WASHINGTON, D.C. – Today, U.S. Senators Tammy Baldwin (D-WI) and Shelley Moore Capito (R-WV) expressed support for the Surface Transportation Board’s (STB) proposed rule that will address unreliable rail service and the high costs of rail shipping for American businesses by increasing transparency and competition in the freight rail industry. The lack of reliable rail service disrupts operations for our farmers, loggers, energy producers, and manufacturers, causing higher prices and leading to increased costs passed on to consumers.
“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,” wrote the Senators in a bipartisan letter to STB Chairman Martin Oberman. “We share the Board’s concerns about declines in rail service and believe the reciprocal switching and data provisions of the Notice of Proposed Rulemaking (NPRM) would take important steps in supporting many shippers.”
Billions of dollars of commerce rely on rail service every year, with freight rail accounting for roughly a third of U.S. exports by volume and 28 percent of freight movement. In Wisconsin, the freight rail network moves approximately 32 percent of Wisconsin’s freight by tonnage. However, recent widespread rail service disruptions are upending operations for thousands of rail shippers.
“We simply cannot afford to have widespread rail service disruptions upending operations for thousands of rail shippers. Given the recent trends of poor rail service, now is the time for the Board to move toward a final rule,” concluded the Senators. “We believe this rule takes an important step in ensuring that farmers, manufacturers, energy producers, and other shippers, and their customers, are able to receive the levels of rail service they need to succeed.”
In September, the Surface Transportation Board issued a Notice of Proposed Rulemaking (NPRM) on Reciprocal Switching for Inadequate Service, a long-requested rule which focuses on providing rail customers with access to reciprocal switching, or allowing shippers currently only serviced by one rail carrier to instead obtain service from a competing railroad as a remedy for poor service.
The NPRM would also increase transparency and set several objective and measurable standards when evaluating service levels. The proposed rule would require Class I carriers, the six largest carriers, to submit publicly accessible data and to adopt a new requirement that shippers can request service data from rail carriers to better understand inadequacies that negatively impact American businesses and consumers. Last month, STB unanimously moved forward to advance the NPRM.
Senator Baldwin has long pushed to allow greater access to reciprocal switching to increase competition. Earlier this year, she also introduced the Reliable Rail Service Act with widespread support; bipartisan legislation to ensure the largest freight railroads meet their obligations of providing reliable service to American businesses.
“The American Chemistry Council applauds Senators Tammy Baldwin and Shelley Moore Capito for their leadership and support of freight rail reforms to help improve service, including the STB’s reciprocal switching proposal. Like many rail customers, chemical manufacturers are paying a heavy price – including lost production – due to the lack of competitive and reliable freight rail service,” Chris Jahn, President and CEO of the American Chemistry Council. “We are committed to working with the Senators and other policymakers to ensure the Board is better equipped to address problems by adopting policies that allow for more rail-to-rail competition and provide better service metrics.”
“Fundamental to this proposal is a requirement for the railroads to report FMLM data on an ongoing basis, a provision to allow a shipper to receive historical service data from its carrier for a 90-day period, and the availability of an access remedy when service is unreliable, inconsistent, or inadequate. FRCA members have become increasingly aware of and concerned by the gap between the service data that the railroads report to the Board and the level of service that shippers actually receive in the real world. While this proposal is a step in the right direction, the U.S. Congress needs to address continued, systemic service problems by updating outdated Federal policies to facilitate competition, such as clarifying the common carrier obligation,” said Ann Warner, Spokesperson for Freight Rail Customer Alliance (FRCA).
“PRFBA looks forward to the positive impact this proposal promises to have on rail service which includes a requirement for the railroads to permanently provide First-Mile Last- Mile data. This rulemaking which has positive support from all five Board members is a great step in ensuring our shippers get good rail service at all their locations, even single served locations. Notwithstanding this STB action, the U.S. Congress still needs to update decades-old Federal policy to 1) facilitate competition by clarifying the common carrier obligation and 2) address railroad service by allowing reverse demurrage,” said Herman Haksteen, President of the Private Railcar Food and Beverage Association (PRFBA).
“The STB has listened to shippers’ concerns, examined the facts, and responded with proposed performance standards that are an important next step to help address inadequate and deteriorating rail service. For years, shippers have been left with little recourse and lost revenues, ultimately weakening the full spectrum of U.S. supply chains. As the largest user by volume of our nation’s rail networks, and a critical industry that feeds our manufacturing and energy supply chains, this proposed rule will benefit the mining industry and every other industry that depends on the materials we supply,” said Scott Gemperline, Director of Government and Political Affairs for the National Mining Association.
“While this new proposal in Docket No. EP-711 (Sub No. 2), Reciprocal Switching for Inadequate Service, is a departure from the initial NITL intent of developing a new reciprocal switching process to facilitate railroad economic competitiveness, it is a first step to help especially captive shippers achieve service-based alternatives for switching under certain circumstances. NITL continues to review the proposal and will be submitting comments including recommending to further enhance service, all traffic (contract and non-contract) should benefit from this proposal. As this is a very important step, NITL stresses that it does not negate the need for the U.S. Congress to address outdated Federal policies to 1) treat all commodities the same when seeking regulatory relief by revoking exempted commodities and 2) facilitate competition by statutorily clarifying the common carrier obligation,” said Nancy O’Liddy, Executive Director of National Industrial Transportation League (NITL).
A full version of this letter is available here and below.
Dear Chairman Oberman:
Thank you for your commitment to our nation’s freight rail network. We write to express our strong support for the Surface Transportation Board (Board)’s Notice of Proposed Rulemaking (NPRM) in Reciprocal Switching for Inadequate Service. 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. 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.
The Board has been evaluating rulemaking relating to reciprocal switching since 2016, and we are encouraged by the Board’s unanimous, bipartisan 5-0 decision in moving forward with the NPRM. We believe this demonstrates the Board’s thoughtful consideration of stakeholder comments relating to reciprocal switching over the last decade, as well as its careful examination of the Class 1 railroads’ performance since its “Urgent Issues in Freight Rail Service” hearing in April 2022. Data collection from the Board following that hearing shows continued trends of rail service unreliability. Further, recent reporting found that millions of dollars of revenue was lost in just one quarter this year for four shippers who rely on rail service. This rule would expand the availability of remedies for many who are currently without access to competition in rail service.
We share the Board’s concerns about declines in rail service and believe the reciprocal switching and data provisions of the NPRM would take important steps in supporting many shippers. The use of several objective and measurable standards when evaluating service levels, combined with the increased data availability to shippers, will give unprecedented levels of transparency and, if necessary, recourse to some shippers should they be faced with inadequate levels of service.
While we are supportive of 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. 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.
Indeed, freight rail accounts for roughly a third of U.S. exports by volume and 28% of freight movement by ton-miles. In addition, a significant portion of our nation’s energy supply depends on efficient rail service to remote areas. We simply cannot afford to have widespread rail service disruptions upending operations for thousands of rail shippers. Given the recent trends of poor rail service, now is the time for the Board to move toward a final rule.
We believe this rule takes an important step in ensuring that farmers, manufacturers, energy producers, and other shippers, and their customers, are able to receive the levels of rail service they need to succeed. We urge the Board to move swiftly to a final rule, we look forward to working with the Board on other steps that can be taken to support the resiliency of the country’s rail network.