Publications

Overview

Late yesterday evening, a draft of the long-anticipated railroad reform legislation was released by the Staff of the Senate Commerce, Science and Transportation Committee. The bill is expected to be introduced in the Senate early next week and will be subject to a Committee mark-up and vote on Thursday, December 17. A summary of the draft bill's provisions is set forth below.

Title I: STB Organization

• STB Established As Independent Agency: The Board would be established as an independent agency of the U.S. government, rather than organizationally placed in DOT.
• Increase in Size of Board: The size of the STB would increase from three to five members.
• Filing Fees: Filing fees for complaints submitted to the STB would be limited to the filing fee for cases in U.S. courts ($350).

Title II: STB Authority

• Revised Rail Transportation Policy: The bill would eliminate certain policies and would reorganize and modify the wording of the remaining policies to emphasize rail shipper protection; the need for an accessible and cost-effective regulatory process; and eliminate the policy to minimize federal regulation of rail carriers. The policies also recognize the railroads' need to earn adequate revenues to maintain and expand rail infrastructure.
• Office of Public Assistance: The bill would substantially strengthen the STB's Office of Public Assistance, and would establish an office of Rail Customer Advocate to represent the interests of rail customers as a party in STB proceedings.
• Increased STB Authority to Act: The agency would be given authority to initiate proceedings on its own motion, without waiting for a complaint.
• Exempt Traffic: The STB would be required to review all class exemptions within two years and determine if the exemptions should be continued. The bill would broaden the standards for determining whether an exemption should be revoked by allowing revocation to protect shippers from the abuse of market power, and require the STB to periodically review exemptions.
• Service Metrics: Railroads would be required to provide certain service metrics to the STB.
• Revision to Uniform Rail Costing System: The bill would require the STB to update, revise or replace URCS within three years.
• Study on Replacement Costs: The bill would require the STB to initiate and complete a study on the feasibility of using replacement costs in proceedings (within two years).
• Rail Practices Study: The STB would be required to initiate and complete a study on rail practices in the areas of demurrage, storage and other rail practices within 18 months.
• Rail Car Interchange Study: The bill would require the STB to initiate and complete a study on rail car interchange practices, including the AAR Interchange Rules, within two years.

Title III: Rates And Remedies

• Paper Barriers: The STB would be given authority to review the reasonableness of new paper barriers; provide means whereby shippers could obtain the text of a paper barrier, under confidentiality restrictions; and give short lines the ability to apply to eliminate an existing paper barrier by compensating the Class I; and establish certain financial assistance to do so.
• Bottleneck Rates and Competitive Switching: The bill would overturn the agency's "Bottleneck" and Midtec decisions by permitting shippers to request a bottleneck rate, including a rate for switching in a terminal area, and would require the carrier to provide the rate. The agency would be given one year to develop standards for determining the reasonableness of such rates. The bill would require the agency to develop standards for bottleneck rates that would include (1) operating, maintenance, and additional investment costs required for service over the bottleneck segment; (2) a reasonable return on embedded capital used for service over the bottleneck segment; and (3) a reasonable contribution to the network infrastructure costs on the non-bottleneck segment "if appropriate," that is sufficient, along with other traffic on the segment, to maintain that segment. The burden of proof would be on the rail carrier, and the agency would have to develop simplified and expedited procedures to determine the reasonableness of a bottleneck rate.
• Terminal Trackage Rights: The bill would make similar changes to the statute's provisions on terminal trackage rights.
• Service: Carriers would be required to provide "reasonable" service on reasonable request, and would have to publish reasonable service expectation ranges.
• Arbitration: The bill would authorize the STB to permit expedited binding arbitration of rate and service complaints, within a limit of relief of $250,000 per year for two years. The arbitration could be implemented at the request of one party; and would be processed by arbitrators chosen from a roster developed by the STB.
• Relief Caps for Small/Medium Cases: The bill would increase the relief caps in small cases from $1 million to $1.5 million, and in Simplified SAC cases from $5 million to $10 million.
• Advance Rate Challenge: The bill would permit a shipper to challenge a rate up to one year before the rate is to take effect.
• Time Limits for SAC Cases: The bill would require the STB to issue a final decision in Stand Alone Cost cases within one and a half years after the rate challenge is initiated.
• Revenue Adequacy Constraint: The bill would require the STB to provide further guidance as to how it would apply the revenue adequacy constraint in rate cases.

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