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Key Legislation, Issues and Proceedings

FRCA Issue Priorities for the 115th Congress: During the current 115th Congress, the Freight Rail Customer Alliance (FRCA) supports the following legislation and/or issues the implementation of recently enacted public laws, and regulatory proceedings.  Additional information, including FRCA’s position papers, follows the following listing.

Legislative Issues

  • 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.
  • Annual Appropriation Levels for the Surface Transportation Board
    FRCA supports the FY 2018 Trump Budget Proposal recommending $37.1 million, of which $2.401 million is noted for IT upgrades, for the Surface Transportation Board (STB).  This follows the record level funding provided to the STB in the FY 2017 Consolidated Appropriations Act, P.L. 115-31, of $37 million where $2.046 million is directed to IT upgrades.
  • Rail Shipper Fairness Act, S. 1233
    FRCA supports the Rail Shipper Fairness Act, S. 1233, which would improve the STB’s existing processes when determining rate reasonableness, recognize that a carrier still has market dominance under a duopoly, and allow competitive switching within 100 miles. 
  • Emergency Fuel Supply Coordination
    Legislation that would establish efforts to prevent disruptions, uncertainties and delays in commodities – such as fuel, grains, and chemicals – reaching the market.
  • Railroad Antitrust Exemption
    Legislation that would remove the 91-year-old special freight railroad antitrust exemption.
  • Positive Train Control Implementation, Surface Transportation Extension Act, P.L. 114-73
    The railroad industry’s efforts to implement PTC systems by December 31, 2018.

Proceedings before the Surface Transportation Board

  • Revenue Adequacy Considerations Before the STB
    STB efforts in Docket No. EP 722, Railroad Revenue Adequacy, exploring its methods in determining railroad revenue adequacy. As a part of this review, FRCA strongly opposes the use of replacement cost methodologies.
  • Rate-Reasonableness Standards and Expediting Rate Cases Before the STB
    Actions to review the Board’s three tests when used to determine railroad revenue adequacy in EP Docket No. 733, Expediting Rate Cases.
  • Commodity Exemption Review Before the STB
    The Advanced Notice of Proposed Rulemaking in Docket No. EP 704 (Sub-No. 1) that would allow certain commodities to seek rate and/or service relief before the Board.
  • Competitive Switching (Access)
    The Notice of Proposed Rulemaking to determine the pros and cons of requiring railroads to provide requested switching arrangements in Docket No. EP 711 (Sub No. – 1).

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, “Freight Rail Pricing and Contracts”.

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

The information below discusses the above issues and supporting reports in further detail, including access to FRCA’s Position Papers. Contact FRCA for further details.

 

SURFACE TRANSPORTATION REAUTHORIZATION

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:

  • Increases the Board members from 3 to 5 and allow non-public meetings
  • Creates authority for the Board to initiate investigations without shipper complaints and creates new guidelines for the investigations.
  • Requires 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.
  • Create new quarterly public reports for the Board on pending cases and a compilation of complaints on the public website.
  • Creates timelines for rate cases.
  • Creates 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 origin 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.

Additional FRCA Background Information: Supports P.L. 114-110 and is actively engaged in proper implementation of the measure. 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 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.]

Surface Transportation Board Reauthorization Act of 2015 and Related Statements/Documents

Quarterly Correspondence to U.S. Senate and House Oversight Committees

Quarterly Reports on Unfinished Regulatory Proceedings

Report on Unfinished Regulatory Proceedings, Second Quarter, July 3, 2017

Quarterly Reports on Rate Case Review Metrics

Quarterly Reports on Formal and Informal Service Complaints

Additional STB Reauthorization Implementation progress reports, and other communications from 2015, 2016 and 1Q 2017 can be found via www.stb.dot.gov/stb/rail/ReauthorizationAct.html

Fiscal Year 2018 – budget and Appropriations
Surface Transportation Board

FRCA Position
FRCA continues to support the highest annual appropriated level possible for the Surface Transportation Board (STB or Board), particularly the level needed to update and enhance the Board’s information technology and data needs to better ensure transparency, consistency, timeliness, and ease of access.

For Fiscal Year 2018, FRCA advocates at a minimum, the $37.1 million funding level proposed by President Trump in his FY 2018 Budget Recommendation released to the U.S. Congress on May 24th.  As noted in the Administration’s Budget, the STB requires adequate resources to perform key functions, including rail rate reasonableness oversight; the processing of rail consolidations, licensing, and other restructuring proposals; and, the resolution of non-rail matters.  The budget request includes funding to implement extensive upgrades to the STB’s information technology (IT) infrastructure and capabilities, along with $1.6 million to cover the planned relocation of the agency in FY 2018.

During the FY 2017 budget and appropriation processes, FRCA strongly advocated before the U.S. Congress the importance of providing the STB with annual, appropriated funding levels needed to meet its longstanding responsibilities, new requirements of the STB Reauthorization Act of 2015, and to make vital upgrades to its IT systems and data collection capabilities.  FRCA was pleased that the final FY 2017 Omnibus Appropriations provided a record level $37 million for the Board of which $2.046 million is being directed to IT improvements.

View FRCA’s Position Paper, “Fiscal Year 2018 Appropriations and Budget – Surface Transportation Board”, FRCA’s Side-by-Side, “FY 2018 Appropriations for Surface Transportation Board” and FRCA’s press release, including the STB, and outlining its request for FY ’18 funding “FRCA Praises Trump Administration Budget Request For STB”.

 

RAIL SHIPPER FAIRNESS ACT

FRCA Position
FRCA continues to support legislation that would improve processes, transparency and effectiveness of the Surface Transportation Board (STB or Board).

Senator Tammy Baldwin (D-WI) and member of the Senate Commerce, Science and Transportation Committee introduced the Rail Shipper Fairness Act, S 1233, on May 26th.  Viewed as a compliment to the Surface Transportation Board Authorization Act of 2015, P.L. 114-110, this bill would improve the Board’s existing processes when determining rate reasonableness by recognizing that a carrier still has market dominance under a duopoly, and allows competitive switching within 100 miles. It also would improve:

  • Rail service by: requiring rail service to be efficient and reliable; clarifying STB authority to address service emergencies for shipments moving under contract; and expanding fines and equitable damages that railroads could be forced to pay for poor service.
  • Rail competition by: allowing competitive switching for interchanges within 100 miles; removing the presumption that market dominance cannot exist when a shipper is served by two carriers; and revising rail transportation policy to reflect shipper priorities in addition to railroad priorities.
  • Reasonable rate standards by:  suspending collection of rate increase while a rate case is pending; requiring use of market-based revenue methodology in stand-alone rate cases; shifting the burden of proof to railroads in stand-alone cost cases; and eliminating the qualitative market dominance test.

The Rail Shipper Fairness Act has one  cosponsor, Senator Al Franken (D-MN).  It has been referred to the Senate Commerce Committee where no hearings are scheduled to date.  Currently, there is no companion bill in the U.S. House of Representatives.

View FRCA’s Position Paper, “Rail Shipper Fairness Act”.

 

Emergency Fuel Supply Coordination

FRCA Position
FRCA continues to support legislation that would establish efforts to prevent disruptions, uncertainties and delays in commodities – such as fuel, grains, and chemicals – reaching the market.

View FRCA’s Position Paper, “Emergency Fuel Supply Coordination”.

 

Railroad Anti-Trust Exemption

FRCA Position
FRCA continues to support legislation that would remove antitrust exemptions shielding freight railroads from the rules of fair competition that govern almost all other U.S. industries, including all other modes of transportation.

View FRCA’s Position Paper, “Railroad Anti-Trust Exemption”.

 

Positive Train Control – Implementation of Surface Transportation Extension Act

FRCA Position
FRCA continues to support the railroad industry’s efforts to implement Positive Train Control (PTC) systems by Dec. 31, 2018.

View FRCA’s Position Paper, “Positive Train Control – Implementation of Surface Transportation Extension Act”.

Surface Transportation Board Proceedings before the Surface Transportation Board

Revenue Adequacy

FRCA Position
FRCA supports the efforts of the Surface Transportation Board (STB or Board) in Docket No. EP 722, Railroad Revenue Adequacy.

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:

  • 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.
  • Strongly oppose railroad efforts (via legislation or proceedings) to evaluate revenue adequacy on the basis of replacement costs.

    View FRCA’s Position Paper, “Revenue Adequacy”.

 

Rate-Reasonableness Standards

FRCA Position
The Surface Transportation Board (STB) Reauthorization Act of 2015, P.L. 114-110 directs the STB (or Board) to review its three tests used when evaluating if a railroad is charging a reasonable rate for shipping goods or commodities when a rate is challenged before the Board. FRCA strongly supports this requirement.

Moreover, FRCA supports the efforts of the STB to meet this requirement in its Advanced Notice of Proposed Rulemaking (ANPRM), EP Docket No. 733, Expediting Rate Cases and the expected future public hearing in EP Docket No. 736, Intervistas Study.

View FRCA’s Position Paper, “Rate-Reasonableness Standards”.

 

Commodity Exemption

FRCA Position
FRCA supports efforts of the Surface Transportation Board (STB or Board), Docket No. EP 704 (Sub-No. 1), in giving meaningful consideration to reviewing, reducing, or eliminating most or all of its other existing commodity, boxcar, and Trailer on Flat Car (TOFC)/Container on Flat Car (COFC) exemptions.

FRCA supports the STB’s Notice of Proposed Rulemaking (NPRM), Docket No. EP 704 (Sub-No. 1),
Review of Commodity, Boxcar, and TOFC/COFC Exemptions, issued on March 23, 2016.

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.

View FRCA’s Position Paper, “Commodity Exemption”.

 

Competitive Switching (Access)

FRCA Position
FRCA supports allowing shippers with direct access to only one railroad to have that carrier provide a “switch” for a nearby rail carrier.

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.

View FRCA’s Position Paper, “Competitive Switching (Access)”.