation challenges have affected the economy nationwide,” Thune continued. “Higher transportation costs can also increase the cost of products at market and at the point of export, decreasing our global competitiveness.”

Thune and Rockefeller are co-sponsoring a bill to give the Department of Transportation’s Surface Transportation Board (STB) more power to regulate freight rail companies. 

The panel has been at the center of a recent dispute between Amtrak and a Canadian freight rail operator over delays on tracks that are shared between the two companies in Illinois. 

Current rules prohibit the panel from launching an investigation of a freight rail company’s performance unless a formal complaint is filed.

Amtrak filed such a complaint recently that asked the panel to investigate the on-time performance of the Canadian National Railway (CN). 

Rockefeller and Thune’s bill would “increase the STB’s investigative authority so it can launch its own investigations before a complaint is filed.” 

The measure would also speed up the railway panel’s timelines for process reviews of freight rail performance and “advance important STB proceedings” that have been stalled thus far. 

AAR’s Hamberger cautioned lawmakers against making too many changes to a system he said repeatedly was working on Wednesday. 

“America’s freight rail system, which is second to none in the world and continues to play a critical role in our country’s economic resurgence, is today moving more traffic than at any time during the last seven years,” he said. 

“Business production and consumer demand are increasing, and rail is playing a bigger part in getting American goods to market, both domestically and internationally,” Hamberger continued. “The record private investments that the rail industry makes every year in the nation’s rail network have well positioned today’s continued economic recovery. The industry invests the revenue it earns, not government funding, to grow and modernize the rail network, meeting the needs of customers, large and small.”