Senate Passes Legislation to Reform Freight Rail Policies
The Bill Will Have A Significant Impact On How Freight Moves By Rail Through The U.S. Supply Chain
The U.S. Senate has approved S.B.808, the Surface Transportation Board Reauthorization Act of 2015, by unanimous consent.
Sponsored by Senators John Thune (R-South Dakota) and Bill Nelson (D-Florida), the bill will make substantial changes to the Surface Transportation Board (STB). The first substantive changes to the panel will have a significant impact on how freight moves by rail through the U.S. supply chain.
In addition to winning the support of the full Senate, the legislation was supported by the 45-plus trade associations that form the Rail Customer Coalition. Members include the American Farm Bureau federation, the Alliance of Automobile Manufacturers, the Steel Manufacturers Council, and the American Chemical Council (ACC).
“Over the past few years, a growing number of policymakers have learned what so many manufacturers, farmers and energy producers know all too well: the Surface Transportation Board and the nation’s freight rail polices are in desperate need of modernization,” says ACC President and CEO, Cal Dooley.
The legislation calls for the STB—which was created in 1995 as the successor to the old Interstate Commerce Commission—to be expanded from three members to five members, which will reduce the need to rely heavily on staff.
According to the bill, the expansion “will allow two members to speak directly to each other without violating Sunshine Laws, reducing the need for communicating between staff.”
LEGISLATION CALLS FOR EXPEDITED HANDLING OF RAIL RATE CASES
The bill also establishes the STB as an independent agency, removing it from under the Department of Transportation and putting it on the same level of independence as its predecessor, the Interstate Commerce Commission. It also requires the Board to provide quarterly reports describing the progress it has made in all unfinished regulatory proceedings.
Rate cases should be expedited under the new bill which will also require reporting to allow for tracking of compliance with the new rate case deadlines. Current rate cases average three years for the most complex cases.
The STB will also be given the authority to initiate investigations on its own initiative. Currently the STB can only exercise its authority upon a formal complaint which many shippers are reluctant to do.
The Board’s arbitration procedures will be expanded to apply to rail rate cases, raising the relief cap for non-rate case arbitration from $200,000 to $2,000,000. For rate case arbitrations the cap is established at $25,000,000 over five years.
The STB’s Comptroller General is directed to commence a study of rate bundling which precludes many shippers from challenging just those rates that they deem unreasonable. The bill intends for this to be the first step in finding a solution to this very complex problem.
The bill also helps to keep the search for rate case alternatives at the forefront by requiring that the Board reports—within one year of the its passage—on rate case methodologies addressing the sufficiency, complexity and cost effectiveness of the current large case methodology and indicating whether alternative methodologies exist.
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