League Calls for Change in Rail Oversight

Oct. 19, 2005
New conditions in transportation industry (and in rail transportation specifically) require new responses, the National Industrial Transportation League

New conditions in transportation industry (and in rail transportation specifically) require new responses, the National Industrial Transportation League (NITL) told the Surface Transportation Board (STB). NITL provided lengthy comments to the STB on the occasion of the 25th anniversary of the Staggers Act, which deregulated the rail industry in 1980.

Much of the NITL comment focused on establishing a case that railroads had been enabled to shed unprofitable trackage and improve operations over the last 25 years, resulting in an industry that has finally met the STB’s “revenue adequacy” standards. NITL called for the STB to shift its attention from protecting the financial health of the railroad. “The agency went too far in that direction,” said the NITL testimony. Saying it wasn’t asking for a return to the regulatory scheme as it existed prior to the Staggers Act, NITL called for an increased emphasis on the creation of value for the shipping public.

Currently, STB can “establish the overall competitive (or non-competitive) structure of the industry.” It can also “set the rules for the commercial relationship.” And, “in the case of market abuse, directly regulate prices and practices.”

But establishing that the railroads and market demand have reversed the condition of overcapacity that existed when the Staggers Act was approved, NITL said the railroads must shift their mindset from cost control to capacity expansion to meet the growing need for transportation capacity. Further, “Public policy makers need to address how to grow capacity in the railroad industry and integrate that growth in capacity with the trucking industry.” Modal cooperation will be increasingly needed, the NITL document stated, and the Staggers Act did not address that.

Arguing the point that railroads have moved away from private contracts allowed by the Staggers Act towards public pricing, NITL said that this places service requirements within the STB’s statutory authority. NITL called for STB to develop and require better data on service. STB has the authority to compel carriers to submit data in a format selected by the agency, NITL explained. It should, therefore, require railroads to report and publish metrics for key lanes and dock-to-dock rail performance.

NITL also took issue with loss and damage and accessorials and surcharges.

Captive shippers should not pay differentially higher rates when some or all of the differential is not required to ensure a financially sound carrier, NITL argued. Differential pricing should have less of a part to play in the pricing of regulated, captive traffic, it continued.

Taking on accessorials and surcharges, NITL said the STB should investigate and create standards for rail surcharges and accessorials because shippers are increasingly concerned these charges are being used to increase revenues not simply for cost recovery. NITL asked, almost rhetorically, whether this fell under the STB’s reasonable rate or reasonable practice oversight or both.

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