10.09.14

Baldwin, Franken and Vitter Call for Surface Transportation Board to Increase Freight Rail Competitiveness and Improve Service

Action would Address Challenges Faced by Local Shippers in Getting Goods to Market, Increase Efficiency and Reliability of Rail Shipping

Washington D.C. – U.S. Senators Tammy Baldwin (D-WI), together with her colleagues Al Franken (D-MN) and David Vitter (R-LA) have sent a bipartisan letter to Surface Transportation Board (STB) Chairman, Daniel Elliott III, calling for reforms that would increase competition and responsiveness from the railroad industry. 

The bipartisan group of Senators gave voice to the concern and frustration of a broad coalition of freight rail shippers in their states that are facing serious service problems due to the inconsistency and lack of options to ship goods by freight rail. The service challenges faced by these shippers are impeding the ability for farmers to get their goods to market and energy suppliers – including propane suppliers – to get sufficient fuel to the state to prevent another shortage this winter.

The Senators write, “While railroad service issues are not new, recent projections of record grain and soybean harvests could set the stage for unprecedented disruptions this fall. The losses for farmers left without means to move their goods to market could reach hundreds of millions of dollars. Power companies are facing fuel supply shortages that could result in plants shutting down and increased energy prices this winter. Businesses and consumers throughout our economy’s supply chain stand to be negatively affected by these disruptions.”

Current federal rules impede freight rail shippers’ ability to use different rail lines - a practice called “competitive switching” – which reduces competition and ultimately increases shipping costs for businesses. The STB has been compiling information to improve competitive switching federal regulations since 2011. In their letter, the Senators urge the STB to move forward on the competitive switching rulemaking process as swiftly as possible so that freight rail shippers have more options and improved rail service.     

"Alliant Energy applauds Senator Baldwin for leading this important, bipartisan effort to help foster real competition in our national freight rail system,” said Scott Reigstad, spokesperson for Alliant Energy. “With coal supply disruptions due to congestion on the nation’s freight rail system continuing on a large scale, Alliant regularly experiences disruptions of delivery to our generation facilities and we continue to work with the railroads on a permanent solution. Therefore, we encourage the STB to move expeditiously with a strong competitive switching rule to ensure that our customers have sufficient power supplies to not only keep warm this winter, but well into the future.”

“Rail companies and farmers need flexibility when shipping their products. Many rural areas face captive shipping situations when there is only one rail option,” said Karen Gefvert, Director of Governmental Relations, Wisconsin Farm Bureau Federation. “Greater marketplace competition and rail infrastructure is essential to move increased oil, coal, fertilizer and grain supplies. Reevaluating the rules for competitive switching of rail lines would provide farmers with new shipping options.”

“The railroads are failing to deliver sufficient amounts of coal to fuel our state’s power plants, leading to higher electricity costs for Wisconsin consumers as our utilities are forced to use more costly fuel sources or implement coal conservation measures. The federal government needs to hold the railroads’ accountable for their poor service, and implement reforms to promote more competition in the freight rail industry. We thank Senator Baldwin for her leadership on this issue and look forward to continuing to work with her to help ensure fair competition in the rail industry and stable energy costs for consumers,” said Matt Bromley, Executive Director, Customers First! Coalition (A coalition of WI energy consumers, power providers and utility workers).

“The rail debacle has affected Manitowoc Grey Iron Foundry on many fronts. Suppliers are unable to provide needed raw materials, utility cost skyrocketing because a coal delivery issues, transportation surcharges due to the lack of available cars to move raw materials,” said Robert Peaslee, President, Manitowoc Grey Iron Foundry.  “Even our customers are being affected. Both John Deere and CNH sales are down because the farmers are unable to move their products to market due to a lack of available rail cars.  We have also been forced to stockpile certain raw material that we know will be difficult to get in the event of another harsh winter.”

“National Industrial Transportation League members greatly appreciate that Senators Baldwin, Franken and Vitter have urged the STB to move forward now on our proposal for a new rule to govern competitive switching.  The absence of normal market competition dramatically raises the cost of shipping by rail for many companies, making their products more expensive and less competitive,” said Bruce Carlton, President and CEO of the National Industrial Transportation League. “Captive rail shippers aren’t looking for a free lunch; they simply want the opportunity to obtain a competitive bid for rail service where it is physically possible for another railroad to provide it.  It really is time to start the rulemaking process.”

“We thank Senator Baldwin, Senator Franken, and Senator Vitter for their leadership and for urging the STB to expeditiously adopt competitive switching reforms,” said Cal Dooley, President & CEO of the American Chemistry Council. “Significant resources are being diverted from research and development, operations, investment, expansion and hiring to pay extremely high rail shipping rates. We believe it is now time to pursue reforms at the STB that would help unleash market forces and reduce the need to adjudicate rail disputes. Adopting sensible reforms like competitive switching would increase access to competitive and reliable freight rail service.”

The letter is supported by Badger CURE (Wisconsin Consumers United for Rail Equity) a coalition that includes: Alliant Energy, Checker Logistics, Inc., Chippewa Valley Bean Co., Citizens Utility Board, Cooperative Network, Customers First! Coalition, Dairyland Power Cooperative, Domtar Industries, ERCOWorldwide (USA) Inc., Georgia Pacific, Great Lakes Timber Professionals Assoc., Green Bay Area Chamber of Commerce, Green Bay Packaging, IBEW Local 2150, Lake States Lumber Assoc., Leicht Transfer & Storage, Louisiana-Pacific, Madison Gas & Electric, Manitowoc Grey Iron Foundry, Manitowoc Public Utilities, Menasha Utilities, Midwest Food Processors Assoc., Municipal Electric Utilities of Wisconsin, Neenah Foundry, NewPage, Ort Lumber, Packaging Corporation of America, Procter & Gamble, Sadoff Iron & Metal Company, Tomahawk Regional Chamber of Commerce, Wausau Paper, We Energies, WI Agri-Service Association, WI Cast Metals Association, WI Corn Growers Association, WI Farm Bureau Federation, WI Farmers Union, WI Crop Production Assoc., WI Industrial Energy Group, WI Manufacturers & Commerce, WI Paper Council, WI Public Service Corp., WI Utilities Association, WPPI Energy, Wolf River Lumber, Inc.

An online version of the letter can be found here.