STB reauthorization legislation is back on the table

Legislation calling to increase competition in the railroad industry was recently introduced by Senators Jay Rockefeller (D-WV) and Kay Bailey Hutchison (R-TX).

By ·

Legislation calling to increase competition in the railroad industry was recently introduced by Senators Jay Rockefeller (D-WV) and Kay Bailey Hutchison (R-TX).

This bill, S. 158 the Surface Transportation Board Reauthorization Act of 2011, is nearly identical to a version rolled out in the previous Congress. It focused on addressing the concerns of rail shippers, regarding rates and service, as well as making the railroad industry more competitive.

If the bill were to be enacted into law, it could have a profound effect on how “business as usual” is currently viewed in the railroad sector. Among the bill’s goals are:
-raising the number of STB board members from three to five;
-establishing the STB as an independent agency and giving the STB investigative authority;
-creating a strong rail customer service advocate to help resolve shippers’ concerns;
-protecting rail shippers and maintaining reasonable rates in non-competitive situations;
-preventing two or more rail carriers from collaborating on interline rates;
-requiring major railroads to quote “bottleneck rates”; and
-improving access to shipper relief.

Rockefeller, whom also serves as chair of the Senate Commerce Committee, said that America is long overdue for a competitive, efficient, and balanced transportation network.

“It is crucial to the health of our economy and the future of our rural communities,” he said in a statement. “That is why I have reintroduced the Surface Transportation Board Reauthorization Act.  During this critical period for our economy, it is essential that we act now to effectively meet our country’s transportation needs for the 21st century.  I look forward to working with my colleagues to tackle these reforms. The Surface Transportation Board Reauthorization Act of 2011 would comprehensively update and improve the economic oversight of the railroad industry and address longstanding, competitive imbalances for shippers by increasing rail competition, strengthening federal oversight, and improving shippers’ access to regulatory relief.”

On May 3, the STB is holding a hearing to explore the current state of competition in the railroad industry and possible policy initiatives to promote more rail-to-rail competition.

As LM has previously reported, this bill has not been well-received by Class I railroad executives, whom maintain this bill is decidedly pro-shipper, coupled with the potential for railroads to lose a significant amount of pricing power.

At Norfolk Southern’s Annual Meeting of Shareholders in 2010, CEO Wick Moorman said re-regulatory efforts “are attempting to alter the economic regulatory regime which governs us so as to lower their rates, and at the same time seriously damage our ability to earn adequate returns…and invest in the future.” Moorman also said that at the end of the day a bill that is bad for the industry cannot be passed.

And railroad executives have repeatedly stated that that the existing regulatory railroad environment for has produced—for North American railroad shippers—a freight railroad system that is the best in the world. And if the railroad industry lost the ability to earn its cost of capital it could have a negative effect on capital investments to support traffic growth and reverse the strides made post-Staggers Act in the areas of rail safety and service reliability.

From the perspective of rail shippers, many feel this bill is long overdue. Reasons for this range from the multiple barriers to competitive access for captive shippers to improving the rate challenge process at the STB, and get relief from what view as monopoly pricing power held by the railroads.

For more articles on railroad shipping, please click here.


About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Latest Whitepaper
Private Fleet vs. Dedicated: Which one is right for you?
Having the right fleet for your business can give you an advantage over the competition and lower transportation costs.
Download Today!
From the April 2017 Issue
While adoption rates have remained relatively flat, yard management systems (YMS) are helping logistics operations turn that important space between the loading dock and the gate into a vital link in the supply chain.
Information Management: Wearables come in for a refit
2017 Air Cargo Roundtable: Positive Outlook Driven by New Demand
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Maximize Your LTL Driver Adherence with Real-time Feedback
This webinar shows how companies are using real-time performance data to optimize the scheduling of their city fleets, as well as the routing of their standard, accelerated and time-critical shipments.
Register Today!
EDITORS' PICKS
2017 Salary Survey: Fresh Voices Express Optimism
Our “33rd Annual Salary Survey” reflects more diversity entering the logistics management...
LM Exclusive: Major Modes Join E-commerce Mix
While last mile carriers receive much of the attention, the traditional modal heavyweights are in...

ASEAN Logistics: Building Collectively
While most of the world withdraws inward, Southeast Asia is practicing effective cooperation between...
2017 Rate Outlook: Will the pieces fall into place?
Trade and transport analysts see a turnaround in last year’s negative market outlook, but as...