DOT proposes STB reauthorization bill

By Staff -- Logistics Management, 11/1/1999

U.S. Secretary of Transportation Rodney E. Slater has proposed legislation that would reauthorize the Surface Transportation Board (STB) for two years.

The STB has been under attack from some shippers who claim that the agency, the successor to the Interstate Commerce Commission, too often makes decisions that favor railroads over their customers. Those decisions, shippers say, unfairly reduce competition.

Slater's bill supports some of the shippers' demands for additional rail reform. The DOT secretary says the administration's proposal would allow for more competitive service, restore important protections for rail workers, and provide some measure of rate-case relief for small shippers. The bill also calls for reciprocal switching in railroad terminal areas. That's something shippers have been demanding for some time, but it is likely to draw fire from the railroads.

The administration's bill would:

- Reinforce protections for employees who would be adversely affected by mergers of major railroads. The administration's bill would strengthen an existing provision that guarantees rail workers at least six years' employment after a merger.

- Eliminate the STB's authority to intervene in the process of negotiating collective bargaining agreements related to all mergers, and direct the parties to bargain under the Railway Labor Act.

- Mandate reciprocal switching in terminal areas. Currently, reciprocal switching is required only when it is "in the public interest." That has been interpreted to mean a compelling necessity, usually related to inadequate service or competitive abuse.

- Extend the allowable term of emergency-service orders from 270 days to one year. The STB may issue those orders to counteract inadequate service provided by a railroad. The most recent such order was issued last year, when poor Union Pacific service created havoc for many Gulf Coast shippers.

- Require the DOT to study the financial and service effects that could result if Congress were to mandate additional competitive-access requirements.

- Provide rate-case relief for small shippers or those that ship only small amounts under a specific rate. That would sharply reduce the cost of bringing such cases before the STB.

- Allow captive shippers to challenge rates under a simplified rate-appeals process, providing that the shipper spent no more than $500,000 in shipping costs over a 12-month period under the challenged rate. STB, at its option, may choose to allow other shipments to qualify as well.

- Remove the requirement that railroads calculate "revenue adequacy" annually. The STB will still have to consider railroads' financial health in rate cases.

- Remove the STB's authority to grant antitrust immunity for pooling agreements. Antitrust immunity for existing agreements would end two years after the legislation's enactment.

- Make railroad mergers subject to the same antitrust review as other industries, including a Department of Justice review of the competitive effects of proposed mergers.

- Require the STB to assess user fees to cover all of its costs.

The complete text of the administration's bill can found at www.fra.dot.gov.