G LASS PRO DUC ERSTRANSPO RTATIO N C O UNC IL
May 23, 2012
The Honorable Leonard L. BoswellU.S. House of Representative 1026 Longworth House Office BuildingWashington, DC 20515
RE: Sections 36402 through 36407 of S.1813
Dear Congressman Boswell:
We are writing you on behalf of rail dependent shippers in support of Sections 36402 through 36407 of S.1813, the Moving Ahead for Progress in the 21st Century Act.
These provisions, which were included in the Senate legislation through the efforts of the bipartisan leadership of the Senate Commerce, Science and Transportation
Committee, make small, but important, improvements to the current law governing the relationship between the nation’s major railroads and their customers.
The nation’s current railroad regulatory program assumes most rail shippers have access to transportation alternatives and, thus, presumes competition and “deregulation.” Unfortunately, today about thirty-five percent of the freight by weight that is moved by the nation’s major railroads does not have access to transportation alternatives. Rather, this freight is dependent on a single railroad for transportation. Rail dependent shippers confronted with no transportation alternatives often experience unreasonably high rates and poor service.
These sections of S.1813 preserve the current railroad regulatory program that presumes competition and deregulation, but make several much-needed improvements to the current regulatory processes of the Surface Transportation Board (“STB”):
Section 36402. COMPILATION OF COMPLAINTS
This section requires transparency in the STB’s formal and informal complaint process through the posting of quarterly reports on the number, type and outcome of complaints filed with the agency by rail customers.
Section 36403. MAXIMUM RELIEF IN CERTAIN RATE CASES
The STB’s rate challenge process for rail shippers without access to transportation competition is generally expensive, cumbersome, time consuming and difficult. At the direction of Congress, the STB has established a “simplified” process as an alternative for “smaller” rate cases. However, the limitations on available damages under the simplified process have proven in practice to be too low for many shippers to justify the commitment of resources to pursue rate relief. Section 36403 increases these damage limits and directs the STB to increase the limits periodically in the future.
Section 36404. RATE REVIEW TIMELINES
This section establishes timelines for the regular rate challenge process in hopes of expediting this cumbersome process.
Section 36405. REVENUE ADEQUACY CONSTRAINT STUDY
In 1985, when the federal regulatory agency established its “maximum rate guidelines” under the Staggers Rail Act of 1980, one important constraint was a limitation on the level of rates that could be charged by a railroad with adequate revenues. Twenty-seven years later, despite the robust health of the remaining major freight railroads, the STB has not specified the mechanisms of applying this constraint. While the STB applies a test under which the major freight railroads are usually determined to fall short of earning “adequate revenues”, Wall Street, Warren Buffett and most other financially astute observers view the major freight railroads as being robustly
healthy. Indeed, the major freight railroads issue periodic statements touting their robust financial health.
Section 36405 requires the STB to produce a long overdue study of its options for implementing the revenue adequacy rate constraint and to report to the congressional committees of jurisdiction on how it intends to apply this constraint.
Section 36406. QUARTERLY REPORTS
The STB is making very little progress on a number of important regulatory policy proceedings it has initiated over the last few years. In addition, several proceedings initiated by stakeholders have been ripe for decision for months or longer. Section 36406 requires the STB to provide quarterly progress reports on these pending proceedings to the congressional committees of jurisdiction.
Section 36407. WORKFORCE REVIEW
The STB is a very small federal agency with an annual operating budget of less than $30 million and a staff of approximately 150. There are significant concerns regarding whether the STB has sufficient personnel to discharge its work load in a timely manner. Section 36407 directs the Chairman of the STB to consult on this issue with the Director of the Office of Personnel Management of the Executive Branch, then develop a long term plan for the “human capital improvement” of the STB, and submit that plan to the congressional committees of jurisdiction.
We ask that you ensure that these important bipartisan provisions, without weakening amendments, are included in any highway authorization legislation that is reported from the conference to the United States House of Representatives and the United States Senate.
Thank you for your attention to this matter and for your support for the final passage of these important regulatory improvement provisions.
Sincerely,
Alliance for Rail Competition Consumers United for Rail EquityAmerican Chemistry Council Dairyland Power CooperativeAmerican Forest and Paper Association DynegyAmerican Public Power Association East River Electric Power CooperativeArizona Electric Power Cooperative, Inc. Edison Electric InstituteArkansas Electric Cooperative Corporation EntergyBadger-CURE Glass Producers Transportation CouncilBasin Electric Power Cooperative GopherCURECentral Iowa Power Cooperative Heartland Consumers Power DistrictCoBank Idaho Grain Producers AssociationIowa Association of Electric CooperativesLafayette Utilities System
Lincoln Electric SystemManufacture AlabamaMinnesota Rural Electric AssociationMissouri River Energy ServicesMunicipal Electric Utilities of WisconsinNational Association of Regulatory Utility CommissionersNational Association of Wheat GrowersThe National Industrial Transportation LeagueNational Rural Electric Cooperative AssociationNebraska Wheat BoardNorth Carolina Electric Membership Corporation Portland Cement AssociationSouth Mississippi Electric Power AssociationUS Magnesium LLCWashington Grain Commission Washington State Potato Commission Western Coal Traffic League
