Posts Tagged ‘STB rulemaking’

Groups Private Car Rules Revised

July 29, 2021

Four groups that represent private freight car owners want the U.S. Surface Transportation Board to launch a rule making process to work toward updating the demurrage and accessorial rules governing the railroads’ use and handling of their equipment.

The petition to the STB asks regulators “to promulgate regulations governing the use by the nation’s Class I railroads of freight rail cars supplied to them by rail car owners, shippers, and other non-railroad entities. [A]n update to the rules governing the railroads’ use of private rail cars is long overdue because the railroad industry has evolved to the point that approximately 73 percent of the rail cars in service today nationwide – approximately 1.2 million rail cars—are no longer owned by railroads, but are . . . purchased, or leased, and maintained, by non-railroad entities at little or no cost to the railroads that use them.”

The groups involved are the North America Freight Car Association, the National Grain and Feed Association, the Chorine Institute and the National Oilseed Processors Association.

They say that current STB rules failed to adequately protect the enormous investment private rail car owners have made in their property because the rules fail to provide sufficient incentives for the Class I railroads to use private rail cars efficiently.

The petition said Class 1 railroads are using private cars in irregular service and holding on to them for too long.

STB Adopts Demurrage Rule

April 8, 2021

The U.S. Surface Transportation Board said this week it has adopted a final rail to establish certain minimum information requirements for demurrage bills from Class I railroads.

The  rule regulates billing cycle, shipment, car replacement and credit and debit information.

The minimum-information requirement represents what regulators determined will have the greatest effect on the ability of rail users to review and verify the accuracy of demurrage charges and help to resolve disputes between railroads and their customers.

In a news release the STB said  the rule establishes a machine-readable data requirement to ensure that rail users have the option to access machine-readable data containing the minimum information.

In its decision, the STB reiterated its expectation that all carriers take reasonable action to ensure the accuracy of their invoicing processes and that their demurrage charges are warranted.

The rule will become effective on Oct. 6.

STB to Hold Conference on Policy Proposal

December 5, 2020

The U.S. Surface Transportation Board plans to conduct a virtual conference on Dec. 18 to address a new approach for considering class exemption and revocation issues.

In a news release, the STB said its proposed approach would “evaluate market conditions using a variety of metrics related to or indicative of rail transportation competition.”

That would include developing a snapshot of the commodities handled by rail, identifying changes in market conditions, and considering certain potential influences from alternative transportation modes that could affect rail shipping markets.

The proposal was developed by the agency’s Office of Economics following a public comment on since dropped rule proposal that would have affected such commodities as stone, cement, coke, and iron and steel products.

The STB has been collecting public comment on its latest proposal the approach since September.

STB noted that its approach has limitations and would not “necessarily provide a final conclusive answer on whether the commodity exemptions at issue should be revoked, or whether additional commodity exemptions should be adopted.”

Nor is the agency seeking “to answer the ultimate qualitative question of whether a commodity’s regulation is necessary to carry out rail transportation policy.

STB OKs Waybill Rule Change

September 5, 2020

A rule that seek to improve waybill sample data collection has been adopted by the U.S. Surface Transportation Board.

The agency said the rule, which takes effect on Jan. 1, 2021, will result in the creation a more robust data set for decision-making and analyses.

In a news release, STB officials said the agency will increase sampling rates of certain non-intermodal carload shipments and specific separate sampling strata and rates for intermodal shipments.

Board members expect the enhanced data set to provide more comprehensive information to the STB and other users of waybill sample data in a variety of contexts, including exemption decisions, stratification reports, traffic volume and rate studies, board-initiated investigations and certain rate cases.

The final rule also eliminates the paper system for reporting waybill data.

Promulgation of the rule began in November 2019.

STB Issues Final Rule Regarding Rate Cases

August 5, 2020

The U.S. Surface Transportation Board this week adopted a rule designed to streamline its approach to cases in which one or more parties is arguing market dominance led to an unreasonable rate.

In a news release, the STB said that market dominance cases can be costly and time-consuming, especially in smaller cases.

The rule adopted this week, which becomes effective Sept. 5, was initially proposed in September 2019 and lays out the factors

that could establish a prima facie showing of market dominance. Those include:

  • The movement has a revenue-to-variable cost ratio of 180 percent or greater;
    • The movement would exceed 500 highway miles between origin and destination;
    • There is no intramodal competition from other railroads;
    • There is no barge competition;
    • There is no pipeline competition;
    • The complainant has used trucks for 10 percent or less of its volume (by tonnage) subject to the rate at issue over a five-year period; and
    • The complainant has no practice buildout alternative (regardless of transportation mode) due to physical, regulatory, financial or other issues.

The STB said complainants who provide evidence of one or more of these

would have the option to use the non-streamlined market dominance approach to prove market dominance.

Under either approach, defendant railroads would continue to have the opportunity to rebut a complainant’s evidence, they added.

The STB also announced that it would soon initiate a proceeding to further explore the adoption of various commodity-specific thresholds, including for chlorine and agricultural products.

STB Withdraws Proposed Rule Change

June 29, 2020

The U.S. Surface Transportation Board has withdrawn a notice of proposed rulemaking that would have incorporated a third model in its methodology for calculating the cost-of-equity component of the railroad industry’s cost of capital.

Each year, the STB determines the railroad industry’s cost of capital, then uses the figure in a variety of regulatory proceedings.

The proposed changed to how it figures those things, was proposed last fall.

The STB said it was considering using an additional model, referred to as the Step Multi-Stage Discounted Cash Flow Model, to complement its use of Morningstar/Ibbotson Multi-Stage Discounted Cash Flow Model and the Capital Asset Pricing Model in determining the cost-of-equity component of the cost of capital.

In announcing its decision to drop the rulemaking process, the STB said it was acting in response to public comment on the proposal.

STB Proposes New Rate Review Rules

September 14, 2019

The U.S. Surface Transportation Board this week has proposed a new set of rules that would govern rate review procedures.

The proposed rules would establish a new rate review option for smaller cases, the final offer rate review, which would use procedural limitations to contain the costs and complexities of a rate case.

The board also has proposed a streamlined market dominance process that could be used in any rate review proceeding.

In a news release, the STB said these changes are designed to make the procedures “more accessible, efficient, and transparent, including for small customers.”

Public comments on the proposed rule changes are due by Nov. 12, and replies are due by Jan. 10, 2020.

The rule changes stem from a Rate Reform Task Force that issued recommendations in April.

The task force raised questions about the STB’s revenue adequacy process that will be addressed at a Dec. 12 hearing.

Among other recommendations, the task force suggested the board establish a definition of long-term revenue adequacy and consider providing different remedies for rate cases involving carriers that are long-term revenue adequate.

Railroads will be given the opportunity to testify during that hearing on the position of the Association of American Railroads that revenue adequacy reflects the industry’s financial soundness and stability under the current regulatory scheme and must not be a trigger for new government intervention and rate regulation.

Railroad Industry Has Its Wish List of Legislative, Policy and Regulatory Changes at the Ready

February 17, 2018

Christmas is 10 months away, but the railroad industry has a long wish list of what it wants from Santa Claus, who in this case is the federal government

The industry will send representatives to Washington on March 7 for its annual Railroad Day on Capitol Hill to push policy makers in Congress, the executive branch and federal regulatory agencies to grant those wishes.

In an analysis, Progressive Railroading magazine said some items on the list are perennial wishes, meaning the industry has still yet to see them granted.

These include a permanent extension of the Section 45G tax credit for short lines railroads; maintaining existing truck-size and weight restrictions; shoring up the federal Highway Trust Fund; and knocking out the U.S. Surface Transportation Board’s proposed “competitive switching” rules.

A recent wish that has been added to the list concerns the Trump administration infrastructure program proposal that Congress is now considering.

Railroad industry trade groups said they will push for rail projects to have priority in funding programs.

This will include increased federal funding for Amtrak and commuter-rail agencies to complete positive train control implementation.

They also want to argue that rails need to be on the same level as other modes of transportation.

“We are very concerned about modal parity,” said Nicole Brewin, vice president of government affairs for the Railway Supply Institute. “We are concerned that rail should have a bite of the apple, so to speak.”

NAFTA

Going back to the 2016 presidential election, railroads have expressed concern about the fate of the North American Free Trade Agreement, which then-candidate Donald Trump used to decry at every opportunity.

Since being elected, Trump has pushed to renegotiate the treaty, but encountered resistance from Canada and Mexico.

The railroad industry has generally supported the talks to negotiate new terms to NAFTA, but doesn’t support Trump’s pledge to withdraw if he doesn’t get the terms he wants.

That’s because railroads benefit from moving goods between the United States and Canada and Mexico. This includes some goods that are manufactured elsewhere around the world, but routed through those countries.

“Economic growth tied to NAFTA has allowed railways to invest tens of billions of dollars into their infrastructure while improving productivity and customer service, and fostering innovation,” a coalition of railroad trade groups wrote in an open letter issued on Jan. 22. “Collectively, these improvements have enabled railways to maintain the low rates that are required to provide shippers with access to global supply chains to support their success.”

The letter said that NAFTA has since it went into effect on Jan. 1, 1994, helped develop an integrated economy in which a continental rail network is essential for the flow of goods across North America.

Trade between the U.S. and Canada between 1993 and 2016 increased by 157 percent to $544.6 billion. During the same period, U.S.-Mexico trade skyrocketed 543 percent to $523.8 billion and Canada-Mexico trade jumped 776 percent to $30.8 billion.

The letter was signed by the heads of the Association of American Railroads, the Railway Association of Canada, and the Asociacion Mexicana de Ferrocarriles.

The AAR said about 42 percent of rail carloads and 35 percent of rail revenue are directly associated with international trade.

“We’re not saying NAFTA can’t be updated,” said AAR CEO Edward Hamberger. “There will be changes in it. But you can’t just withdraw from it.”

Worrying the railroad industry is a Trump administration proposal to dramatically increase the amount of content from NAFTA nations in automobiles to 85 percent from 62.5 percent.

The administration wants to see 50 percent of the content of vehicles come from companies in the United States.

Much of the auto traffic in North America, including parts, moves by rail and the industry fears that the administration’s proposed formula could interrupt the supply chain and make it more difficult for vehicles and parts to move within the United States or between Mexico and Canada duty-free.

Short Line Tax Credit

The short-line railroad tax credit has long been on the wish list of the American Short Line and Regional Railroad Association.

The credit, which expired on Dec. 31, 2016, allowed regional and short-lines railroads to claim a 50-cent tax credit for each dollar they spend on track rehabilitation and maintenance projects. That credit is capped at $3,500 per mile of owned or leased track.

Although Congress is considering extending the credit until the end of this year, ASLRRA President Linda Bauer Darr said her group’s members want a 10-year deal.

Class I railroads recently benefited from the Tax Cuts and Jobs Act, which cut their corporate taxes. Now short-line railroads want relief of their own.

Truck Size

The trucking industry, of course, has its own wish list that it circulates in Washington and that includes loosening federal restrictions on the size and weight of trucks allowed on interstate highways.

Truckers would like to see the allowable length restriction on double trailers extended from 28 feet to 33 feet.

“Our biggest concern [with the truck-size and weight issue] is the size and shape of the opposition,” says ASLRRA’s Darr. “As we see companies like Amazon coming on board and aligning themselves with FedEx, UPS and others, it becomes an even larger challenge to hold our ground on what is an existential threat to our industry.”

Darr said twin 33-foot trailers would hurt the carload market of railroads by causing a significant amount of freight diversion from rails to trucks.

Railroads and a lobbying group fighting longer trucks beat back the trucking industry’s proposals last year, but the truckers are back.

Railroad lobbyists say the congressional appropriations process is always a battleground because appropriations bills are the primary vehicles for bigger-truck proponents to advance their proposals.

Highway Trust Fund

The solvency of the Highway Trust Fund has been an issue in recent years because of falling revenue from federal taxes on gasoline and diesel fuel.

The trust fund is used for surface transportation improvements, including at transit-rail agencies.  Congress last increased fuel taxes in 1993 and many in the transportation sector have long argued that the trust fund isn’t keeping pace with the cost to maintain and repair infrastructure. Since 2008 Congress has bolstered the highway trust fund with $143 billion a year from general revenue.

The railroad industry argues that this has represented a subsidy to the trucking industry, which doesn’t cover the cost of infrastructure damage caused by heavy trucks.

The AAR said that freight railroads have invested $25 billion a year in their own infrastructure networks.

“We think our competition should have to pay their way as well,” said AAR Senior Vice President of Government Affairs Ian Jefferies.

The AAR has proposed finding new ways to shore up the highway trust fund, including raising the gas tax or instituting tolls or new fees based on vehicle miles traveled.

Railroad Regulation

So long as railroads and their customers continue to have disputes there will continue to be calls by shippers to impose new regulations on railroads.

The railroad industry is heartened by the Trump administration’s approach to federal regulation, including the U.S. Department of Transportation’s repeal late last year of a Federal Railroad Administration rulemaking proceeding pertaining to the installation of electronically controlled pneumatic brakes on certain tank cars.

The railroad industry has called Trump’s efforts to streamline the infrastructure project approval process a welcome sign.

Still, railroad industry executives worry that some proposed regulations being considered by the STB might discourage railroad investments.

This includes competitive access, also known as reciprocal switching, which is being pushed by some shippers.

The railroad industry view is that competitive switching would force them to surrender their privately-owned property for use by competing railroads, said Sean Winkler, director of advocacy at the Railway Engineering-Maintenance Supplier Association.

For their part, shippers counter that reciprocal switching would increase price competition.

The railroad industry is also eyeing how the STB defines “revenue adequacy” for Class I railroads, a concept that describes whether a railroad is earning enough revenue to cover its costs and earn a return that’s sufficient to attract capital.

The STB is currently awaiting the seating of three more members before moving forward on some rulemaking decisions.

The Board has two members, Acting Chair Ann Begeman and Vice Chair Deb Miller, since a third member, Daniel R. Elliott III, resigned last September.

The railroad industry wants to see those open seats filled by members with direct rail industry experience.

Infrastructure Plan

The railroad industry is pleased with the Trump administration’s focus on rebuilding infrastructure but fears that partisan fighting will result in little or nothing getting done.

The administration has proposed spending $200 billion over the next decade as matching grants for projects that would be primarily financed by state and local governments, or the private sector.

Trump has claimed that the plan will lead to $1.5 trillion in infrastructure spending.

“Picking a number to spend on infrastructure is the easy part; the hard part is figuring out how to pay for it,” said Chuck Baker, president of the National Railroad Construction and Maintenance Association.

Baker said he is “hopeful but not optimistic” about whether Congress will be able to agree on a program that “spends real money and in any way moves the dial on infrastructure.”

Instead, he believes what is more likely is a smaller bill that calls for regulatory reforms, shortens the environmental permitting process and fixes financing programs for infrastructure projects.

The railroad industry hopes that any infrastructure program included grants for freight-rail projects.

It could also be used to extend longer term the short-line railroad tax credit, freeze current truck size and weight restrictions, and provide grants for transit and intercity passenger rail.

STB Wants to Modify its Rules

October 2, 2017

The U.S. Surface Transportation Board said last week it is initiating a rules making process designed to modify its longstanding rules on ex parte communications during informal rule-making proceedings.

Such communication has been prohibited in the past.

In its notice, the STB said it is looking to allow ex parte communications, subject to disclosure requirements, and “to make other clarifications as to when and how interested persons may communicate with the Board about other pending proceedings.”

The notice said the STB has waived the rules pertaining to ex parte communications in two recent cases in order to allow individual board members or staff to participate in one-on-one meetings, subject to public disclosure requirements.

The board said it found these meetings useful and has recognized that significant benefits flow from direct and candid discussions with stakeholders.

In a news release, the STB said that more generally, many federal agencies now have regulations and policies facilitating direct interaction with stakeholders on regulatory matters.

STB Wants Weekly Rail Service Reports

May 4, 2016

The U.S. Surface Transportation Board has proposed mandating that Class I railroads and the Chicago Transportation Coordination Office provide weekly reports o service performance.

The STB issued the proposed rule on Tuesday in a supplemental notice pertaining to a rulemaking process that began in December 2014.

STBThat rulemaking proceeding was prompted by service delays that occurred during the winter and spring of 2014-2014 when the Board required reports to be filed on an interim basis.

After receiving comments from the railroad industry, the waive the rules temporarily in order to allow a discussion about the proposed rules between industry representatives and STB staff.

“These sessions allowed staff to talk candidly with railroads, shippers and other interested parties to gain additional insight into the utility of the interim reporting, to learn more about railroad data-keeping and performance measurement practices, and to discuss technical issues raised by the proposed rulemaking,” the STB said in a news release.

The news release said that the rule that it proposed in the supplemental notice reflect the STB’s analysis of those discussions.

“The railroads’ reporting of service performance data on an interim basis has been very useful to the board in monitoring the industry’s recovery from the severe service downturn of 2013-2014,” said STB Chairman Daniel Elliott III. “It also provides us with a near real-time perspective on the pulse of the industry, and benefits rail customers and other stakeholders in the same way.”

Elliot said the proposed rules will “promote transparency” and enhance the STB’s ability to detect and respond to rail service problems.