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Key, Issues, Legislation, and Proceedings

Issue Priorities for the 117th Congress can be read here, “FRCA Legislative and Regulatory Priorities”:

Legislation

Congressional Oversight – Implementation of the Surface Transportation Board Reauthorization (STB) Act of 2015
Continued STB implementation and Congressional oversight of the first authorization for the STB since 1998 which is establishing basic reforms and process enhancements for the Board. View FRCA’s position paper, “FRCA Congressional Oversight-Implementation of STB Reauthorization Act of 2015”:

Annual Budget and Appropriation Levels for the Surface Transportation Board For FY 2022
FRCA supports the highest appropriated amount possible for the STB for FY 2022.  View FRCA’s position paper,  “FRCA FY 2022 Appropriations Position Paper” and “FRCA FY 2021 Appropriations STB Side-by-Side” 

FRCA successfully advocated for the following appropriated funding levels and accompanying report language addressing shipper concerns regarding the continued delays in regulatory proceedings, a lack of a full complement of Board Members, service problems, and greater use of Cost-Benefit Analysis in Fiscal Years (FYs):

  • 2021 – $37.5 million, as recommended in the Administration’s Budget.
  • 2020 – $37.1 million, as recommended in the Administration’s Budget.
  • 2019 – $37.1 million (of which $2.797 million to be directed to IT upgrades), as recommended in the Administration’s Budget

Rail Shipper Fairness Act
FRCA continues to support legislation that would build upon the reforms to the Surface Transportation Board (STB or Board) made by the U.S. Congress when it reauthorized the STB in 2015.  View FRA’s position paper here:  

Precision Scheduling Railroading (PSR)
FRCA supports legislation that would examine how certain rail carrier operating practices, such as Precision Scheduled Railroading (PSR), are impacting freight rail shippers including their effect on demurrage and accessorial charges and overall service problems.  

Emergency Fuel Supply Coordination
Legislation that would establish efforts to prevent disruptions, uncertainties, and delays in commodities – such as fuel, grains, and chemicals – from reaching the market. View FRCA’s position paper here.

Railroad Antitrust Exemption
Legislation that would remove certain freight railroad antitrust exemptions.  Read FRCA’s position paper here.

Proceedings before the Surface Transportation Board

Revenue Adequacy
FRCA supports the efforts of the STB in exploring its methods in determining railroad revenue adequacy in Docket No. EP 766, Joint Petition for Rulemaking—Annual Revenue Adequacy Determinations and Docket No. EP 761, Hearing on Revenue Adequacy, and Document No. EP 711, Railroad Revenue Adequacy.  View the “FRCA Revenue Adequacy, Position Paper”.

A goal of the Staggers Rail Act of 1980 was to restore financial stability to the U.S. rail system. By all accounts, this goal has been achieved, as demonstrated by the industry’s continued high levels of capital investment and shareholder returns including dividends, buybacks, and stock appreciation. However, FRCA has long been concerned that the Board’s annual determinations of “revenue adequacy” for Class I carriers does not reflect the true health of the overall rail industry and its individual carriers.

As a part of this and other STB rulemakings, FRCA continues to:

  • Strongly oppose railroad efforts (via legislation or proceedings) to evaluate revenue adequacy on the basis of replacement costs.
  • Support eliminating the statutory requirement for the annual determination because it believes that 1) the carriers’ falsely- perceived lack of adequate revenues has served to shield the railroads’ exercise of their monopoly pricing power from STB scrutiny; and 2) has prevented shippers from obtaining appropriate relief.

Rate-Reasonableness Standards and Expediting Rate Cases Before the STB
STB supports the efforts of the STB to review the Board’s three tests when used to determine railroad rate reasonableness in two Final Rules:  EP Docket No. 733, Expediting Rate Cases, and Docket No. EP 756, Market Dominance Streamlined Approach.   View the FRCA “Rate Reasonableness Position Paper”. 

Commodity Exemption Review
FRCA supports the efforts put forth in STB Advanced Notice of Proposed Rulemaking in Docket No. EP 704 (Sub-No. 1) that would allow certain commodities to seek rare and/or service relief before the Board. 

FRCA believes that exemptions for certain commodities are no longer needed and have become counterproductive especially given the market, statutory, and regulatory changes for both railroads and shippers. FRCA also advocates, that all freight rail shippers regardless of commodity, should be able to seek rate and/or service relief before the Board.   Read FRCA’s “Commodity Exemption Position Paper”. 

Competitive Switching (Access)
FRCA supports allowing shippers with direct access to only one railroad to have that carrier provide a “switch” for a nearby rail carrier.  View FRCA’s “Competitive Access Position Paper”.  

FRCA supports the Surface Transportation Board’s (STB or Board) Notice of Proposed Rulemaking (NPRM) to determine the pros and cons of requiring railroads to provide the requested switching arrangements (Docket No. EP 711 (Sub No.-1), Reciprocal Switching). This NPRM was issued on July 27, 2016.

Moreover, FRCA is a co-signer of the 201l National Industrial Transportation League (NITL) petition filed with the STB allowing competitive switching.

Supporting Published Reports

“Modernizing Freight Rail Regulation,” Transportation Research Board/National Academy of Sciences. June 2015. View FRCA’s Position Paper, “TRB Report”.

“Freight Rail Pricing: Contracts Provide Shippers and Railroads Flexibility, but High Rates Concern Some Shippers”, General Accountability Office. December 2016.
View FRCA’s Position Paper, “GAO-Freight Rail Pricing and Contracts”

Quadrennial Energy Review, U.S. Department of Energy. April 2015.
View FRCA’s Position Paper, “Quadrennial Energy Review”.

Background

Surface Transportation Board (STB) Reauthorization Act of 2015, S. 808 (S. Rpt. 114-52), was signed into law (P.L. 114-110) on December 11, 2015. It was approved by the U.S. House of Representatives under Suspension of the Rules on December 10, 2015, and approved earlier by the U.S. Senate on June by Unanimous Consent on June 18th.

Introduced by Commerce Committee Chair John Thune (R-SD) and Ranking Member Bill Nelson (D-FL), the law:

  • Increased the Board members from 3 to 5 and allow non-public meetings
  • Created authority for the Board to initiate investigations without shipper complaints and creates new guidelines for the investigations.
  • Required a report on rate case methodologies by the STB looking at whether rate cases are too complex and expensive and whether alternative methods could be used to address the complexity and expense.
  • Created new quarterly public reports for the Board on pending cases and a compilation of complaints on the public website.
  • Created timelines for rate cases.
  • Created a new voluntary arbitration process at the Board that can be used for rate cases with judgments up to $25 million.
  • Requires a study by GAO of rail contracts proposals containing multiple origins and destination pairs.
  • Accompanying report language, Section 16 (Criteria), clarifies standards and procedures for evaluating revenue adequacy and emphasizes the infrastructure needed in order for rail carriers to be able to meet the present and future demand for rail service. This section does not require any change to how the STB determines railroad revenue adequacy. View FRCA’s Position Paper, Congressional Oversight:  Implementation of the Surface Transportation Board Reauthorization Act of 2015.

FRCA’s positions during the development of S.808 can be read here: FRCA STB Reauthorization Act of 2015 Side-by-Side and FRCA 2015 Surface Transportation Board Reauthorization Principles.
During the legislative process, FRCA expressed concerns to key Senators and staff that Section 16 of S. 808 could allow the STB to utilize “replacement cost methodologies” when evaluating current and future needs for railroad revenue adequacy purposes. Also on July 21st, FRCA submitted written testimony to the STB stating opposition to using “replacement cost methodologies”. [July 22-23, 2015 Hearing: Docket No. EP 722, Railroad Revenue Adequacy and Docket No. EP 664 (Sub-No. 2), Petition of the Western Coal Traffic League to Institute a Rulemaking Proceeding to Abolish the Use of the Multi-Stage Discounted Cash Flow Model in Determining the Railroad Industry’s Cost of Capital.]

The STB Reauthorization Act of 2015 expired on September 30, 2020.