WASHINGTON, D.C. – Today, U.S. Senator Shelley Moore Capito (R-W.Va.), along with Senator Tammy Baldwin (D-Wis.), expressed her 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 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,” the senators wrote 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.”
“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,” the senators continued. “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.”
“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,” Scott Gemperline, Director of Government and Political Affairs for the National Mining Association, said.
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 in a 5-0 vote.
Full text of this letter can be found 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.
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