STB Reauthorization Bill Threatens Rail Investment

The U.S. Senate Committee on Commerce, Science, and Transportation has scheduled a markup for tomorrow afternoon of the Surface Transportation Board (STB) Reauthorization Act (S.2777). If enacted, the bill (specifically, Section 14) would threaten much needed investment in railroad infrastructure and reverse three decades of progress on railroad regulation.

Senate Commerce chair Sen. Jay Rockefeller (D-W.V.), irresponsibly joined by Sen. John Thune (R-S.D.), has for years sought to reverse the partial deregulation enacted by Congress over 30 years ago. Since 1980, when the Staggers Act was enacted, average real freight rates have fallen by nearly 50 percent, railroad employee productivity and safety have dramatically improved, and the industry is now healthy and reinvesting more than $20 billion of its own funds every year.

But hydraulic fracturing revolution has led crude oil shipments to skyrocket in recent years—since 2005, originated carloads of crude oil on major railroads have increased by more than 6,500%. With continued steady growth in intermodal movements, new capacity investments are needed to ensure America’s freight rail system remains the envy of the world. Unlike road and air carriers, the railroad industry owns and manages its own networks and uses its own funds for infrastructure investment.

While singling out the private railroad industry for its alleged sins, Sen. Rockefeller has often championed subsidies for other modes of transportation. West Virginia’s highway system has long been one of the most federally subsidized in the nation, and Sen. Rockefeller never misses an opportunity to protect wasteful taxpayer subsidies of government-owned Amtrak and the completely misnamed and unessential Essential Air Service.

Railway Age Editor-in-Chief William C. Vantuono met Sen. Rockefeller’s latest attack on private railroads with an appropriate level of skepticism and sarcasm:

For what it’s worth, here’s Rockefeller’s by-now-predictable standard shtick on what’s wrong with the railroads, one last time:

“It is far past time that America had a competitive and efficient rail transportation network. Industries, businesses, consumers, and rail passengers around the country rely on our freight rail system, and when the system or its economic regulatory framework breaks down, so does our economy.”

That, Senator, and about 20 or 30 million bucks, will get you another six years in the Senate to coddle your state’s perpetually whining coal shippers (and campaign contributors) and agree with them on how they’re being fleeced by those greedy, monopolistic railroads. But you won’t need to worry about that much longer.

Harkening back to 2001, when Rockefeller introduced his perpetually DOA Rail Competition Act, he said: “In the past 20 years, the number of Class I railroads in the United States has decreased from more than 40 to six, thus diminishing the opportunity for rail competition. Of the six railroads currently operating in the United States, just four carry approximately 90% of all rail freight cargo.”

Well now, we can’t allow that to continue! It’s just too damned efficient!

Senator, with all due respect, why don’t you just let it go? You have more money than you can possibly spend. Enjoy your retirement. If I were you, I’d buy a private railroad car, hire a professional on-board service staff, and go on a cross-country tour coupled up to the rear of an Amtrak long-distance train.

Congress would be wise to reconsider, at the very least, Section 14 of Rockefeller's bill. It injects a troubling amount of political pressure into an active STB proceeding, Ex Parte 711. Currently, Section 14 reads as follows:


    It is the sense of Congress that–

            (1) as part of Docket No. EP 722, the Surface

        Transportation Board should consider the costs and benefits of

        the annual determinations of revenue adequacy for Class I


            (2) the Surface Transportation Board should review the

        methodology employed to define the business cycle in its annual

        determination of revenue adequacy and consider undertaking, if

        necessary, a rulemaking to define the business cycle;

            (3) as part of Docket No. EP 711, the Surface

        Transportation Board should consider if a rulemaking proceeding

        on mandatory competitive switching is needed to ensure a viable

        competitive national rail system; and

            (4) if the Surface Transportation Board determines a

        rulemaking proceeding on mandatory competitive switching is

        needed, the Surface Transportation Board should ensure that

        such rulemaking is completed in as timely a manner as possible.

The EP 711 proposal calls for dangerous new forced access requirements on U.S. railroads, reversing progress achieved since bipartisan partial deregulation three decades ago and reducing railroads’ incentives to invest to new capacity.

CEI has been active in the Ex Parte 711 proceeding, as well as the previous Ex Parte 705 proceeding. For more information on competition in the railroad industry and efforts to reverse deregulatory progress, see the items below.

CEI Studies on EP 705 and EP 711

CEI Comments to the STB in EP 705

CEI Comments to the STB in EP 711