US railroads, shippers argue over regulatory proposals

A meeting to collect public comments for the US Surface Transportation Board's regulatory reform task force today highlighted the vast divide between railroads and shippers on competition.

The so-called listening session today was geared toward board efforts to streamline its processes. Railroads said that changes made and proposed since the Staggers Rail Act of 1980 were essentially reregulation and would stifle economic growth. Shippers in turn argued that railroad consolidation had reduced competition and changes were necessary because so many companies were captive shippers.

The root cause of the 1970s' rail crisis which led to Staggers was "smothering regulation," Norfolk Southern vice president law John Scheib said. The board has been "backsliding" since then and needs to return to what Congress laid out nearly 40 years ago, he said.

Association of American Railroads (AAR) chief executive Ed Hamberger said that Congress had the opportunity to implement that and other changes when it passed the Surface Transportation Board Reauthorization Act of 2015 but "rejected calls for further regulation."

Shippers urged regulators to maintain federal protections.

"We urge the task force to reject any attempt by other stakeholders to rescind or weaken the few remaining statutory regulations afforded to rail users under the Staggers Rail Act and other federal statutes," National Grain and Feed Association general counsel Charlie Delacruz said.

Comments veered into a heavily debated issue — proposed new regulations to improve the availability of reciprocal switching.

"The board should move forward expeditiously to repeal and replace its outdated, burdensome and unworkable reciprocal switching rules," National Industrial Transportation League (NITL) executive director Jennifer Hedrick said.

The rules have never been successfully implemented, indicating they do not work, and shippers do not even bother to attempt to file cases, she said. It was a request from the group in 2011 that led to the board developing and proposing the reciprocal switching proposal it is now considering.

Implementing new rules would be a form of deregulation, Hedrick said, because it would eliminate board regulatory authority over a portion of a transportation move.

The switching rules in place are more of a bar to shippers and a change would remove barriers for shippers with no competitive options, American Chemistry Council senior director of regulatory and technical affairs Jeffrey Sloan said.

Railroads continue to fight the proposal.

"The forced switching proposal runs directly counter to what Congress' direction is to this agency," AAR's Hamberger said.

Hamberger also said the board should reject the proposal to remove the exemption of certain commodities from regulation, calling it "a solution in search of a problem."