November 17, 2016

Rail group chief urges STB to freeze regulations until Trump appoints full slate of members

Rules 'have no business advancing' without five-member board in place, AAR's Hamberger says.

By Mark B. Solomon

The Surface Transportation Board (STB), the federal agency that regulates U.S. railroads, should defer a cluster of regulatory proposals until the U.S. Senate confirms the full slate of five board members appointed by President-elect Donald J. Trump, the head of the nation's leading freight rail group said last night.

Speaking at a conference in New York, Edward R. Hamberger, president and CEO of the Association of American Railroads, said the board should freeze all action on pending regulations until the President-elect fulfills the intent of Congress, which in 2015 re-authorized the STB with a five-member board instead of the traditional three members. The board is still comprised of three members. President-elect Trump will nominate three new members next year, each of whom is subject to Senate confirmation.

Hamberger said efforts to layer economic regulation on an industry that's been deregulated since 1980 "have no business advancing without a full complement of board members" to analyze and vote on any such proposals. In particular, Hamberger cited an STB proposal that would make it easier for shippers to prove the need for "reciprocal switching," where one railroad, for a fee, switches carloads to a rival carrier to give shippers access to facilities they might not otherwise reach with the original carrier.

The board's proposal, issued in July, was a rare victory for shipper interests, which have sought changes in switching rules for five years, and which rarely prevail in legislative or regulatory battles with the railroads.

Shippers have said the STB's action represents commonsense reform that will require railroads to compete with one another and free companies currently "captive" to the railroads, or even one railroad, for those services. Businesses that ship bulk commodities such as coal, grain, iron ore, and chemicals historically have no modal alternatives.

The railroads argued that the proposed switching changes represent a step back toward reregulation because it mandates that railroads make their private equipment and infrastructure available for the benefit of competitors. Some rail users are concerned that the proposal could negatively impact service levels. UPS Inc., one of the largest railroad users, warned late last month that it might have to pull traffic off the railroads if mandated switching results in service problems that impact its customers.

"Our industry has made it clear that rules should protect a true free market, and that no agency can spur 'competition' through regulation," Hamberger said. "The current economic regulatory structure enables freight railroads to earn the revenues necessary to invest so we can deliver the rail service our customers expect and deserve."

The American Chemistry Council, which represents large chemical manufacturers and which supports the STB switching proposal, said in a statement that the nation's "outdated freight rail regulations can no longer be allowed to shield the rail industry from the free market at the expense of the families that depend on manufacturing, farming, and energy production for their livelihood." The Council added that the election was "clear proof that Americans want change, and they expect the federal government to act on reforms that will remove regulatory barriers to growing our economy."

About the Author

Mark B. Solomon
Executive Editor - News
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

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