Class 1 Railroads Told to Report on Preparedness for post-pandemic Demands

Class 1 railroads have been instructed by U.S. Surface Transportation Board Chairman Martin Oberman to provide information about their preparedness to meet service demand as the nation continues to recovery economically from the COVID-19 pandemic.

In a letter to the railroad CEOs, Oberman said he was concerned about service problems reported by some shippers and expressed fear those issues might be related to a broader trend of rail labor reductions over the past several years, in addition to the furloughs and quarantines brought about by the pandemic.

The railroads were asked to provide information about the sufficiency of operating personnel and railroad equipment availability going forward, as well as longer-term expectations for hiring.

“The freight-rail industry has performed admirably during the COVID-19 pandemic and, as the nation’s economy recovers, I want to be fully informed as to the Class I railroads’ preparedness to meet forecasted demand, including the railroads having the necessary labor and equipment resources in place to provide safe, reliable and efficient service to customers,” Oberman wrote.

He acknowledged that the pandemic disrupted rail operations and lauded the carriers for their communication with the board and stakeholders during the past year.

On another matter, the STB also has asked Class I railroads to continue reporting revenues from demurrage and accessorial charges.

Regulators say that information has allowed them to monitor trends in such revenues.

“In light of the Board’s close oversight of Class I railroad rules and practices related to demurrage and accessorial charges, including our policy statement and final rules related to warehouseman liability and minimum requirements for demurrage bills, it is important for us to continue to receive quarterly updates on these revenue streams,” the STB said in a news release.

CSX Shipper Complaints to STB Dropping

Even as some CSX shippers continue to be disgruntled with the service they are receiving, other railroad customers are either finding their service satisfactory or have given up complaining about it.

The U.S. Surface Transportation Board said that shipper complaints about CSX service have dropped and an STB member attributes that to improved service.

Acting STB Chairman Ann Begeman made that observation in a letter sent to the American Chemistry Council, saying the Board has received “very few calls” regarding CSX service in the past few weeks

The Chemistry Council had earlier this week released findings of a survey of its members that many of them still are receiving inconsistent service, forcing some to curtail production and/or rely more on truck transportation.

CSX CEO James M. Foote met with Begeman on Feb. 1 to discuss CSX service matters and the Board has indicated it will continue to review weekly reports the carriers has been filing since last August.

However, the STB may modify its oversight as soon as April. The STB ramped up its oversight of CSX after service issues became rampant last summer after the railroad moved to the precision scheduled railroading operating model.

The STB might be willing to roll back some of the reporting on performance metrics that it has required of CSX since last summer.

In her letter to the Chemical trade group, Begeman urged shippers who have experienced problems to contact the STB so the problems can be addressed.

GLBT Misses Deadline to Appeal STB Ruling

A proposed Chicago freight railroad bypass proposal is officially defunct after its backers failed to meet a 60-day deadline to appeal an adverse decision of the U.S. Surface Transportation Board.

The STB last August ruled against the bid by Great Lakes Basin Transportation to build a 261-mile rail line between northwest Indiana and southern Wisconsin.

GLBT had 60 days to appeal that decision, but failed to do so.

In its Aug. 31 decision, the STB said the financial information provided by GLBT was inadequate to show that the company had the ability to conduct the project.

Had GLBT appealed the STB decision, it would have been required to show that it was financially capable of constructing the bypass.

STB Wants to Modify its Rules

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.

Appeals Court Strikes Down STB On-Time Standards

Another federal court has struck a blow to the efforts of the U.S. Surface Transportation Board to establish on-time standards for Amtrak trains.

The Eighth U.S. Circuit Court of Appeals found the STB standards to be unconstitutional, saying that the STB had “exceeded its authority” in creating the standards.

The appeals court ruling came in the wake of a similar U.S. Supreme Court decision that development of on-time metrics by the Federal Railroad Administration and Amtrak as directed by Section 207 of 2008’s Passenger Rail Investment and Improvement Act was unconstitutional.

In the Eighth Circuit ruling, Chief Judge Lavenski R. Smith acknowledged that the absence of on-time standards would make it impossible for the STB to investigate or adjudicate disputes brought by Amtrak against its host railroads in the event that punctuality fell below 80 percent for two consecutive quarters.

However, the court in essence decided that the STB’s inability to measure on-time performance is not a problem for the judiciary to solve.

There are two cases pending before the STB in which Amtrak alleges that host railroads needlessly delayed Amtrak trains.

One case involves the handling by Canadian National of the Saluki and Illini between Chicago and Carbondale, Illinois, while the other regards Norfolk Southern’s handling of the Capitol Limited west of Pittsburgh.

In both cases, Amtrak contends that dispatching decisions made by the host railroads are delaying its trains.

The STB had contended that it had the legal right to establish on-time standards “by virtue of its authority to adjudicate complaints brought by Amtrak. Any other result would gut the remedial scheme, a result Congress clearly did not intend.”

Supporting the STB’s position were 13 intervenors, including the National Association of Railroad Passengers and its state affiliates, and the U.S. Conference of Mayors.

Challenging the on-time standards were Union Pacific, CSX, CN and the Association of American Railroads.

They argued that the “gap-filling rationale does not allow one agency to assume the authority expressly delegated to another.”

The court found that the only place in federal law where the 80 percent standard was spelled out was in section 207, which the Supreme Court ruled unconstitutional because Amtrak had a hand in developing it.

Although the court let stand Congress’ setting a statutory right of passenger train “priority” over freight trains, the practical effect of the court decision is that Amtrak has no way to challenge a host railroad’s systematic denial of that right.

Instead, the only motivation for railroads to keep Amtrak trains on time are the proprietary and confidential incentive contracts Amtrak has been able to negotiate with its host railroads pertaining to on-time handling.

The only action Amtrak can take against a host railroad would be to refuse to make incentive payments due to non-performance under the terms of its operating contract with a host railroad.

The court rulings do suggest that Congress could give the FRA a mandate to establish on-time standards provided that Amtrak was not a participant in the writing of those standards.

STB Rules Change Seeks to Expedite Rate Cases

The U.S. Surface Transportation Board wants to move along litigation over rail rates and has proposed changing its rules to achieve that.

The proposal includes implementing a 70-day “pre-complaint” period during which the complainant would notify the defendant of the rate and movement it intends to challenge. Mandatory mediation also would occur during that period.

During the discovery process, the proposed rules would require service of the complainant’s and defendant’s initial discovery requests with the complaint and the answer, respectively.

If the new rules are adopted, an STB staff person would serve as a liaison for the case and assist the parties in technical and procedural matters, particularly during the discovery process.

The proposed rules changes stem from a rulemaking process that began in June 2016.

The STB is seeking public comment on the proposed rules.

Begeman Named Acting STB Chairman

President Trump has named Ann D. Begeman to be acting chairman of the U.S. Surface Transportation Board.

Ann Begeman

Begeman, a Republican and South Dakota native, is currently serving her second five-year term on the STB, having been re-nominated in December by President Obama and unanimously confirmed by the Senate. That term expires on Dec. 31, 2020.

She initially joined the STB on May 2, 2011, after more than 20 years as a staff member on Capitol Hill.

A news release by the STB that announced Begeman’s appointment said that while working in Senate staff positions she played “ . . . a key role in the crafting of major transportation legislation, including the ICC [Interstate Commerce Commission] Termination Act, which created the STB.”

Among Begeman’s appointment were serving as the Republican staff director for the Senate Committee on Commerce, Science, and Transportation under former U.S. Senator Kay Bailey Hutchison (R-Texas) and as the committee’s deputy staff director and transportation policy adviser under Sen. John McCain (R-Arizona).

Begeman also served as legislative director and acting chief of staff for McCain and as a legislative assistant for former Senator Larry Pressler (R-South Dakota).

She worked as a benefits specialist for First American Bankshares. Begeman grew up in Humboldt, South Dakota, and earned a B.S. in business administration from the University of South Dakota.

Railway Age reported that Begeman does not want to be permanent chairman and will hold the acting chair title until two more STB members are appointed and confirmed by the Senate.

A 2015 reauthorization of the STB expanded the STB from three to five members. Other current STB members include Democrats Daniel R. Elliott III, the previous chairman, and Deb Miller.

STB Increases Civil Penalties

The U.S. Surface Transportation Board has increased its civil penalties by 1.6 percent to take into account inflation.

The fines are imposed for such things as improper handling or routing of traffic, joint use of facilities, and embargoes.

A carrier who knowingly violates an STB order will now be assessed $7,635 per day, up from $7,512 in 2016.

The STB has authority to levy penalties of $763 per day after 30 days if it “cannot transport the traffic offered to it in a manner that properly serves the public.”

Begeman Renominated to STB

A Senate committee has approved by voice vote the nomination by the Obama administration of Ann Begeman to another five-year term on the U.S. Surface Transportation Board. The nomination is expected to be approved today by the full Senate.

Ann Begeman

Some Washington observers expect that Begeman will become chair of the STB after the Trump administration takes office next month.

Begeman, a Republican, had seen her term expire on Dec. 31, 2015, but she remained on at the STB as a holdover member. By law, STB members may remain for up a year past the expiration of their term.

The STB currently has two Democrats, Dan Elliott (whose term expires on Dec. 31, 2018) and Deb Miller (whose term expires on Dec. 31, 2017).

The Surface Transportation Board Reauthorization Act of 2015 created two new STB seats, which the Trump administration is expected to fill next year.

STB Gives GLBT More Time to File Route Info

Great Lakes Basin Transportation has received an extension of time to file with the U.S. Surface Transportation Board a document showing alternative routes for its proposed Chicago freight bypass line.

GLBT will now have until Sept. 20 to file the documents with the STB’s Office of Environmental Analysis.

The original deadline had been Aug. 29. The STB had told GLBT that it must provide a listing of alternative alignments or explain why it can’t provide those.

The STB said it needs that information before it can issue a final scope of study for an environmental impact statement.

GLBT has proposed building a freight-only route between southern Wisconsin and northwestern Indiana that it said would relive rail traffic congestion in Chicago.