Board Member Views on Surface Transportation Board Reauthorization — House Hearing (117-49)
Summary
Transcript of the remote hearing "Board Member Views on Surface Transportation Board Reauthorization" (117-49) before the Subcommittee on Railroads, Pipelines, and Hazardous Materials of the Committee on Transportation and Infrastructure on May 12, 2022. Opening statements are listed for Donald M. Payne, Jr., Chair of the Subcommittee, and Peter A. DeFazio, Chair of the Committee. Witnesses from the Surface Transportation Board were Martin J. Oberman, Patrick J. Fuchs, Robert E. Primus, Michelle A. Schultz and Karen J. Hedlund. A prepared statement in the record says the Infrastructure Investment and Jobs Act authorized up to ten new positions to staff the PRU and discusses Amtrak's right of preference under 49 U.S.C. 24308(c).
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Cite this document
“Board Member Views on Surface Transportation Board Reauthorization — House Hearing (117-49).”
Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/board-member-views-on-surface-transportation-board-reauthorization-f9e17454ee/
, SHA-256 013cea0bad781d286fe0e5edf2828f19aa779181d6b832539e35d7d44bcab14e.Full text
[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
BOARD MEMBER VIEWS ON SURFACE
TRANSPORTATION BOARD REAUTHORIZATION
=======================================================================
(117-49)
REMOTE HEARING
BEFORE THE
SUBCOMMITTEE ON RAILROADS, PIPELINES,
AND HAZARDOUS MATERIALS
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
__________
MAY 12, 2022
__________
Printed for the use of the
Committee on Transportation and Infrastructure
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available online at: https://www.govinfo.gov/committee/house-
transportation?path=/browsecommittee/chamber/house/committee/
transportation
__________
U.S. GOVERNMENT PUBLISHING OFFICE
48-459 PDF WASHINGTON : 2022
-----------------------------------------------------------------------------------
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
PETER A. DeFAZIO, Oregon, Chair
SAM GRAVES, Missouri ELEANOR HOLMES NORTON,
ERIC A. ``RICK'' CRAWFORD, Arkansas District of Columbia
BOB GIBBS, Ohio EDDIE BERNICE JOHNSON, Texas
DANIEL WEBSTER, Florida RICK LARSEN, Washington
THOMAS MASSIE, Kentucky GRACE F. NAPOLITANO, California
SCOTT PERRY, Pennsylvania STEVE COHEN, Tennessee
RODNEY DAVIS, Illinois ALBIO SIRES, New Jersey
JOHN KATKO, New York JOHN GARAMENDI, California
BRIAN BABIN, Texas HENRY C. ``HANK'' JOHNSON, Jr.,
GARRET GRAVES, Louisiana Georgia
DAVID ROUZER, North Carolina ANDRE CARSON, Indiana
MIKE BOST, Illinois DINA TITUS, Nevada
RANDY K. WEBER, Sr., Texas SEAN PATRICK MALONEY, New York
DOUG LaMALFA, California JARED HUFFMAN, California
BRUCE WESTERMAN, Arkansas JULIA BROWNLEY, California
BRIAN J. MAST, Florida FREDERICA S. WILSON, Florida
MIKE GALLAGHER, Wisconsin DONALD M. PAYNE, Jr., New Jersey
BRIAN K. FITZPATRICK, Pennsylvania ALAN S. LOWENTHAL, California
JENNIFFER GONZALEZ-COLON, MARK DeSAULNIER, California
Puerto Rico STEPHEN F. LYNCH, Massachusetts
TROY BALDERSON, Ohio SALUD O. CARBAJAL, California
PETE STAUBER, Minnesota ANTHONY G. BROWN, Maryland
TIM BURCHETT, Tennessee TOM MALINOWSKI, New Jersey
DUSTY JOHNSON, South Dakota GREG STANTON, Arizona
JEFFERSON VAN DREW, New Jersey COLIN Z. ALLRED, Texas
MICHAEL GUEST, Mississippi SHARICE DAVIDS, Kansas, Vice Chair
TROY E. NEHLS, Texas JESUS G. ``CHUY'' GARCIA, Illinois
NANCY MACE, South Carolina ANTONIO DELGADO, New York
NICOLE MALLIOTAKIS, New York CHRIS PAPPAS, New Hampshire
BETH VAN DUYNE, Texas CONOR LAMB, Pennsylvania
CARLOS A. GIMENEZ, Florida SETH MOULTON, Massachusetts
MICHELLE STEEL, California JAKE AUCHINCLOSS, Massachusetts
Vacancy CAROLYN BOURDEAUX, Georgia
KAIALI`I KAHELE, Hawaii
MARILYN STRICKLAND, Washington
NIKEMA WILLIAMS, Georgia
MARIE NEWMAN, Illinois
TROY A. CARTER, Louisiana
Subcommittee on Railroads, Pipelines, and Hazardous Materials
DONALD M. PAYNE, Jr., New Jersey,
Chair
ERIC A. ``RICK'' CRAWFORD, Arkansas TOM MALINOWSKI, New Jersey
SCOTT PERRY, Pennsylvania SETH MOULTON, Massachusetts
RODNEY DAVIS, Illinois MARIE NEWMAN, Illinois
MIKE BOST, Illinois STEVE COHEN, Tennessee
RANDY K. WEBER, Sr., Texas ALBIO SIRES, New Jersey
DOUG LaMALFA, California ANDRE CARSON, Indiana
BRUCE WESTERMAN, Arkansas FREDERICA S. WILSON, Florida
BRIAN K. FITZPATRICK, Pennsylvania JESUS G. ``CHUY'' GARCIA, Illinois
TROY BALDERSON, Ohio MARILYN STRICKLAND, Washington,
PETE STAUBER, Minnesota Vice Chair
TIM BURCHETT, Tennessee GRACE F. NAPOLITANO, California
DUSTY JOHNSON, South Dakota HENRY C. ``HANK'' JOHNSON, Jr.,
TROY E. NEHLS, Texas Georgia
MICHELLE STEEL, California DINA TITUS, Nevada
SAM GRAVES, Missouri (Ex Officio) JARED HUFFMAN, California
STEPHEN F. LYNCH, Massachusetts
JAKE AUCHINCLOSS, Massachusetts
TROY A. CARTER, Louisiana
PETER A. DeFAZIO, Oregon (Ex
Officio)
CONTENTS
Page
Summary of Subject Matter........................................ vii
STATEMENTS OF MEMBERS OF THE COMMITTEE
Hon. Donald M. Payne, Jr., a Representative in Congress from the
State of New Jersey, and Chair, Subcommittee on Railroads,
Pipelines, and Hazardous Materials, opening statement.......... 1
Prepared statement........................................... 3
Hon. Eric A. ``Rick'' Crawford, a Representative in Congress from
the State of Arkansas, and Ranking Member, Subcommittee on
Railroads, Pipelines, and Hazardous Materials, opening
statement...................................................... 4
Prepared statement........................................... 4
Hon. Peter A. DeFazio, a Representative in Congress from the
State of Oregon, and Chair, Committee on Transportation and
Infrastructure, opening statement.............................. 5
Prepared statement........................................... 7
Hon. Sam Graves, a Representative in Congress from the State of
Missouri, and Ranking Member, Committee on Transportation and
Infrastructure, prepared statement............................. 45
Hon. Eddie Bernice Johnson, a Representative in Congress from the
State of Texas, prepared statement submitted for the record by
Hon. Donald M. Payne, Jr....................................... 45
WITNESSES \\
Martin J. Oberman, Chairman, Surface Transportation Board, oral
statement...................................................... 9
Prepared statement........................................... 10
Patrick J. Fuchs, Member, Surface Transportation Board
Robert E. Primus, Member, Surface Transportation Board
Michelle A. Schultz, Vice Chair, Surface Transportation Board
Karen J. Hedlund, Member, Surface Transportation Board
SUBMISSIONS FOR THE RECORD
Statement of Ian Jefferies, President and Chief Executive
Officer, Association of American Railroads, Submitted for the
Record by Hon. Donald M. Payne, Jr............................. 46
Submissions for the Record by Hon. Eric A. ``Rick'' Crawford:
Letter of April 21, 2022, from the Agricultural
Transportation Working Group to the Surface Transportation
Board...................................................... 49
Statement of Patricia Davitt Long, President, Railway Supply
Institute.................................................. 50
Position Paper from the Railway Supply Institute............. 52
APPENDIX
Questions to Martin J. Oberman, Chairman, Surface Transportation
Board, from:
Hon. Peter A. DeFazio........................................ 53
Hon. Stephen F. Lynch........................................ 55
Questions from Hon. Peter A. DeFazio to Patrick J. Fuchs, Member,
Surface Transportation Board................................... 55
Question from Hon. Stephen F. Lynch to Robert E. Primus, Member,
Surface Transportation Board................................... 57
----------
\\ An oral and prepared statement were provided solely by
Chairman Oberman. All five Surface Transportation Board members were
available for questioning.
Question from Hon. Stephen F. Lynch to Karen J. Hedlund, Member,
Surface Transportation Board................................... 58
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
May 6, 2022
SUMMARY OF SUBJECT MATTER
TO: Members, Subcommittee on Railroads, Pipelines,
and Hazardous Materials
FROM: Staff, Subcommittee on Railroads, Pipelines, and
Hazardous Materials
RE: Board Member Views on Surface Transportation
Board Reauthorization
PURPOSE
The Subcommittee on Railroads, Pipelines, and Hazardous
Materials will meet on Thursday, May 12, 2022, at 10:00 a.m. ET
in 2167 Rayburn House Office Building and via Zoom to hold a
hearing titled ``Board Member Views on Surface Transportation
Board Reauthorization.'' The purpose of this hearing is to hear
from members of the Surface Transportation Board on their ideas
to improve the efficiency and authority of the Board to better
resolve freight rail conflicts. The hearing participants will
be the five members of the Surface Transportation Board.
BACKGROUND
I. THE SURFACE TRANSPORTATION BOARD
The Surface Transportation Board (STB or Board) is the
economic regulator of freight railroads, which carry one third
of the nation's freight.\1\ The STB is a five-member
independent agency whose members are appointed by the president
with the advice and consent of the Senate, serving staggered
five-year terms. The STB's predecessor, the Interstate Commerce
Commission (ICC), was created in 1887 by the Interstate
Commerce Act.\2\ The STB was created by the ICC Termination Act
of 1995 to maintain federal economic oversight of rail
carriers.\3\ Congress's only reauthorization of the STB came in
the Surface Transportation Board Reauthorization Act of 2015,
which lasted through Fiscal Year 2020.\4\
---------------------------------------------------------------------------
\1\ Congressional Research Service, ``The Surface Transportation
Board (STB): Background and Current Issues.'' January 19, 2022 (R47013)
and U.S. Department of Transportation, Pocket Guide to Transportation
2019, Page 3.
\2\ P.L. 49-41.
\3\ P.L. 104-88.
\4\ P.L. 114-110.
---------------------------------------------------------------------------
The STB's jurisdiction includes overseeing and monitoring
railroad commercial practices nationally; enforcing the
railroads' common carrier obligations; evaluating challenges to
the reasonableness of rail rates; reviewing proposed railroad
mergers; ensuring rail carriers provide fair employee
protective arrangements in certain transactions; monitoring
rail carriers to ensure they are able to earn revenues that are
adequate for the infrastructure and investment needed to meet
the present and future demand for rail services; investigating
rail service matters of regional and national significance;
authorizing construction, operation, discontinuance, and
abandonment of rail lines and service; and more recently,
passenger rail regulation.\5\
---------------------------------------------------------------------------
\5\ STB also has jurisdiction over certain trucking company, moving
van, and noncontiguous ocean shipping company rate matters; certain
intercity passenger bus company structure, financial, and operational
matters; and rates and services of certain pipelines not regulated by
the Federal Energy Regulatory Commission. https://www.stb.gov/about-
stb/.
---------------------------------------------------------------------------
II. STAKEHOLDER REAUTHORIZATION RECOMMENDATIONS
On March 8, 2022, the subcommittee held a hearing examining
STB reauthorization recommendations from the following
organizations: the American Chemistry Council, Amtrak, the
Association of American Railroads, the Brotherhood of
Locomotive Engineers and Trainmen, the National Industrial
Transportation League, and the Private Railcar Food & Beverage
Association.\6\ In addition, the National Grain and Feed
Association, Portland Cement Association, the National Stone,
Sand and Gravel Association, the Fertilizer Institute, the
Freight Rail Customer Alliance, the American Fuel &
Petrochemical Manufacturers and several rail unions including
the Brotherhood of Maintenance of Way Employees, Brotherhood of
Railroad Signalmen, International Association of Sheet Metal,
Air, Rail and Transportation Workers Mechanical Division, and
the National Conference of Firemen and Oilers, 32BJ, SEIU have
also proposed reauthorization ideas to the Subcommittee.\7\
---------------------------------------------------------------------------
\6\ https://transportation.house.gov/committee-activity/hearings/
stakeholder-views-on-surface-transportation-board-reauthorization
\7\ https://www.ngfa.org/newsletter/ngfa-food-and-ag-groups-
outline-transportation-priorities-to-incoming-biden-administration/ See
section on Freight Rail. See also https://www.agri-pulse.com/articles/
17574-ag-groups-detail-priorities-ahead-of-regulatory-hearing-on-
snarled-rail-traffic.
---------------------------------------------------------------------------
Furthermore, the STB held an emergency hearing, ``Urgent
Issues in Freight Rail Service,'' on April 26 and 27, 2022. The
Board heard from Department of Transportation (DOT) Secretary
Pete Buttigieg, Deputy Secretary of Agriculture Dr. Jewel H.
Bronaugh, and Commissioner Carl W. Bentzel of the Federal
Maritime Commission.\8\ A number of the shipper organizations
listed above also participated in this STB hearing. More than
25 companies and shipper organizations representing farmers and
agri-business, consumer gas companies, petroleum and oil
refiners, medical and municipal drinking water suppliers,
regional and local home electricity providers, and Wall Street,
among others, expressed concern with current rail service.\9\
Additional union representation at the STB hearing included the
Transportation Trades Department of the AFL-CIO, SMART-
Transportation Division, the Transport Workers Union of
America, and the Transportation Communications Union/IAM.\10\
---------------------------------------------------------------------------
\8\ Surface Transportation Board Press Release ``Secretary of
Transportation Buttigieg, Deputy Secretary of Agriculture Bronaugh, FMC
Commissioner Bentzel to Testify at Hearing on Urgent Issues in Freight
Rail Service.'' April 22, 2022. https://www.stb.gov/news-
communications/latest-news/pr-22-24/?aiEnableCheckShortcode=true
\9\ American Farm Bureau Federation, Archer Daniels Midland, the
Agricultural Transportation Working Group, Cargill, USA Rice, Growth
Energy, Loop Capital Markets, JP Morgan, Delek Companies, American
Forest and Paper Association, Packaging Corporation of America,
National Association of Chemical Distributors, Occidental Chemical
Corporation, International Liquid Terminals Association, Pilot Travel
Centers, Arizona Electric Power Cooperative, the National Mining
Association, the Institute of Scrap Recycling Industries, the Corn
Refiners Association, TransDistribution Brookfield Railroad and
Sweetener Supply Company, as examples.
\10\ Surface Transportation Board Press Release ``Secretary of
Transportation Buttigieg, Deputy Secretary of Agriculture Bronaugh, FMC
Commissioner Bentzel to Testify at Hearing on Urgent Issues in Freight
Rail Service.'' April 22, 2022. https://www.stb.gov/news-
communications/latest-news/pr-22-24/?aiEnableCheckShortcode=true
---------------------------------------------------------------------------
During the STB emergency hearing, numerous shipper and
union representatives outlined and offered recommendations for
Congress to consider in STB reauthorization in response to the
detrimental impacts of erratic and reduced rail service on
their businesses and therefore increasing prices on American
consumers at the grocery store, at the gas pump, and on their
electric and drinking water bills.\11\
---------------------------------------------------------------------------
\11\ https://www.stb.gov/proceedings-actions/filings/
---------------------------------------------------------------------------
Each of the largest Class I railroads also participated in
the recent STB emergency hearing--Union Pacific, Burlington
Northern Sante Fe, CSX Transportation, Norfolk Southern,
Canadian National, and Canadian Pacific.\12\ Kansas City
Southern did not participate.\13\ Each railroad discussed
negative impacts from COVID-19, global shipping delays, a tight
labor market, and equipment shortages.\14\
---------------------------------------------------------------------------
\12\ Surface Transportation Board Press Release ``Secretary of
Transportation Buttigieg, Deputy Secretary of Agriculture Bronaugh, FMC
Commissioner Bentzel to Testify at Hearing on Urgent Issues in Freight
Rail Service.'' April 22, 2022. https://www.stb.gov/news-
communications/latest-news/pr-22-24/?aiEnableCheckShortcode=true
\13\ Id.
\14\ https://www.youtube.com/channel/UCgd2FPpKSpQZ57p771aafNg/live.
See STB Hearing on Urgent Issues in Freight Rail Service--April 26 and
27.
---------------------------------------------------------------------------
Additional detail about the reauthorization suggestions
that stakeholders and railroads provided to STB and this
subcommittee is summarized below.
A. ADMINISTRATIVE AND PROCEDURAL RECOMMENDATIONS
I. Adequate Funding and Staff
The National Industrial Transportation League, the American
Chemistry Council, and the Private Railcar Food and Beverage
Association recommend that the reauthorization bill include
adequate funding and staff for the broad range of STB
responsibilities and to keep pace with changes to the rail
network.\15\ Amtrak echoed this recommendation, particularly in
light of Section 22309 of P.L. 117-58, the Infrastructure
Investment and Jobs Act's (IIJA) creation of a Passenger Rail
Program within the STB.\16\
---------------------------------------------------------------------------
\15\ Testimony of Brad Hildebrand, Member, National Industrial
Transportation League, March 8, 2022. https://transportation.house.gov/
committee-activity/hearings/stakeholder-views-on-surface-
transportation-board-reauthorization. Page 11. Testimony of Chris Jahn,
President and CEO of the American Chemistry Council, March 8, 2022.
https://transportation.house.gov/committee-activity/hearings/
stakeholder-views-on-surface-transportation-board-reauthorization. Page
7. Testimony of Herman Haksteen, President of the Private Railcar Food
and Beverage Association, March 8, 2022. https://
transportation.house.gov/committee-activity/hearings/stakeholder-views-
on-surface-transportation-board-reauthorization. Page 16.
\16\ Testimony of Dennis Newman, Executive Vice President,
Strategy, Planning and Accessibility, Amtrak, March 8, 2022. https://
transportation.house.gov/committee-activity/hearings/stakeholder-views-
on-surface-transportation-board-reauthorization. Page 8.
---------------------------------------------------------------------------
II. Data Collection
The American Chemistry Council recommends that the
reauthorization bill require the STB to commission the
Transportation Research Board to develop an economic model to
determine whether rates are reasonable.\17\ The National
Industrial Transportation League recommends the reauthorization
bill ensure data transparency for all stakeholders so the Board
can make evidence-based decision-making.\18\ USA Rice, the
Private Railcar Food and Beverage Association and the American
Fuel & Petrochemical Manufacturers, among others, recommend
that the STB require railroad reporting on first-mile/last-mile
data so shippers have greater visibility into when shipments
are going to be picked up or delivered, akin to the information
that most business-consumer shipping brands offer
customers.\19\
---------------------------------------------------------------------------
\17\ Testimony of Chris Jahn, President and CEO of the American
Chemistry Council, March 8, 2022. https://transportation.house.gov/
committee-activity/hearings/stakeholder-views-on-surface-
transportation-board-reauthorization. Pages 7 and 8.
\18\ Agricultural Transportation Working Group letter to the
Surface Transportation Board, April 21, 2022. https://www.stb.gov/
proceedings-actions/filings/ Filing ID 304349. Testimony of Brad
Hildebrand, Member, National Transportation Industrial League, March 8,
2022. https://transportation.house.gov/imo/media/doc/
Hildebrand%20Testimony%20-%20NITL.pdf. Page 12.
\19\ Testimony of Herman Haksteen, President, Private Railcar Food
and Beverage Association, March 8, 2022. https://
transportation.house.gov/committee-activity/hearings/stakeholder-views-
on-surface-transportation-board-reauthorization. Page 10. And, American
Fuel and Petrochemical Manufacturers Letter to Committee, March 8,
2022.
---------------------------------------------------------------------------
III. Expedited STB Proceedings
According to the Board, it has ten pending regulatory
proceedings.\20\ One has been pending for eight years and three
have been pending for six years. In addition, the National
Academy of Sciences determined that the STB's rate review
standards are outdated, burdensome, and proven to be unworkable
for most shippers.\21\ While shippers and railroads disagree on
how to resolve this issue, both agree on the benefit of
expedited resolution of rate cases before the STB. The American
Chemistry Council and the American Fuel & Petrochemical
Manufacturers suggest that the STB adopt Final Offer Rate
Review which requires both parties to put forward their best
and final proposals and the STB would select one.\22\ This
process is intended to incentivize each party to offer a
reasonable proposal.\23\ The National Industrial Transportation
League suggested STB reauthorization include timelines or
deadlines for completing a formal proceeding.\24\ The
Association of American Railroads (AAR) expressed concerns
about Final Offer Rate Review and uncertainties with using a
``more reasonable'' standard for determining rates, and
requested that STB reauthorization identify solutions that
provide a simplified, expedited dispute resolution procedure
for rate cases less than $4 million.\25\ AAR further expressed
support for the STB establishing a voluntary arbitration
program for small rate cases, and asserted that ``[i]f
structured properly, this new procedure could offer cost
savings and flexibility to stakeholders.'' \26\
---------------------------------------------------------------------------
\20\ https://www.stb.gov/wp-content/uploads/1Q-Report-on-Pending-
STB-Regulatory-Proceedings-4.1.22.pdf and https://www.stb.gov/news-
communications/latest-news/pr-22-23/
\21\ National Academy of Sciences, Transportation Research Board,
``Modernizing Freight Rail Regulation'', https://onlinepubs.trb.org/
onlinepubs/sr/sr318highlights.pdf.
\22\ Testimony of Chris Jahn, CEO, American Chemistry Council,
March 8, 2022. https://transportation.house.gov/committee-activity/
hearings/stakeholder-views-on-surface-transportation-board-
reauthorization. Page 6. And, American Fuel and Petrochemicals March 8,
2022 letter to the Committee.
\23\ https://www.federalregister.gov/documents/2021/11/26/2021-
25168/final-offer-rate-review-expanding-access-to-rate-relief
\24\ Testimony of Brad Hildebrand, Member, National Transportation
Industrial League, March 8, 2022. https://transportation.house.gov/
committee-activity/hearings/stakeholder-views-on-surface-
transportation-board-reauthorization. Page 11.
\25\ Testimony of Ian Jefferies, CEO, Association of American
Railroads, March 8, 2022. https://transportation.house.gov/committee-
activity/hearings/stakeholder-views-on-surface-transportation-board-
reauthorization. Page 6.
\26\ Id. Page 14.
---------------------------------------------------------------------------
B. FREIGHT RAIL OVERSIGHT RECOMMENDATIONS
A common refrain from rail shippers today is summed up in
the American Fuel & Petrochemical Manufacturers testimony to
the STB:
AFPM believes in free market solutions, but the free market
does not work when there is no competition, or even a realistic
threat of competition. Consolidation in the railroad industry
has created a system of regional duopolies and the railroads
understandable desire to maximize profits has come into
conflict with railroads' common carrier obligations. The
Staggers Act was not intended to make the railroads attractive
investment targets on Wall Street; rather it was designed to
`meet the demands of interstate commerce and the national
defense.' PSR has interfered with those goals.\27\ A healthy,
efficient rail system benefits all parties, and stakeholder
concerns are meant to improve the rail network for
everyone.\28\
---------------------------------------------------------------------------
\27\ American Fuel & Petrochemical Manufacturers. https://
www.stb.gov/proceedings-actions/filings/ Filing ID 304461
\28\ Id.
---------------------------------------------------------------------------
I. Common Carrier Obligation
Rail carriers have a statutory duty to provide
``transportation or service on reasonable request.'' \29\ A
rail carrier may not refuse to provide service merely because
to do so would be inconvenient or unprofitable.\30\ Railroads,
shippers, and rail labor can disagree on how this requirement
is implemented in practice. Rail labor, numerous shippers
represented by the Agricultural Transportation Working
Group,\31\ the National Grain and Feed Association, the
National Industrial Transportation League, the Private Railcar
Food & Beverage Association, and the Freight Rail Customer
Alliance recommend reauthorization include a review of this
common carrier obligation definition.\32\ This would ensure
that the definition applies not only to service refusals but
also material service reductions and deficiencies, combined
with consequences when the obligation is not met.\33\ The U.S.
Department of Agriculture (USDA) echoes these comments.\34\
---------------------------------------------------------------------------
\29\ 49 USC 11101(a)
\30\ Surface Transportation Board, https://www.federalregister.gov/
documents/2008/02/27/E8-3712/common-carrier-obligation-of-railroads.
\31\ Agricultural Transportation Working Group. Letter to the
Surface Transportation Board, April 21, 2022. The following
organizations are part of the Agricultural Transportation Working
Group: Agricultural Retailers Association, American Farm Bureau
Federation, American Feed Industry Association, American Sheep Industry
Association, American Soybean Association, American Sugar Alliance,
Consumer Brands Association, Corn Refiners Association, Equipment
Dealers Association, Forest Resources Association, Fresh Produce
Association of the Americas, Growth Energy, Hardwood Federation,
Institute of Shortening and Edible Oils, Leather and Hide Council of
America, National Aquaculture Association, National Association of
Wheat Growers, National Corn Growers Association, National Cotton
Council, National Council of Farmer Cooperatives, National Farmers
Union, National Grain and Feed Association, National Grange, National
Milk Producers Federation, National Oilseed Processors Association,
National Pork Producers Council, North American Meat Institute, North
American Millers' Association, Pet Food Institute, Specialty Soya and
Grains Alliance, The Fertilizer Institute, USA Rice, U.S. Wheat
Associates.
\32\ https://transportation.house.gov/committee-activity/hearings/
stakeholder-views-on-surface-transportation-board-reauthorization,
Statement for the Record of the Brotherhood of Maintenance of Way
Employees Division/IBT; Brotherhood of Railroad Signalmen;
International Association of Sheet Metal, Air, Rail and Transportation
Workers Mechanical Division; and National Conference of Firemen and
Oilers, 32BJ/SEIU on March 8, 2022 and https://www.ngfa.org/newsletter/
ngfa-food-and-ag-groups-outline-transportation-priorities-to-incoming-
biden-administration/ See section on Freight Rail.
\33\ Testimony of Brad Hildebrand, Member, National Industrial
Transportation League, March 8, 2022. https://transportation.house.gov/
committee-activity/hearings/stakeholder-views-on-surface-
transportation-board-reauthorization. Page 7. In Mr. Hildebrand's
amended testimony, he described the experience of a recent National
Industrial Transportation League member who has multiple locations
served by multiple Class Is. While in each location the cost of rail
service was increasing by approximately 5 percent in 2022, in one
location that did not have another option for transporting their goods,
rates went up by 25 percent in a single year. There is potential that
the Mississippi-based plant will close due to the increase in
transportation costs.
\34\ U.S. Department of Agriculture Written Testimony. https://
www.stb.gov/proceedings-actions/filings/ Filing ID 304441.
---------------------------------------------------------------------------
II. Remedies for Rail Service Failures
A significant number of shippers--30-40 percent according
to Morgan Stanley--have abandoned rail service altogether in
the last year and instead moved to truck.\35\ Truckload and air
freight tonnage are increasing while rail freight tonnage is
decreasing.\36\ Not all shippers have the resources to change
shipping services.\37\ National Grain and Feed Association
members are currently experiencing losses in the tens of
millions of dollars and lost or reduced operating days totaling
weeks from rail service delays.\38\ At rail origins, its
members are unable to purchase grain from farmers because they
are full while awaiting loaded trains to be moved out by the
railroad.\39\ At rail destinations, its members are unable to
deliver feed to livestock producers.\40\ The Farm Bureau
reports a 47 percent increase in the number of grain rail cars
that aren't delivered on time, including a 107 percent increase
in rail cars that are 11 or more days overdue.\41\ USA Rice
states that rail service is:
---------------------------------------------------------------------------
\35\ Testimony of Herman Haksteen, President, Private Railcar Food
and Beverage Association, March 8, 2022. https://
transportation.house.gov/committee-activity/hearings/stakeholder-views-
on-surface-transportation-board-reauthorization. Page 5.
\36\ Id. Pages 5-6.
\37\ Testimony of Brad Hildebrand, Member, National Industrial
Transportation League, March 8, 2022. https://transportation.house.gov/
committee-activity/hearings/stakeholder-views-on-surface-
transportation-board-reauthorization. Page 4.
\38\ https://www.stb.gov/wp-content/uploads/NGFA-Letter-to-STB-
Chairman-Oberman-on-Rail-Service-and-Precision-Scheduled-Railroading-
March-24-2022.pdf and https://imis.ngfa.org/ngfa/News/Pressers/2022/
NGFA_testifies_on_rail_service_issues_at_the_STB_.aspx.
\39\ Id.
\40\ Id.
\41\ Farm Bureau. https://www.fb.org/market-intel/farmers-and-
ranchers-feel-crunch-of-railway-supply-chain-shortfalls
unreliable and inconsistent. This includes the carriers
offering car deliveries, only for those deliveries to be
cancelled hours later. The carriers are also notorious for
being late or early in spotting cars--often with little to no
advance notice. Weekly car orders are not being filled anywhere
close to the full orders, and replacement car arrivals are
unpredictable.\42\
---------------------------------------------------------------------------
\42\ USA Rice. https://www.stb.gov/proceedings-actions/filings/
Filing ID 304362.
Archer Daniels Midland submitted a letter to the STB
stating that recent Class I failures to meet acceptable service
requirements ``result in reduced production rates at ADM
processing plants, shut down of ADM customers' production
facilities, and a highly underutilized private railcar fleet.''
\43\ National Industrial Transportation League Members
experienced a record number of plant shutdown cases in 2021 due
to sporadic rail service.\44\ Private Railcar Food and Beverage
Association members are experiencing erratic railcar pick-up
and delivery times.\45\ In a survey of its members from July
2021-December 2021, nearly every member of the Freight Rail
Customer Alliance (92 percent) experienced rail service issues,
more than half (60 percent) reported service worse than 2019 or
2020, and more than half (64 percent) had to modify
operations.\46\ Each incurred additional costs as a result of
between $100,000-$20 million.\47\ The National Mining
Association testified before the STB that `` . . . the trains
often do not show up at all.'' \48\
---------------------------------------------------------------------------
\43\ Archer Daniels Midland. https://www.stb.gov/proceedings-
actions/filings/ Filing ID 304408.
\44\ Attachment to Testimony of Brad Hildebrand, Member, National
Industrial Transportation League, March 8, 2022. https://
transportation.house.gov/committee-activity/hearings/stakeholder-views-
on-surface-transportation-board-reauthorization. Pages 2-5.
\45\ Testimony of Herman Haksteen, President, Private Railcar Food
and Beverage Association, March 8, 2022. https://
transportation.house.gov/committee-activity/hearings/stakeholder-views-
on-surface-transportation-board-reauthorization. Pages 8-9.
\46\ Submitted Statement for the Record of Ms. Emily Regis, Vice
President, Freight Rail Customer Alliance, March 8, 2022.
\47\ Id.
\48\ National Mining Association. https://www.stb.gov/proceedings-
actions/filings/ Filing ID 304395.
---------------------------------------------------------------------------
The National Grain and Feed Association and the American
Chemistry Council recommend the STB have meaningful remedies
for customers facing railroad service failures, including the
authority to require a service recovery or assurance plan if a
railroad fails to provide adequate service.\49\ The National
Industrial Transportation League suggests expanding the STB's
ability to assess fines or penalties to recover appropriate
damages for shippers and increase the current penalty from an
$8,700/violation to assess a higher amount per incident or
assess this amount per day by carload.\50\ The Private Railcar
Food and Beverage Association echoes the National Industrial
Transportation League recommendation and further recommends the
ability to charge reverse demurrage, in that the railroads will
pay the private railcar owners a daily fee when those private
rail assets are held up due to railroad operating issues or
allow charge backs to the railroads for daily car hire fees to
offset the cost of additional transit days experienced by car
owners.\51\ In a letter to the committee, the Fertilizer
Institute also encourages the ability for reverse demurrage to
address the seeming lack of railroad incentive to move non-
railroad owned assets.\52\ The Agricultural Transportation
Working Group echoed these comments.\53\ Archer Daniels Midland
states that reciprocity is key to the prevention of future
service failures.\54\ During the STB hearing, a Wall Street
railroad analyst from Loop Capital Markets expressed support
for the STB to assess fines or allow for reverse demurrage for
rail customers after receiving poor service as a way to
incentivize better service.\55\ Both the DOT and USDA also
expressed support for the STB to incentivize better rail
service.\56\
---------------------------------------------------------------------------
\49\ https://www.stb.gov/wp-content/uploads/NGFA-Letter-to-STB-
Chairman-Oberman-on-Rail-Service-and-Precision-Scheduled-Railroading-
March-24-2022.pdf. Testimony of Chris Jahn, President and CEO of the
American Chemistry Council, March 8, 2022. https://
transportation.house.gov/committee-activity/hearings/stakeholder-views-
on-surface-transportation-board-reauthorization. Page 8. Testimony of
Dennis R. Pierce, National President, Brotherhood of Locomotive
Engineers and Trainmen, March 8, 2022. https://
transportation.house.gov/committee-activity/hearings/stakeholder-views-
on-surface-transportation-board-reauthorization. Page 7.
\50\ Id. Page 8.
\51\ Id. Page 12. Railroads have statutory authority to charge
shippers fees called ``demurrage charges'' when the shipper detains
rail cars beyond the time permitted for loading or unloading rail cars
at 49 USC 10746. Despite owning or leasing a majority of railcars, rail
shippers do not currently have this statutory authority. Class I
railroads charged $1.7 billion in demurrage fees in 2021. See March 2,
2022 Summary of Subject Matter prepared for the Subcommittee's
``Stakeholder Views on Surface Transportation Board Reauthorization''
March 8, 2022 hearing.
\52\ Letter to the Transportation and Infrastructure Committee from
Corey Rosenbusch, President and CEO, The Fertilizer Institute, March 8,
2022. Letter refers to how rail shippers own or lease 73 percent of
railcars.
\53\ Agricultural Working Group letter to the Surface
Transportation Board, April 21, 2022. https://www.stb.gov/proceedings-
actions/filings/ Filing ID 303439.
\54\ Archer Daniels Midland. https://www.stb.gov/proceedings-
actions/filings/ Filing 304408.
\55\ https://www.youtube.com/channel/UCgd2FPpKSpQZ57p771aafNg/live.
April 26, 2022.
\56\ Id.
---------------------------------------------------------------------------
III. Long Train Operating Plans
Due to Precision Scheduled Railroading (PSR), train lengths
have been getting longer.\57\ Class I railroads are operating
trains as long as three miles in length which means single
track mainlines face greater congestion as fewer trains fit in
the sidings.\58\ Shippers who own their own railcars are seeing
increasing maintenance costs from the longer trains--one
shipper saw a 52 percent increase in car maintenance costs and
a 330 percent increase in cars that were completely destroyed
over the last five years commensurate with the implementation
of PSR.\59\ Rail union members described the length of time it
takes to build a long train, that long trains must operate more
slowly, and that crew members are reaching the end of their
statutorily limited hours of service without reaching final
destinations thereby contributing to delays.\60\ Amtrak
recommends that the STB reauthorization bill include a
requirement that Class I railroads develop Long Train Operating
Plans and submit them to the STB for review and approval
following public comment.\61\
---------------------------------------------------------------------------
\57\ Bill Stephens, Trains Magazine, November 15, 2021. https://
www.trains.com/trn/news-reviews/news-wire/railroads-use-of-long-trains-
to-go-under-the-microscope/
\58\ Testimony of Dennis Newman, Executive Vice President,
Strategy, Planning and Accessibility, Amtrak, March 8, 2022. https://
transportation.house.gov/committee-activity/hearings/stakeholder-views-
on-surface-transportation-board-reauthorization. Page 9.
\59\ Testimony of Herman Haksteen, President, Private Railcar Food
and Beverage Association, March 8, 2022. https://
transportation.house.gov/committee-activity/hearings/stakeholder-views-
on-surface-transportation-board-reauthorization. Page 8.
\60\ STB Hearing on Urgent Issues in Freight Rail Service, April
26, 2022. Jeremy Furguson and Matthew Brukart, SMART-Transportation.
https://www.youtube.com/channel/UCgd2FPpKSpQZ57p771aafNg/live
\61\ Id.
---------------------------------------------------------------------------
IV. Commodity Exemptions
Certain commodities are exempt from the ability to seek
redress and relief from the STB, though the STB has the ability
to waive these exemptions.\62\ Portland Cement Association sent
a letter to the Committee requesting the commodity exemptions
be reviewed as their commodity was exempted more than 25 years
ago.\63\ Within the last year, cement manufacturers have lost
significant volume--one shipper lost between 60,000-100,000
tons of annual volume due to poor rail service.\64\ This amount
is enough cement to build 3,000 homes.\65\ The American Forest
& Paper Association states that they face similar
``unreasonable demurrage practices, poor service, car supply
issues and rising rates as the commodities which are under the
STB's purview'' and would like access to the STB's regulatory
remedies.\66\ The National Industrial Transportation League
suggests these exemptions be either entirely revoked by a date
certain unless the railroads can show that the exemption is
still warranted or periodically review the exemptions every
five years.\67\
---------------------------------------------------------------------------
\62\ 49 CFR 1039.11.
\63\ Letter from Sean O'Neill, Senior Vice President of Government
Affairs, Portland Cement Association. March 4, 2022.
\64\ Id.
\65\ Id.
\66\ https://www.stb.gov/proceedings-actions/filings/. Filing ID
304465 in EP_770.
\67\ Testimony of Brad Hildebrand, National Industrial
Transportation League, March 8, 2022. https://transportation.house.gov/
committee-activity/hearings/stakeholder-views-on-surface-
transportation-board-reauthorization. Page 9.
---------------------------------------------------------------------------
V. Cost-Benefit Analysis
As an independent agency, STB is not required by Executive
Order 12866 to conduct cost-benefit analyses of regulatory
requirements that executive agencies like the DOT are required
to do.\68\ AAR requested that STB reauthorization include the
requirement for STB regulations to undergo a cost-benefit
analysis.\69\
---------------------------------------------------------------------------
\68\ Testimony of Ian Jefferies, CEO, Association of American
Railroads, March 8, 2022. https://transportation.house.gov/committee-
activity/hearings/stakeholder-views-on-surface-transportation-board-
reauthorization. Pages 14 and 15. And, https://www.everycrsreport.com/
reports/R42821.html.
\69\ Id.
---------------------------------------------------------------------------
C. INTERCITY PASSENGER RAIL RESPONSIBILITIES
With the passage of the IIJA, and its accompanying advanced
appropriations, there will be billions of federal dollars
invested in the freight railroad network to improve intercity
passenger rail.\70\ And yet, Amtrak accounts for approximately
four percent of train-miles on Class I railroads.\71\ That
percentage will not significantly increase even if all the
expansion contemplated in the Amtrak Connects US Plan over the
next 15 years occurs.\72\
---------------------------------------------------------------------------
\70\ https://railroads.dot.gov/BIL
\71\ Testimony of Dennis Newman, Executive Vice President,
Strategy, Planning and Accessibility, Amtrak, March 8, 2022. https://
transportation.house.gov/committee-activity/hearings/stakeholder-views-
on-surface-transportation-board-reauthorization. Page 15.
\72\ Id.
---------------------------------------------------------------------------
Amtrak requested the STB reauthorization bill include a
number of provisions to assist with intercity passenger rail
development including: allow Amtrak to seek enforcement of its
preference rights in federal court, direct the STB to conduct
on-time performance investigations rather than await
complaints, allow the STB to issue injunctive orders to enforce
on-time performance including allowing for joint dispatching by
the host railroad and Amtrak or an independent third party,
require all intercity passenger rail providers to be under the
jurisdiction of the STB, require railroad mergers to consider
passenger rail impacts, and add passenger rail to the Rail
Transportation Policy at 49 U.S.C. 10101.\73\
---------------------------------------------------------------------------
\73\ Id.
---------------------------------------------------------------------------
WITNESS LIST \74\
---------------------------------------------------------------------------
\74\ The STB will submit only one written statement with potential
addendums by individual members. Only the Board Chairman will present
oral testimony. The additional four members will be available for
questioning.
---------------------------------------------------------------------------
LMartin Oberman, Chairman, Surface Transportation
Board
LPatrick Fuchs, Member, Surface Transportation
Board
LRobert Primus, Member, Surface Transportation
Board
LMichelle Schultz, Vice-Chair, Surface
Transportation Board
LKaren Hedlund, Member, Surface Transportation
Board
BOARD MEMBER VIEWS ON SURFACE TRANSPORTATION BOARD REAUTHORIZATION
----------
THURSDAY, MAY 12, 2022
House of Representatives,
Subcommittee on Railroads, Pipelines, and Hazardous
Materials,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to call, at 10:01 a.m. in
room 2167 Rayburn House Office Building and via Zoom, Hon.
Donald M. Payne, Jr. (Chair of the subcommittee) presiding.
Members present: Mr. Payne, Mr. DeFazio, Mr. Cohen, Mr.
Carson, Ms. Wilson of Florida, Mr. Garcia of Illinois, Mrs.
Napolitano, Mr. Johnson of Georgia, Ms. Titus, Mr. Huffman, Mr.
Lynch, Mr. Auchincloss, Mr. Crawford, Mr. Rodney Davis of
Illinois, Mr. Bost, Mr. LaMalfa, Mr. Fitzpatrick, Mr.
Balderson, Mr. Burchett, Mr. Johnson of South Dakota, Mr.
Nehls, and Mrs. Steel.
Mr. Payne. The subcommittee will come to order.
I ask unanimous consent that the chair be authorized to
declare a recess at any time during today's hearing.
Without objection, so ordered.
I also ask unanimous consent that Members not on the
subcommittee be permitted to sit with the subcommittee at
today's hearing and ask questions.
Without objection, so ordered.
As a reminder, please keep your microphone muted unless
speaking. Should I hear any inadvertent background noise, I
will request that the Member please mute their microphone.
To insert a document into the record, please have your
staff email it to [email protected].
So, good morning. To continue this subcommittee's work
towards reauthorization of the Surface Transportation Board,
today we have an opportunity to hear from members of the Board
to determine what additional authorities are needed to improve
rail service across the country.
The STB is a unique independent agency that is the primary
economic regulator of freight railroads, responsible for
ensuring that the railroads honor their common carrier
obligations.
Shippers play a critical role in the national supply chain
by making the food we eat, ensuring the water that we drink is
safe, providing electricity, and providing building materials.
We held a hearing with stakeholders 2 months ago who
sounded the alarm on rail service issues and to get their ideas
for reauthorization. Recently the STB held 2 days of emergency
public testimony on the meltdown of our Nation's freight rail
operations. The STB heard from many shippers, labor leaders,
and even Transportation Secretary Pete Buttigieg and the
Agriculture Deputy Secretary Bronaugh on the significant delays
in transporting cargo by freight rail.
Chemical shippers are enduring 78 percent longer transit
times, and service days have been cut nearly in half.
Agriculture producers such as soybean and rice have seen a
particularly sharp decline in the quality of freight rail
service. The National Grain and Feed Association recently wrote
to this subcommittee explaining that, and I quote, ``The
current inability of several Class I carriers to provide
reliable rail service to their customers is impacting farmgate
commodity prices and elevating food prices for customers.''
Increasing prices for our food, gas prices at the pump,
turning on our lights, and having safe drinking water is
crucial. These are all impacted by increasing delays in freight
rail service. Quite frankly, this is unacceptable. The timely
and efficient movement of goods remains of paramount importance
to a strong economy.
I understand that Class I freight railroads' explanation of
the decline in service is due to several factors, including
workforce shortages. What is maddening is that the very
workforce shortage contributing to the decline in service is a
result of the Class I's implementing Precision Scheduled
Railroading, or PSR. By the end of last year, the Class I
railroad workforce was cut by nearly one-third compared to
2015. Those cuts began years before the pandemic hit. And
despite knowing it takes a number of months to return qualified
workers to the rails, the railroad doubled down by cutting
again in 2020.
I have been concerned to hear from workers and their unions
about employees being overworked and rushed on the job. Now,
the worsening working conditions, years of job insecurity, and
the months required to properly train workers before they can
return to service, have come home to roost in the form of
severe hiring challenges the railroads currently face.
All of this is why the STB held the emergency hearing.
Last week, the STB unanimously acted to require the largest
railroads--UP, BNSF, CSX, and NS--to develop service recovery
plans to improve service and metrics to measure progress,
including goals and measures for rail service performance, and
employment training and hiring levels.
Stakeholders have also proposed new authorities, such as
expanding the STB's ability to assess fines or allow for
reverse delay charges that shippers can charge carriers.
I look forward to hearing Board member views on stakeholder
proposals and their own proposals.
[Mr. Payne's prepared statement follows:]
Prepared Statement of Hon. Donald M. Payne, Jr., a Representative in
Congress from the State of New Jersey, and Chair, Subcommittee on
Railroads, Pipelines, and Hazardous Materials
Good morning.
To continue this subcommittee's work toward reauthorization of the
Surface Transportation Board, today we have an opportunity to hear from
members of the Board to determine what additional authorities are
needed to improve rail service across the country.
The STB is a unique independent agency that is the primary economic
regulator of freight railroads, responsible for ensuring that the
railroads honor their common carrier obligations.
Shippers play a critical role in the national supply chain by
making the food we eat, ensuring the water we drink is safe, providing
electricity, and providing building materials.
We held a hearing with stakeholders two months ago who sounded the
alarm on rail service issues and to get their ideas for
reauthorization.
Recently, the STB held two days of emergency public testimony on
the meltdown of our nation's freight rail operations.
The STB heard from many shippers, labor leaders, and even
Transportation Secretary Buttigieg and Agriculture Deputy Secretary
Bronaugh on the significant delays in transporting cargo by freight
rail.
Chemical shippers are enduring 78 percent longer transit times and
service days have been cut nearly in half.
Agriculture producers such as soybeans and rice have seen a
particularly sharp decline in the quality of freight rail service.
The National Grain and Feed Association recently wrote to this
subcommittee explaining that, and I quote, ``the current inability of
several Class One carriers to provide reliable rail service to their
customers is impacting farmgate commodity prices and elevating food
prices for customers.''
Increasing prices for our food, gas prices at the pump, turning on
our lights, having safe drinking water--these are all impacted by
increasing delays in freight rail service.
Quite frankly, this is unacceptable.
The timely and efficient movement of goods remains of paramount
importance to a strong economy.
I understand that the Class I freight railroads' explanation of the
decline in service is due to several factors, including workforce
shortage.
What is maddening, is that the very workforce shortage contributing
to the decline in service is a result of the Class Is implementing
precision scheduled railroading, or PSR.
By the end of last year, the Class I railroad workforce was cut by
nearly a third compared to 2015.
Those cuts began years before the pandemic hit, and--despite
knowing it takes a number of months to return qualified workers to the
rails--the railroads doubled down by cutting again in 2020.
I have been concerned to hear from workers and their unions about
employees being overworked and rushed on the job.
Now, those worsening working conditions, years of job insecurity,
and the months required to properly train workers before they can
return to service, have come home to roost in the form of severe hiring
challenges the railroads currently face.
All of this is why the STB held the emergency hearing.
Last week, the STB unanimously acted to require the largest
railroads--UP, BNSF, CSX and NS--to develop service recovery plans to
improve service and metrics to measure progress, including goals and
measures for rail service performance and employment training and
hiring levels.
Stakeholders have also proposed new authorities such as expanding
the STB's ability to assess fines or allow for reverse delay charges
that shippers can charge carriers.
I look forward to hearing Board member views on stakeholder
proposals and their own proposals.
Mr. Payne. I now recognize Mr. Crawford for an opening
statement.
Mr. Crawford. Thank you, Mr. Chairman, and I thank you for
holding this hearing today.
And for the witnesses, thank you for being here today, as
well.
Today's hearing will be the first time all five Surface
Transportation Board members have appeared before the
committee. We will hear about their work and thoughts on a
potential STB reauthorization.
The STB is an independent agency created in 1996. It has
only been reauthorized one time--that was back in 2015--when
changes were made to ensure that STB operated more effectively,
including expanding the Board from three to five members.
This year, the STB is busier than ever as it reviews
several major proposed rulemakings, a major merger between two
Class I freight railroads, and the potential expansion of
Amtrak service.
The STB recently held a 2-day hearing where it examined
service issues involving freight railroad carriers and
shippers. The STB heard testimony from several stakeholders on
their concerns about the state of the industry and potential
solutions.
Some of these freight service issues have arisen in my
district, prompting me to submit a letter to the STB expressing
my concerns and hopes that the STB can work with shippers and
freight carriers to resolve these problems.
When broadly looking at a potential STB reauthorization, we
must carefully and deliberatively examine the Board's needs;
ensure that any proposals have a positive long-term impact on
the STB's operations; and we must not interfere with, slow
down, or distract from the STB's current duties and their
abundant workload.
I commend the chair for holding this hearing today and look
forward to hearing from our witnesses.
[Mr. Crawford's prepared statement follows:]
Prepared Statement of Hon. Eric A. ``Rick'' Crawford, a Representative
in Congress from the State of Arkansas, and Ranking Member,
Subcommittee on Railroads, Pipelines, and Hazardous Materials
Thank you, Chair Payne, for holding this hearing, and thank you to
our witnesses for participating.
Today's hearing will be the first time all five Surface
Transportation Board members have appeared before the Committee. We
will hear about their work and thoughts on a potential STB
reauthorization.
The STB is an independent agency created in 1996. It has only been
reauthorized once, in 2015, when changes were made to ensure the STB
operated more effectively, including expanding the Board from three to
five members.
This year, the STB is busier than ever as it reviews several major
proposed rulemakings, a major merger between two Class One freight
railroads, and the potential expansion of Amtrak service.
The STB recently held a two-day hearing where it examined service
issues involving freight railroad carriers and shippers. The STB heard
testimony from several stakeholders on their concerns about the state
of the industry, and potential solutions.
Some of these freight service issues have arisen in my district,
prompting me to submit a letter to the STB expressing my concerns and
hopes that the STB can work with shippers and freight carriers to
resolve these problems.
When broadly looking at a potential STB reauthorization, we must
carefully and deliberatively examine the Board's needs, ensure that any
proposals have a positive long-term impact on the STB's operations, and
we must not interfere with, slow down, or distract from the STB's
current duties and abundant workload.
I commend the Chair for holding this hearing today and look forward
to hearing from our witnesses.
Mr. Crawford. And with that, I yield back the balance of my
time.
Mr. Payne. The gentleman yields back. We will now hear from
the chairman of the full committee, Mr. DeFazio.
Mr. DeFazio. Thank you, Mr. Chairman. Thanks for this
critical hearing. Thanks to members of the Surface
Transportation Board for being here. Thanks for your service.
We are at a point of crisis, and we have to deal with that
crisis meaningfully. The facts are undeniable. Freight service
in the United States of America--we used to have the best
freight rail in the world--is abysmal. Shippers are being
impacted by poor rail service. They are shifting to trucking.
Of course, that is more greenhouse gas pollution. Raw material
delays have actually shut factories, and there are extra labor
costs to load and unload once railcars arrive. This service is
forcing shippers to recoup their losses--or the manufacturers--
downstream, and that is the consumers. So, this is contributing
to the inflationary spike in this country.
The evil ghost of Hunter Harrison lives on. The legacy of
this man is disgusting, what he did. He has addicted the CEOs
of the rail industry to watching the ticker on Wall Street and
using their resources to benefit their shareholders and not run
railroads like railroads.
This isn't the only industry that has been infected. Boeing
killed people because of the same pressure and the same
infection. And it has got to stop. And you are the people who
can stop it with the freight rail industry.
The freight railroad CEOs say poor service. It has nothing
to do with us. Oh, no, no. It is COVID, supply chain. Oh, their
workforce--oh, by the way, you laid off one hell of a lot of
your workforce, and a lot of them aren't coming back to you
because they have been disrespected, mistreated. And you have
made it more dangerous for your workers with these cuts.
You are not looking to change. I am talking to the CEOs
now. You are not looking to change. You are just bringing in--
raking in record profits. Whoa, more dividends for
shareholders. And oh, hey, by the way, my salary also goes up,
and my stock goes up. Isn't that great? While the country
suffers.
I have been talking about this for a long time, and people
say, oh, that is just DeFazio carrying on. Well, now it is
DeFazio joined with some very unlikely allies. That would be
the chemical industry, the energy industry, the agriculture
industry, and a whole host of other shippers who are bemoaning
what has been done, the destruction that has been wrought on
freight rail in America with so-called Precision Scheduled
Railroading.
I don't have much in common with the oil industry. We don't
agree on much of anything. But here is a quote from the
American Fuel and Petrochemical Manufacturers testimony. And I
hope the Republicans are listening, because you just listen to
the damn freight railroads. Listen to your constituents, and
look at what it is doing to them. ``Consolidation in the
railroad industry has created a system of regional duopolies
and the railroads understandable desire to maximize profits has
come into conflict with railroads' common carrier obligation.
The Staggers Act was not intended to make the railroads
attractive investment targets on Wall Street; rather it was
designed to `meet the demands of interstate commerce and
national defense.' PSR''--Precision Scheduled Railroading--
``has interfered with those goals.''
It is a business model, cuts expenses to the bone, slows
customer service, volume growth, and the freight railroads only
want to take now the most profitable freight. They are not
going to spend anything on growing or maintaining their
businesses, because that might hurt their stock price, if they
actually looked to the future and made investments. ``Surplus''
assets are mothballed, workers furloughed. But they are getting
short-term profits. That is great.
You don't have to take my word for it. Again, former
Burlington Northern Santa Fe CEO Matt Rose, he left a great
legacy which is now being dismantled over there, too, which is
sad that BNSF is following Hunter Harrison. This is Matt Rose,
this is his exit op ed, essentially, from the industry. ``The
Street--I am talking about sell-side analysts--has been
extremely aggressive with the publicly traded railroads.
They're saying that less is better. Less capital is better.
Fewer market opportunities are better. Fewer unit trains are
better. It's all about lowering the operating ratio. I disagree
with almost all of that. I truly believe that every industry,
every business, needs growth . . . I just don't think you can
shrink yourself into a virtuous-cycle model that works.'' That
is Matt Rose, former CEO of BNSF.
Now, I am pleased that you are taking the matter seriously.
I am pleased you held a hearing. But we have got to act more
decisively and more quickly. And you need to do that because
you have to protect the railroad network in this country. It is
a vital asset. It is going to be critical, not only for supply
chain issues, but for the future in terms of dealing with
climate change, moving freight much more effectively and with
much less pollution than trucks.
And your testimony asks for virtually nothing from this
committee, suggesting you have all the powers you need. Well,
if that is true, and I am not sure it is, then use them. Use
them.
Some will argue, oh, it is a free-market problem, it will
be resolved by the markets. But that doesn't work with
duopolies or monopolies. It does not work. In fact, that is the
reason you exist. That is the whole reason that you exist.
Current law lays out your responsibilities. I am not going
to go through all of them, but you know what they are. But they
include maintaining reasonable rates, fair wages, prohibit
predatory pricing, meet the needs of public and national
defense, ensure the development and continuation of a sound
rail transportation system. That isn't happening in America
today. It is not happening. We are going downhill here really
quickly.
So, you are not there to protect the bottom line of these
railroads and the CEO's bonuses. You are not there even for the
shippers' bottom line. But you are there to make this system
work better, keep the costs lower, and be competitive. There is
very little competition. We need to re-instill competition
here.
So, let me be crystal clear. If you don't move decisively,
and don't rise to this occasion, which is a looming crisis,
this committee will legislate. I just talked to the White House
economic adviser about this last night, they are well aware of
it, they are extraordinarily concerned, they are looking at
what steps they can take by Executive order to deal with this
mess that is being created by the leeches on Wall Street in the
obeisance of these CEOs running these companies into the
ground.
I want freight railroads to be successful. I do. But that
success should be defined by the amount of freight they move
across the Nation, the amount of greenhouse gas they prevent,
and the safety of their employees and communities they
traverse.
So, I urge you to incentivize the railroads to act like
railroads, not Wall Street cash cows, not pawns of those
leeches on Wall Street. Stock buybacks and dividends can't be
the measures for success of freight rail in this country. They
are the only mode with a continued decline in volume in a time
of shipping crisis in this Nation, and high inflation. You have
got to do something about it.
[Mr. DeFazio's prepared statement follows:]
Prepared Statement of Hon. Peter A. DeFazio, a Representative in
Congress from the State of Oregon, and Chair, Committee on
Transportation and Infrastructure
The facts before this committee today are undeniable. Freight
railroad service is abysmal. Shippers are being severely impacted by
poor rail service, which forces them to shift to trucking, raw material
delays that cause factory closures, and extra labor costs to load and
unload once the rail cars finally arrive. This appalling service is
forcing shippers to recoup their extra costs downstream and Americans
are paying for it--with increased food costs and at the gas pump.
Sadly, the freight railroad CEOs blame poor service on everyone but
themselves. They blame COVID, supply chain disruptions, their
workforce, and their customers. The CEOs are not looking for change.
They are bringing in record profits for their shareholders, and they
are not going to do anything to mess with this ``winning formula.''
I have been beating the drums about the dangers of precision
scheduled railroading (PSR) for years, leading some to dismiss me as a
grumpy old man. Today, this grumpy old man has been joined by the
agriculture industry, energy industry, chemical industry, and other
shippers who bemoan PSR and its impacts on their businesses. In fact,
these shippers have even joined forces with the labor movement to
demand a free and fair freight railroad market with the capacity to
grow and meet demand.
I don't have a lot in common with the big oil executives, but this
quote from the American Fuel & Petrochemical Manufacturers testimony to
the STB is spot on:
``Consolidation in the railroad industry has created a system of
regional duopolies and the railroads understandable desire to maximize
profits has come into conflict with railroads' common carrier
obligations. The Staggers Act was not intended to make the railroads
attractive investment targets on Wall Street; rather it was designed to
`meet the demands of interstate commerce and the national defense.' PSR
has interfered with those goals.''
PSR is a business model that cuts expenses to the bone even when
that slows customer and volume growth. Freight railroads accept only
the most profitable freight. They are not going to spend a dime on
growing their companies unless the new customer is truly captured and
highly profitable to the railroad. Any ``surplus'' asset is mothballed
and worker furloughed, making it difficult for railroads to accommodate
more business. PSR delivers short-term profits, while harming the long-
term success of the freight railroad industry.
You don't have to take my word for it. Former BNSF CEO Matt Rose
said it when he retired back in 2019:
``The Street--I'm talking about sell-side analysts--has been
extremely aggressive with the publicly traded railroads. They're saying
that less is better. Less capital is better. Fewer market opportunities
are better. Fewer unit trains are better. It's all about lowering the
operating ratio. I disagree with almost all of that. I truly believe
that every industry, every business, needs growth . . . I just don't
think you can shrink yourself into a virtuous-cycle model that works.''
I am pleased the Surface Transportation Board is taking this matter
seriously but let me say for the record the Board is moving too slow.
American businesses and consumers are needlessly suffering at the hands
of duopolies, while these duopolies extract record profits. We have
five witnesses before us today who are the regulators and this is
occurring on their watch. The STB needs to act quickly and decisively
to protect the railroad network, a vital asset to the U.S. economy.
Your testimony asks for very little from this committee, suggesting
you have all the regulatory powers you need. If that is true, and I am
not sure it is, how did the current freight failures get this bad under
your watch?
Some will argue this is a free-market problem to be resolved by the
markets. But that doesn't work with duopolies. It is, in fact, the very
reason the STB exists.
Current law lays out your responsibilities in Chapter 101 of Title
49. These responsibilities include:
``to ensure the development and continuation of a sound
rail transportation system with effective competition among rail
carriers and with other modes,''
``to meet the needs of the public and the national
defense,''
``to maintain reasonable rates where there is an absence
of effective competition and where rail rates provide revenues which
exceed the amount necessary to maintain the rail system and to attract
capital,''
``to encourage fair wages and safe and suitable working
conditions in the railroad industry,'' and
``to prohibit predatory pricing and practices, to avoid
undue concentrations of market power, and to prohibit unlawful
discrimination.''
Your mandate is not to protect the freight railroads' bottom lines
or rail shippers' bottom lines, but to ensure the rail network is
operating efficiently, keeping costs low for Americans, maintaining
reasonable profits for the railroads, and giving American manufacturers
a competitive advantage worldwide. We need the STB to do more to meet
those mandates.
Let me be crystal clear that if the STB doesn't move more quickly
to rise to the occasion, this committee will legislate. I urge my
Republican colleagues to join me and shippers from the agriculture,
energy and chemical industries (just to name a few) to bring sanity
back to the freight railroad business.
My goal is simple. I want freight rail companies to be successful,
but that success should be defined by the amount of freight they move
across the nation, the amount of GHG emissions they prevent, the safety
of their employees and the communities they traverse and serve, and the
economic advantage that timely, efficient, and affordable freight rail
provides the American economy.
I urge the STB to incentivize the railroads to act like railroads,
and not Wall Steet cash cows. Stock buy backs and dividends cannot be
the sole measures of success for freight railroads. The ability for
Wall Street to extract massive capital out of the railroads will
undermine the U.S. freight rail network. They are the only mode with
continued decline in freight rail volume, a sure sign that the industry
is unhealthy.
Congress cannot sit idle and ignore the current problems with the
freight railroads. They are too important of an asset for our national
economy. The rail system is broken, and it needs fixing. We need you to
fix it, or we will.
Mr. DeFazio. Thank you, Mr. Chairman.
Mr. Payne. I would like to thank the chairman. I now would
like to welcome our witnesses.
First we have Martin Oberman, Chairman of the Surface
Transportation Board; Michelle Schultz, Vice Chair, Surface
Transportation Board; and Surface Transportation Board members
Patrick Fuchs, Robert Primus, and Karen Hedlund.
Thank you for joining us today, and I look forward to your
testimony.
Chairman Oberman will testify on behalf of the entire
Surface Transportation Board, but all five members are
available for questions.
Without objection, our witness' full statement will be
included in the record.
Since your written testimony has been made a part of the
record, the subcommittee requests that you limit your oral
testimony to 5 minutes.
Chairman Oberman, you may proceed.
TESTIMONY OF MARTIN J. OBERMAN, CHAIRMAN, SURFACE
TRANSPORTATION BOARD
Mr. Oberman. Thank you and good morning, Chairman DeFazio,
Chairman Payne, Ranking Member Crawford, and distinguished
members of the committee and subcommittee.
As Chairman of the STB, and on behalf of my fellow Board
members, thank you for the opportunity to offer our views on
agency reauthorization.
I will say at the outset that our five-member Board has
evolved into an extraordinarily collegial and effective group
which strives hard to act by consensus and generally has
succeeded in doing so.
Rail network reliability is essential to the Nation's
economy, and is my top priority. The industry is now facing a
severe crisis in service, as described by one Wall Street
analyst, a description which, in my view, is all too accurate.
I was designated Chairman by President Biden in January
2021. One of my first initiatives was to focus on the freight
network, with particular attention on congestion in the
intermodal supply chain.
Shortly after becoming Chairman, I sent letters to the CEOs
of all Class I's, asking them to report on their preparedness
to meet growing demand for rail service as freight volumes
rebounded. In response, they all provided assurances, and
expressed confidence they could handle freight volume as the
economy continued its recovery. They were wrong.
Instead, the rail industry clearly is struggling to provide
adequate and reliable rail service. Why? Over the last 6 years,
the Class I railroads have cut their workforce by 29 percent,
for a loss of 45,000 employees. With demand back, and against
the backdrop of these significant cuts and other changes, they
face major holes in their service.
The severity of the problem has necessitated immediate
Board action. Two weeks ago, the Board held public hearings
which revealed beyond any debate that rail service is
unacceptably poor, with acute issues in many regions. It is
clear that the four largest railroads' earlier assurances about
having sufficient employees, locomotives, and railcars were
incorrect.
All stakeholders agree the problem is principally caused by
a shortage of labor. That shortage started with the huge pre-
pandemic cuts. Then, in the spring of 2020, at the onset of the
pandemic, the same railroads cut their already-reduced labor
forces even more, by as much as an additional 20 percent. As
demand for freight rail service quickly rebounded, many of the
previously laid-off workers found other careers. And as the
railroads admit, they are now having difficulty recruiting and
training employees.
Rail labor reports particular difficulty directly caused by
increased job uncertainty, worsened working conditions, and
insufficient incentives. Given these challenges, I am not
optimistic about significant improvement in service in the near
term.
What is clear is that the railroad industry cannot thrive
without redundancy. They must maintain a workforce and
equipment, particularly locomotives, at a level which provides
an essential cushion to meet all the variable but not
unforeseeable contingencies. When they fail to do so, then,
ultimately, not only will they suffer, but, even worse, their
customers and the public suffers more.
What could not be more clear is that the railroads do not
have sufficient redundancy. Two weeks ago, the Board issued a
proposed rule to improve our process to provide relief in times
of emergency. As a followup to our rail service hearing last
week, we issued an order focusing the industry's attention on
the urgent need to restore reliable service. The details of
that order are in my written testimony.
In addition, this past March, we held a hearing to work on
updating the reciprocal switching rules. In my view, reciprocal
switching can improve rail service by enhancing competition,
and I personally hope the Board will act on it before this year
is out.
We have also advanced two proposed rulemakings to reform
our rate review process: a streamlined new idea for the U.S.
called final offer, and a rule to establish a voluntary and
binding arbitration process. It is also my intention that we
will act on these two rules by this fall.
The Board has a number of tools in its existing statutory
arsenal to enhance service. To be sure, and to be fair to some
of my colleagues, not everyone on the Board agrees on the exact
scope of that authority. But in my view, the Board can use its
existing authority to mitigate these problems in a meaningful
way.
And because my time is about up, I do want to just jump
quickly to point out that we are establishing a new office to
handle our new responsibility to enforce on-time performance in
the passenger area, which will be up and running, and we will
be able to handle any new on-time performance cases that are
brought to us.
With that, I see my time is up, and I can elaborate on
these points in answer to your questions. Thank you very much.
[Mr. Oberman's prepared statement follows:]
Prepared Statement of Martin J. Oberman, Chairman, Surface
Transportation Board
Good morning, Chairs DeFazio and Payne, Ranking Members Graves and
Crawford, and distinguished Members of the Committee and Subcommittee.
As Chairman of the Surface Transportation Board and on behalf of my
fellow Board members with me today, thank you for the opportunity to
offer my views on agency reauthorization and answer any questions you
may have. I will say at the outset that our five-member Board has
evolved into an extraordinarily collegial and effective group which
strives hard to act by consensus and generally has succeeded in doing
so.
As you know, the STB is an independent federal agency charged by
Congress with the economic oversight of the nation's interstate rail
system. The Board was created in 1996 as the successor to the
Interstate Commerce Commission. The Board was administratively aligned
with the U.S. Department of Transportation (DOT) until enactment of the
Surface Transportation Board Reauthorization Act of 2015, Pub. L. No.
114-110, which established the Board as a fully independent agency on
December 18, 2015. The economics of freight rail regulation affect the
national transportation network and are vital to our nation's economy.
For this and other reasons, Congress gave the STB sole jurisdiction
over railroad rates, practices, and service. Congress also gave the STB
sole jurisdiction over rail mergers and consolidations, abandonments of
existing rail lines, and new rail line constructions, exempting them
from federal antitrust laws and state and municipal laws.
Rail network reliability is essential to the Nation's economy and
is my top priority as Chairman. The rail industry is now facing a
``severe crisis'' in service, as described by one Wall Street analyst,
a description which in my view is all too accurate and which I will
address momentarily.
I was designated Chairman by President Biden in January 2021, as
our country was beginning to emerge from the depths of the COVID-19
pandemic. One of my first initiatives was to focus on the resilience of
the freight railroad network with particular attention on congestion in
the rail intermodal supply chain, which was affecting shippers not only
at major ports, such as Los Angeles and Long Beach, CA, but also inland
gateways such as Memphis, TN and Chicago, IL. I continued the practice
of holding more frequent meetings of the Rail-Shipper Transportation
Advisory Council (RSTAC)--which includes rail carriers and shippers,
large and small, from across the country--to help inform the Board's
intensive oversight work.
In May 2021, I wrote letters to the CEOs of the Class I railroads
asking them to report on their preparedness to meet growing demand for
rail service, as freight volumes rebounded as part of the Nation's
larger economic recovery. In July 2021, I again wrote to the Class I
railroads about protracted intermodal network congestion, and
significant fees that railroads were imposing on their customers,
largely due to circumstances beyond shippers' control. In response, the
railroads provided assurances and expressed confidence they could
handle freight volume as the economy continued its recovery.
Nevertheless, in the second half of 2021, rail service was erratic and
inadequate for many rail customers, albeit with different Class I
railroads performing better or worse at different points in time.
Moving to the present day, the rail industry clearly is struggling
to provide adequate and reliable rail service. Although the rail
industry has been hit by many of the problems the pandemic has visited
on all businesses, the railroads and their dedicated workers delivered
for the public during the pandemic's earliest and most uncertain days.
Yet, as the Nation's economy has recovered, recent Class I business
practices have undermined industry preparedness and service
reliability. In particular, over the last 6 years, the Class I
railroads have cut their work force by 29 percent--a loss of 45,000
employees. With demand back, and against the backdrop of these
significant labor cuts and other changes, railroads face major holes in
their service, with loaded trains sitting for days for lack of crews,
factories struggling to obtain needed raw materials or deliver their
finished products, farmers straining to obtain adequate fertilizer at
the beginning of planting season, food producers finding it difficult
to obtain grain and feed for their livestock, and on and on.
The severity of the problem, and its impact on our Nation's food
and fuel supplies, is distressing and has necessitated immediate Board
action. Just two weeks ago, the Board held a two-day public hearing,
Urgent Issues in Freight Rail Service, which revealed beyond any debate
that rail service is unacceptably poor, with acute issues in many
regions and with certain carriers. The testimony we heard was
consistent with anecdotal reports we have steadily received in recent
months and was further substantiated by the rail service performance
metrics the Board collects on a weekly basis. It is clear the four
largest U.S. Class I railroads' earlier assurances about having
sufficient employees, locomotives, and railcars to meet service demand
going forward were incorrect. Here, again, it is worth noting that not
all Class I railroads have had the same problems and that rail users
have stated that Class II and III railroads--the smaller railroads that
typically have less market power than their larger, Class I railroad
counterparts--have been more responsive to their customers despite
facing many of the same external forces.
Railroads, rail users, rail labor, and rail experts all attribute
the current service disruptions principally to a shortage of labor. To
understand the cause of that shortage one must first take into account
the Class I railroads' actions in significantly cutting their labor
forces in the years leading up to the pandemic. Then, in the spring of
2020, in response to a precipitous decline in economic activity that
immediately followed the onset of the pandemic, the same railroads cut
their already reduced labor forces even more, by as much as an
additional 20 percent. They made these cuts despite the fact that
neither they nor anyone else could have known at that time how long
this unprecedented pandemic would last and when the economy would begin
to recover, requiring the railroads to again be fully staffed. Nor
could they have been confident that the laid-off workers would promptly
return if asked to do so.
Keep in mind that the workers dismissed by the Class I railroads
are highly skilled and held positions that require lengthy training.
Replacing them is difficult and requires months of rigorous training
before they can actually begin the work of moving trains. Since June
2020, as the demand for freight rail service quickly rebounded, the
railroads have not been able to achieve a commensurate and appropriate
increase in work force levels. Many of the previously laid-off workers
had found other careers and never returned to the railroads. And, as
explained at our recent hearing, the Class I railroads have found it
difficult to recruit and train new employees. The railroads have noted
broader economic trends in the labor market, while rail labor has
reported the particular difficulty in the rail industry directly caused
by increased job uncertainty, worsened working conditions, and
insufficient incentives.
Given the challenges the railroads now recount regarding hiring and
retaining employees, and the aforementioned difficulty in remedying the
labor shortage problem quickly, I am not optimistic about significant
improvement in rail service in the near term. The Board does not
prescribe particular industry-wide labor levels, nor does it manage
railroad labor agreements. However, I provide this information to
explain what is driving a critical aspect of the Board's oversight
responsibilities--service--and why the Board is taking additional steps
that I will describe in a moment.
What has become clear over the past few years, and more acutely
over the past few months, is that the railroad industry cannot thrive
and fulfill its critical role supporting the Nation's economy without
some redundancy--that is, the railroads must maintain a workforce and
equipment, particularly locomotives, at a level which provides an
essential cushion to meet all the variable, but not unforeseeable,
contingencies which have been known to afflict the rail industry since
its inception nearly 200 years ago. Railroads must always be ready to
nimbly respond to and work around events such as the recent spate of
polar vortexes, forest fires, floods, international emergencies, and,
yes, the pandemic. Railroads must maintain a buffer to protect their
operations against external shocks, and if they fail to do so, then
ultimately, they will suffer--but even worse, their customers and the
public will suffer more. What could not be more clear is that, at
present--and for the past several years--the major railroads do not
have sufficient redundancy to keep pace with rapid shifts in demand.
Partly in response to the growing problems with rail service
reported to the Board, shortly before the rail service hearing two
weeks ago, the Board issued a proposed rule to improve its process to
provide relief in times of emergency and to ease the burden on rail
users seeking such relief. As a follow-up to our rail service hearing,
where we heard from Secretary of Transportation Pete Buttigieg and
Deputy Secretary of Agriculture Jewel H. Bronaugh, in addition to
representatives of many rail shippers and rail labor as well as the
railroads, last week we issued an order aimed at focusing the
industry's attention on the urgent need to restore reliable service by
the Class I railroads as rapidly as possible. That order does the
following, among other things:
Requires the four largest U.S. Class I railroads to
submit service recovery plans and bi-weekly service progress reports
for a period of six months with detailed steps they are taking to
restore adequate levels of service;
Requires all Class I railroads to submit weekly
performance data and monthly employment data for a period of six
months; and
Requires the four largest U.S. Class I railroads to
participate in individual bi-weekly conference calls with Board staff
to provide an update on progress made to improve rail service for a
period of three months.
Importantly, this action requires six-month service targets, more
detailed geographic data, and new customer-centric reliability metrics
that will give the Board and its stakeholders heightened visibility
into the extent and location of the acute service issues and labor and
equipment shortages that are currently negatively affecting the rail
industry. This information, which supplements the service data all
Class I carriers already provide, will also help drive industry-wide
transparency, accountability, and service improvement.
The Board is also considering several additional mechanisms that
would help enhance rail service. While the Board's recent actions have
included temporary reporting on first-mile / last-mile service issues
related to the urgent service problems, and other crucial measures of
whether shippers received their freight when expected, the Board is
considering using its authority to permanently collect more detailed
information on service reliability and has been considering comments
recently filed on this topic from interested parties. In addition, this
past March, the Board held a public hearing to consider updating its
reciprocal switching regulations. Reciprocal switching is an
arrangement whereby an incumbent carrier transports a shipper's traffic
to an interchange point, where, for a fee, it switches the rail cars
over to a competing carrier to enable the competing carrier to offer
its own single-line service. In my view, reciprocal switching is a
potential avenue for improving rail service by enhancing competition
and is an area where I personally hope the Board will be able to act
before this year is out.
The Board has also recently advanced two proposed rulemakings to
address the reasonableness of rates. The first, which proposes use of a
streamlined final offer procedure, would utilize the Board's existing
authority to create simplified and expedited methods for determining
rate reasonableness in those cases where a more fulsome presentation is
too costly, given the value of the case. The second, which proposes use
of an expedited arbitration procedure, would utilize the Board's
existing authority to establish a voluntary and binding arbitration
process. The record in both of those proceedings closed last month and
it is my intention that the Board will act on these two proposals by
this fall. My hope is that adoption of either such procedure will add
more balance to the Board's regulations, thereby helping shippers
lacking effective competition to receive reasonable rates and negotiate
adequate service.
As you can see, the Board has a number of tools in its existing
statutory arsenal to enhance rail service. To be sure, and to be fair
to some of my colleagues on the Board, not everyone agrees on the exact
scope of that authority or on certain proposed regulations, and at
least some of the proposals outlined have been challenged, including by
the rail industry. However, while the problems facing the rail industry
today are significant, in my view, the Board can use its existing
authority to mitigate those problems in a meaningful way.
While much of the Board's work involves freight railroads, the
STB's involvement with passenger rail matters is extremely important
and continues to expand. The Board has undertaken significant steps to
establish a passenger rail program as required in the Infrastructure
Investment and Jobs Act, including by planning the creation of a
passenger rail office and identifying the key personnel with the
requisite skills and expertise needed to staff that office. In
addition, the Board has entered into an interagency agreement with
DOT's Volpe National Transportation Center for several data tools,
including an analytic tool for handling the Federal Railroad
Administration's quarterly metrics publications. I am confident in the
Board's preparedness to meet its responsibility to enforce on-time
passenger rail performance, and I can tell you that the agency stands
ready to expeditiously handle any on-time performance cases that are
filed, to fully analyze the quarterly data provided to us by FRA, and
to determine whether any Board-initiated investigations may be
necessary.
In addition, the Board also has responsibility to approve
construction of certain new passenger rail projects that provide rail
service between two states or intrastate passenger rail service that is
carried out as part of the interstate rail network. We have found
jurisdiction over several projects since 2007, including high-speed
projects. The Board also has statutory authority to order a freight
railroad to allow the operation of additional Amtrak trains over its
line. We are currently completing the first proceeding brought to us by
Amtrak under this provision requesting access to freight lines along
the Gulf Coast. Because this is a pending proceeding, I am precluded
from commenting on this matter.
As noted, my fellow Board members and I have found RSTAC an
absolutely invaluable resource for information on rail and shipper
issues, especially during periods of strained service like that being
experienced now. Indeed, at the height of the pandemic, the Board met
with RSTAC weekly to hear updates from the carriers and from shippers
on how the pandemic was affecting their operations. To expand the
voices on this vital informational resource, we recommend adding three
additional seats to RSTAC: one each for rail car lessors, labor, and
port representatives. We also suggest updating the RSTAC enacting
legislation to clarify that all five Board members are members of
RSTAC. Congress passed that legislation at a time when the Board
consisted of three members and the statute currently refers to that
smaller figure. Lastly, the Board has initiated efforts to create a
committee under the Federal Advisory Committee Act (FACA) to advise it
on passenger rail issues. I understand, however, that creating a new
committee under FACA is not a fast-moving or easy process, so we would
suggest amending FACA to make the process more user-friendly.
In my view, the Board presently has sufficient appropriations to
properly carry out its mission. For each of its work force vacancies,
the Board either is in the process of selecting an applicant, has
issued a hiring announcement, or has initiated internal steps to fill
the position. I have placed a priority on the Board's office directors
hiring the employees they need to handle all that is before the Board,
and we are well on our way to doing that. In addition, as I mentioned
earlier, the Board is in the process of establishing a passenger rail
office and expects to be adding up to ten additional staff to ensure it
successfully fulfills its important passenger rail responsibilities.
While we can currently absorb at least some of those employees under
our budget, with those additional employees, all of the things
currently before the Board, and all of the items on which I would like
to take action, it is probable that we will step up our budgetary asks
in the coming years to meet our staffing needs.
Thank you and I appreciate your support for the STB and the surface
transportation network.
Mr. Payne. Thank you.
We will now move on to questions. Each Member will be
recognized for 5 minutes, and I will start by recognizing the
chairman of the full committee, Chairman DeFazio.
Mr. DeFazio. Thank you, Mr. Chairman.
Rail labor and shippers really haven't agreed on many
things, but they both recommend that we do a better job of
defining the common carrier obligation. So, given what the
Chair just said about the abysmal service, the fact that we are
forcing shippers to accept less service, not showing up, is the
common carrier language too vague to prevent these reductions
in service? Because we can redefine what it means.
Mr. Oberman. That is really the topic of the day, in my
view, to some degree, Chairman.
The common carrier language in the statute is general, but
we have authority by rulemaking to define it more specifically.
But I will tell you, as a lawyer who has done a lot of drafting
in my time myself, there are so many variables in how shippers
and customers get their service from railroads, trying to come
up with rulemaking language that would be enforceable in court
and covers the variety of situations has been a task I have
been struggling with.
Mr. DeFazio. OK, then maybe----
Mr. Oberman [interrupting]. And I think this Congress is
struggling----
Mr. DeFazio. Then you think perhaps we need to specify.
Mr. Oberman. Well, I think either you or us could--I think
you have the authority to----
Mr. DeFazio. OK. Well, but--I mean, when I hear, you might/
you hope to get something done by the end of the year, that
doesn't help me much here. I feel much more of a sense of
urgency. So, this is really pointing toward the committee in
your reauthorization to take action.
Mr. Oberman. I would welcome that, Mr. Chairman, and I
would be happy to have me and our staff work with your experts
to try to come up with those definitions. I think it is a legal
challenge, but I think it is needed. I agree with you.
Mr. DeFazio. Great. That is good. And I am going to ask
Member Primus about this one.
I mean, we all know about inflation across the economy, I
already talked about what is happening with freight rail is
increasing costs for manufacturers, shippers, and others, and
they are passing it on to consumers.
But UP just announced $25 billion in stock buybacks. I
wonder how much that is worth to the CEO and his salary. I
really wonder. Norfolk Southern, $10 billion; CSX, a 7-percent
hike in its dividend; and BNSF is doing very well for Berkshire
Hathaway. Can you suggest something we can do to deal with this
egregious behavior by these people?
Mr. Primus. Thank you for the question, Mr. Chairman, and
it is good to see you again.
Yes, I have the same concerns as you. I look at the first
quarter of this year and the service degradation, and instead
of immediately after that quarter talking about how they are
going to fix the service to their customers, or how they are
going to address the concerns of their employees, they turned
around and gave billions of dollars in stock buybacks to
investors who probably won't invest back into the network,
especially when we need more investment in the network at this
moment. Their capital expenditures or their investment in the
network is far less than their dividends or their buybacks that
they are giving these shareholders, and I think there has to be
a refocus of priority.
I think, if there is anything that we need to look at, or
need help on, it is these activist investors, these hedge funds
that come in only for short-term gain. You can see it clearly.
It has played out the last several years. This is not the same
investment group that the railroads have had in the past who
understand that, in order to run a railroad correctly, there
has to be long-term growth, long-term investment, long-term
interest. And I think you see that now.
Mr. DeFazio. OK.
Mr. Primus. You see----
Mr. DeFazio [interrupting]. Well, if you have any
suggestions afterwards--I would just like to ask one more
question of Board Member Hedlund about passenger rail service.
There was some reference to it.
I know the Board is looking at action. It is pretty clear
in the law, when we took over the obligation to carry
passengers from the railroads, that Amtrak is supposed to get
preference. And of course, they don't. And it has been
litigated many times by the industry. What can we do there, or
what do you think should be done there?
I don't think your mic is on.
Ms. Hedlund. Thank you, Mr. Chairman. We now have authority
to examine on-time performance, which will, of course,
implicate the issue of whether the railroads are giving them
preference. And we expect we are going to get a case fairly
soon, given the on-time performance percentages that Amtrak has
reported for the last two quarters the last year. There was
only one long-distance line that was above 80 percent. The rest
were well below. Some of the shorter lines are above 80
percent, but the long-distance lines do not perform well.
And we need to look into that to see whether--one of the
issues that has come up is long trains, and they are running
trains that are longer than their sidings. So, when there is a
3-mile-long train in front of a little Amtrak train, the 3-
mile-long train may not be able to get out of the way for many,
many, many miles. So, that is something that I look forward to
examining.
Mr. DeFazio. Thank you. And just one quick comment, Mr.
Chairman, and then I will be done.
I mean, yes, my State actually partnered with Union
Pacific--I hope they are listening--to do more sidings between
Eugene and Portland, where we have trains that can run faster
than the freight track can handle, but it takes 3 hours or more
to go 112 miles.
Ms. Hedlund. Right.
Mr. DeFazio. And that is because their trains are now
longer than the sidings, which was a joint investment, which is
pretty sad. So, thank you.
Thank you, Mr. Chairman.
Mr. Payne. Thank you. Now I recognize the ranking member of
the subcommittee, Mr. Crawford.
Mr. Crawford. Thank you, Mr. Chairman. I want to direct
this to Chair Oberman.
The Biden administration has advocated for many policies to
increase competition, improve safety, reduce emissions, and the
Board has considered those goals when moving forward with
regulations. However, overlaid on top of those efforts have
been significant disruptions to our Nation's supply chain. I
think it is important to remember that the supply chain is an
extremely complex system, and regulations can impose
significant operational disruptions to the freight
transportation sector.
Mr. Chairman, would you commit today to ensuring that the
Board fully considers the impact of any potential regulations
or determinations on the supply chain before taking any action?
Mr. Oberman. We, of course, do that every time we consider
a regulation.
But I have heard this argument made, and I want to have the
opportunity in answering your question to tell you that the
railroads could not possibly have screwed up the system any
more than they are doing on their own. There is nothing we
could do to make it worse right now. It is in terrible shape,
as has been indicated by members of the committee, and by
everything we heard at our hearing.
But everything we are doing--and one reason that it takes
some time for us to carefully enact regulations--is to do just
what you said, to make sure that, if we are going to enact new
regulations such as reciprocal switching, it is done with care
to solve the problems, and not create them.
But a lot of what we hear from the railroads, in my view,
are just excuses for what they are doing inadequately.
But yes, of course, we have that commitment, so, it is easy
for me to give you that assurance.
Mr. Crawford. All right. The STB has expressed concern with
competition in the rail industry. However, the last update to
the study of competition in the U.S. freight rail industry
commissioned by the Board was completed in 2010. The dynamics
of the industry's markets that the railroads serve have changed
significantly over the past 12 years. Would each of you support
the Board updating that study?
Mr. Oberman. Well, let me address that. I always welcome
more data, more research. It is always helpful. But I do not
need a study to know that there is woefully lacking competition
in the rail----
Mr. Crawford [interrupting]. I get that, Mr. Chairman. You
made that point abundantly clear. But I am asking the question,
would you support updating that 12-year-old study?
Mr. Oberman. Sure. There is no reason not to, and it will
give us more information.
Mr. Crawford. OK.
Mr. Oberman. But we don't need a study----
Mr. Crawford [interrupting]. And you have also indicated in
your testimony that you have a spirit of collegiality among the
Board members. And so, it is safe to say that the Board would
agree across the Board that they would support an update to
that study, as well?
Mr. Oberman. One of the ways I have achieved that
collegiality is to make sure they all get a chance to speak for
themselves. So, I will let them address you.
Mr. Crawford. Perfect. Thank you, sir. I appreciate it.
Mr. Primus, do you want to go first? We will just move from
right to left, left to right, as case may be?
Mr. Primus. Yes. My answer is yes.
Mr. Crawford. Thank you.
Ms. Schultz. Yes as well.
Mr. Crawford. Thank you.
Mr. Fuchs. Yes, Ranking Member Crawford.
Mr. Crawford. Thank you.
Ms. Hedlund. Absolutely, thank you.
Mr. Crawford. I appreciate that.
And with that, Mr. Chairman, I will yield back.
Mr. Payne. The gentleman yields back. I am now recognizing
myself for questions.
Chairman Oberman, I am deeply troubled by testimony I heard
from both our hearing in March and the STB's recent hearing on
freight rail service in the country.
I am aware that the STB recently took emergency action to
require railroads to submit plans to recover service and report
information. Can you elaborate on what concerns you the most
from the testimony you heard?
Mr. Oberman. It would take a long time to tell you
everything that concerned me the most. It was very, very
troubling.
But it does boil down to the pressures that the railroads--
Chairman DeFazio alluded to--to cut resources. They have cut
labor to below the bone, really. They have thousands of
locomotives they have mothballed, which slows down trains,
involves less locomotives to move trains when they need to be
moved. That is the big picture. That is the overview, and it
concerns me the most.
And what sort of exacerbates the problem, in my view, is
that we have been hearing--and I have heard since I have been
on the Board, but more intensely in the last year--reports from
rail labor that, in order to--in my view, what is happening is,
in order to make up for the shortage of labor, they are
overworking and abusing the workforces they have. Not enough
days off, sudden announcements of their assignments, and so
forth. And so, they are forcing an unusually--a larger-than-
usual number of people--long-term employees, literally--
leaving. So, you are not only a shortage of workers, but you
are losing a tremendous amount of institutional knowledge.
So, I think that is the focus of it. There are lots of
parts of it, but that is what really concerns me the most, this
overview to--pressure that the railroads feel. And you could
argue whether the pressure is only from outside, from Wall
Street, or it is internal in the C-suites. I think it is joint,
that they have realized there is a way that they can make
short-term profits at the expense of the public.
Mr. Payne. OK, and how did that inform the Board's
unanimous decision to require corrective actions?
Mr. Oberman. I am sorry, Mr. Chairman. I didn't hear the
question.
Mr. Payne. I said how did that inform the Board's unanimous
decision to require corrective actions?
Mr. Oberman. Well, it certainly eliminated any debate
amongst us that strong corrective action was needed. And we
acted, for the Board, with lightning speed by issuing an order
just, I think, a week or so, 10 days after that hearing. The
details we submitted to you in the order, but it is very far-
reaching in terms of requiring much more detailed reporting of
on-time performance, which we have never really had. And we had
been working on a longer term rule, which we are still working
on, but we felt we couldn't wait.
So, we are requiring a certain amount of first-mile/last-
mile reporting immediately, and we have ordered the four big
U.S. railroads to give us recovery plans within, I think, 2
weeks--I don't have the timeframe in front of me--and then
report to our staff every 2 weeks over the next few months, so
we can monitor their progress.
Mr. Payne. OK. And I want to ask the question, can everyone
quickly highlight what concerned them from the hearing? And
let's begin with Vice Chair Schultz.
Ms. Schultz. Thank you for the----
Mr. Payne [interrupting]. As quickly as you can.
Ms. Schultz. As quickly as I can. Yes, just to echo
Chairman Oberman's comments, there were so many issues brought
to our attention, and they were all incredibly important.
What comes to mind immediately were the challenges that I
believe that the agricultural products industry, as well as the
energy industries, are experiencing at this time, and the
impact that that is having on other areas of the supply chain.
Mr. Payne. OK, thank you.
Ms. Hedlund?
Ms. Hedlund. When I joined this Board in January, I never
thought that I would be worrying about whether we would be able
to export enough grain to make up for the reduction to the
world market in grain caused by the war in Ukraine. But that is
where we are.
Mr. Payne. Thank you.
Mr. Fuchs?
Mr. Fuchs. I would say, Mr. Chairman, first-/last-mile
service failures. These are missed switches. This is just
before a shipper or receiver is about to receive their freight.
And so, it has a disproportionate impact on their operations.
So, that includes first-/last-mile service failures for both
grain and energy, but across the entire network. That is what
concerns me most.
Mr. Payne. Thank you.
Mr. Primus?
Mr. Primus. Thank you, Mr. Chairman. I would say that I
have been alarmed at just how comprehensive the service
failures have become. It is not limited to region, it is not
limited to one industry or one area. It is widespread. I think
it is a national crisis, a national emergency. I think it is a
national security emergency.
You look at food prices going up, you look at the cost of
energy, even coal to our coal-fired powerplants. You are
looking at chemicals to water treatment plants, shortages
there. I think, across the board, we are in trouble. And I
think that we have really got to raise this to a level to
address that.
Mr. Payne. Thank you. My time has expired. I will now hear
from Mr. Burchett for 5 minutes.
Mr. Burchett. Thank you, Mr. Chairman, and I will try to be
brief, as well.
Mr. Oberman, freight transportation bottlenecks, they seem
to continue to disrupt our national supply chains. I wonder how
have these Federal mandates improved or worsened the crisis.
And also, do you foresee any recent regulatory changes
negatively affecting rail freight operations in the future?
Mr. Oberman. I am not sure which changes, Congressman, you
are talking about in terms of bottlenecks.
Mr. Burchett. Well, it seems that every day I pick up a
paper, there are supply chain issues. And I know that a large
amount of freight is traveled across our rails. And I am
wondering, do those--are any Federal mandates--have they
improved or have they caused problems with it?
Mr. Oberman. Well, I am not aware of any Federal mandate
that is causing problems. The lack of mandates, I think, over
the last 40 years has enabled the railroads to get to the point
they are at.
There were great advantages to the Staggers Act when it was
enacted and for the next 20, 25 years. But the Staggers Act--it
eliminated a great many of what had been probably--I think we
all agree--over-regulation. But, in my view, what has happened
in the system is that the pendulum has swung too far. And once
the major railroads were allowed to consolidate, which had many
good aspects to it in the 1990s, it enabled, ultimately, a
situation I think that Chairman DeFazio described as
monopolistic and duopolistic.
And so, by the early 2000s, those railroads had begun to
exercise that monopoly power, which has really brought us to
the place where we are today.
Mr. Burchett. So, on that line of thinking, are you
thinking that we need more regulations on railroads to improve
their service?
Mr. Oberman. The way I look at it, Congressman, is that we
need to change the incentives. And what I have preached since I
have been on the Board, and certainly since I have been
Chairman, is that I would rather the railroads solve these
problems on their own so we do not have to intervene. But
clearly, the incentives right now are weighed much more heavily
in incentivizing the railroads to cut resources.
So, we need to do things--for example, if we set--if we
could, as Chairman DeFazio was questioning, put some detailed
service standards in the common carrier obligation, as an
example, that is one tool to say, look, you have to meet these
standards.
I have said if you can do it with an OR of 50, I don't
really care what your OR is, but you have got to have decent
service. I don't think you can do it with an OR that low,
because it means you don't have enough workers.
So--but I--to me, the way to go is to change the
incentives, and not try to micromanage how they operate the
actual railroad, but just say meet these standards, and then
you are fine.
Mr. Burchett. And do you think that is possible without any
additional regulations, or do you think that is--you think they
are just--you are putting them on the honor system, and if they
don't you are going to pop them, is that what I understand?
Mr. Oberman. I have been around too long, Congressman, to
put anybody on the honor system totally when there is that much
money floating around on Wall Street. It is just too powerful
for all of us humans. And I include myself in that remark. So,
we do need to take some action.
I think--and the Board is working mightily in this
direction, I can't speak for what the outcome is--that a
regulation which permits--doesn't mandate, but permits--
reciprocal switching will bring more competition, for example.
I think, by making rate relief easier to obtain--because right
now there basically isn't rate--even though we have the
authority to regulate review rates, nobody brings rate cases.
They cost millions of dollars and take years, and there are
clearly cases where people are entitled to them. Those will
incentivize, I think, the railroads and shippers to reach their
own agreements, if they know we stand there, without our having
to intervene. That is the hope.
But I do think we need to do more. One way would be--and it
is something that has very much been on my mind, but in all
honesty I haven't figured out the solution; if I had, I would
have brought it to you--is to put more specifics into the
common carrier obligation.
But beyond that--and I have given this a lot of thought,
particularly getting ready for this hearing--that the broad
economic forces that Chairman DeFazio spoke of are really
matters of such fundamental business policy in this country,
they are beyond what this Board was set up to do. And you
wouldn't want, I don't think, our Board to be telling Wall
Street how to behave. I think there is a place for the Congress
to be reviewing that, but you wouldn't want to regulate stocks
in just one industry.
If there is a problem, I think we may need to rethink it
and reexamine it as a country, and I would certainly welcome
the chance to contribute our little corner of the world--it is
not so little, but our corner of it. But it may require that
because, as has been mentioned, while the railroads, because of
their monopolistic ability, are a particularly egregious area
right now, there are other areas of the business community
which we may need to be thinking about.
Mr. Burchett. I have run over my time. Thank you, Mr.
Chairman.
Mr. Oberman. Sorry about that, so did I.
Mr. Burchett. Mr. Chairman, thank you.
Mr. Payne. Next we will hear from the gentleman from
Tennessee, Mr. Cohen, for 5 minutes.
[Pause.]
Mr. Cohen. I am unmuted now. Thank you, Mr. Chairman. I
appreciate your having this hearing. And it is an honor to
follow Mr. Burchett, and I might have some time to [inaudible]
into my questions.
But first, Mr. Oberman, I want to thank you for appearing
before us.
I really appreciated Mr. DeFazio's comments. He is
passionate, and apparently there are problems within the
freight industry that the employees seem to be having and that
the industry seems to be having.
But my concern is that I continue to hear from rail
employees in my district, and my district has several Class I
railroads going through it, including the BNSF. But they
continue writing me about increasing difficulty that they have
on the job.
You discussed severe job-cutting on the Class I's that--
45,000 jobs, or 29 percent of the industry, in just a few short
years. Demands on employees that remain have only increased,
including the deployment of Hi-Viz attendance policy at the
BNSF. This policy and others like it put incredible strain on
employees, making it difficult, if not impossible, to take time
off for doctor's appointments, care for sick children or loved
ones, or even rest when an employee knows that they are too
fatigued to work safely. These unreasonable, restrictive
expectations are driving people out of the industry at a time
when we are all hearing about the need to staff up the
railroads.
So, do you believe the imposition of conditions like Hi-Viz
are ultimately having an impact on the ability of railroads to
deliver good services?
Mr. Oberman. Somebody slammed the door just as you asked
the question, Congressman. Could you just state the last
question again?
Mr. Cohen. Was it somebody from BNSF?
[Laughter.]
Mr. Cohen. They would do that.
Mr. Oberman. I only caught the back of their head as they
went out of the room, so, I can't answer.
Mr. Cohen. Thank you, sir. I was asking about the Hi-Viz
program that they have got, and one of the employees who has
written me, a constituent, it was a very touching letter. I
wasn't going to ask any questions at all, but his letter was so
touching I thought I needed to ask on his behalf. He is my--he
is a 13-year retired vet. He has got twins. He loves working
for BNSF. But he said he has been having trouble getting time
off to do doctor's appointments and take care of his health.
And I wondered if you think Hi-Viz is the problem in
stopping railroads from delivering the good services that they
should be doing?
Mr. Oberman. Well, it is not the problem, but I have
received many, many of the same kinds of letters that you just
described. And we heard from rail labor at our hearing 2 weeks
ago. And I don't think BNSF is unique. They all have a
different name for how they are treating their employees. But I
think this effort to squeeze more work out of a smaller and
smaller number of workers has become extremely oppressive, and
is forcing, as I mentioned earlier, a number of people to just
leave the industry, some in mid-career, leaving their pensions
on the table. It is really quite remarkable.
So, I think it is a symbolic of the problem. And I--the
RTP, the Rail Transportation Policy, says that we are generally
to make sure that there are fair wages, a good treatment of
labor. But we really do not have jurisdiction over rail labor.
There are other agencies specifically set up to deal with that.
And of course, there is a national bargaining session going on
right now. And one would hope that rail--the Class I railroads
are getting the message.
I would note, Congressman, and I don't want to concede too
much at this point because it was just the beginning, but 2
days ago, Jim Foote, who is CEO of CSX, gave a relatively
remarkable statement, in my view, that I read an account of in
yesterday's press saying that it was time for the Class I's to
completely rethink their relationships with labor, that they
know they have problems.
Now, that was good rhetoric. It remains to be seen if there
is any meat behind that rhetoric. But maybe they--we are, all
of us who are engaged in this area, including the members of
this committee, are beginning to get their attention. I would
hope so.
Mr. Cohen. Well, thank you, Mr. Oberman. And I realize
there are other agencies that deal with labor, but you are the
closest opportunity I had to raise this issue, and the only
thing that I really wanted to talk about. [Inaudible] really
talk about anything, but this was just too much.
And this--Mr. Smithers contacted us back from BNSF about
this particular employee. It was about a month after we
contacted him, and the letter is rather vanilla, and maybe we
will try again, or BNSF will help me. I mean, I was just
touched by this man's letter. He is an older man. He is working
as an engineer. And he gave 13 years to our Government and
defense industry. And he came home to be with his twins. And he
has got health problems, and he wants to stay on--it seems like
they should take--they are doing the minimum which the Federal
Government requires on FMLA and some other things, but they
ought to be doing more than the minimum to bolster their
workforce, care for their employees, and to help the rail
industry in general. So, we will try to do that.
Do I have any time left?
Mr. Payne. The gentleman's time has expired.
Mr. Cohen. Well, I will lend that time to Mr. Burchett, and
I thank you.
[Laughter.]
Mr. Payne. Thank you. The Chair now recognizes Mr. Bost for
5 minutes.
Mr. Bost. Thank you, Mr. Chairman.
Chairman Oberman, over the last 6 months, the Board has
held 2-day hearings on reciprocal switching, a 2-day hearing on
rail service, and multiday hearings on restoring Amtrak service
along the gulf coast. The Board has also issued notices of
proposed rulemaking for a number of different issues. The Board
has also continued to attempt to address the supply chain
crisis, review mergers, and engage in other regulatory
activities.
Mr. Chairman, how does the level of activity for the
current STB compare to the past Boards?
Mr. Oberman. Well, thank you for that question.
First of all, Congressman, I am really happy to see
somebody here from Illinois. It makes me feel a little more at
home. So--and I didn't grow up too far from you. I grew up in
Springfield.
Mr. Bost. Yes, you are way north in the State.
Mr. Oberman. Well, my father used to say we grew up on the
far South Side of Chicago.
This has been an extraordinarily busy time at the Board,
probably--I have only been there 3 years, but we have a lot of
people who have been there for a while, and we probably have
never been this busy in the last 20 years.
A lot of it were some actions started by my predecessor,
which we need to fulfill. And of course, there were many issues
that were brought to us, such as the pending merger between
Canadian Pacific and Kansas City Southern, the gulf coast case,
which is unprecedented--it is the first time that statute has
been tried--the whole supply chain meltdown. These all landed
on our plate at the same time.
And I have to say that our staff, which is relatively small
for a Government agency--first of all, it is a highly qualified
and dedicated staff, and we have churned out an amazing amount
of work. So, I know people get frustrated with the fact that it
takes us a long time. But let me just take the opportunity to
tell you that, with only 117 FTEs on staff now--and we are in
the process of intense hiring efforts--last year the Board
issued 474 decisions--and these are often lengthy, lengthy
decisions--339 of those were staff-written decisions from our
director's office. And our OPAGAC office, which handles
relationships with Congress, but also relationships with the
shipping world and our stakeholders, handled almost 1,400
matters that came in with a relatively small number of people.
So, we have, I think, risen to the occasion. I think we are
all working extremely hard, and I think we are meeting the
challenge. But I appreciate the question, because it has been a
very busy time.
Mr. Bost. Well, my second question I was going to ask was
asked by the ranking member before he left. And you did a--so,
I have got that answer. But my third was this.
Last month, the Board held a 2-day hearing to discuss
issues in rail service. And during that hearing, railroads
admitted that service had not been at the level the customers
expected. These disruptions have been severely felt by my
constituents in the agricultural industry, and I don't believe
that we can simply regulate our way out of the problem, but we
can find a solution.
Will the STB commit to working with all stakeholders to
address service issues and work to ensure that both rail
carriers and shippers have a balance in that decision?
Mr. Oberman. We will, because we always do, Congressman.
And I will say it is a big step in the right direction. And
one of the reasons to hold public hearings--and, of course, I
don't have to tell the Congress about that--is to force these
issues out in the open. And I think it was a big step in the
right direction that the railroads did not come in and try to
pretend that there was no problem.
Mr. Bost. Right.
Mr. Oberman. They often have in the past, but they really
couldn't deny the facts that were in front of us.
Mr. Bost. I agree. And I think there is a lot of work to be
done. And I think that every answer that you have given today
says that you are willing to do that work. And I appreciate you
being here today.
And with that, I yield back.
Mr. Oberman. Thank you, Congressman.
Mr. Payne. Thank you, the gentleman yields back. We will
now hear from the gentleman from Indiana, Mr. Carson, for 5
minutes.
Mr. Carson. Thank you, Chairman.
Thank you, Chairman.
Thank you, Commissioner Primus, Commissioner Hedlund. I
would like to hear from both of you on what additional
authorities are needed to limit the time that rail crossings
block traffic on public roads.
And secondly, I made a request in 2018 for more data about
this problem but haven't received details on the number of
locations of incidents since that time. Has STB investigated
the economic impact of stopped trains, and extremely long
trains for that matter, that block crossings?
And if so, we would love to be briefed on what you found so
far. If not, would you investigate the problem?
Mr. Primus. Thank you, Congressman. And again, it is good
to see you.
The problem of trains stopped at crossings actually doesn't
really fall under our purview. It is more of an FRA-related
issue. But it is--well, I should say the symptoms of it are
something that is concerning to us, because we believe, because
the railroads are building longer and longer trains, I think
that lends itself to why you are seeing more train stoppages at
these crossings.
In my time at the Board, while we have heard it, I don't
think we have had any cases come before us or any issues come
before us to take a look at it. But I think we can--we look
forward to working with FRA as they move forward in looking at
the issue, and addressing the issue as well.
Ms. Hedlund. Sometimes the issue of blocked crossings will
come up in the context of a merger matter, and I know that that
has happened in the past. And so, possibly, in connection with
that kind of proceeding, we can take that into account and ask
the railroads what they intend to do about it if there is
additional traffic on a certain line. So, I think that is one
place where we can look at it.
But to the extent the blocked crossings is really a result
of this problem that we have talked about several times this
morning, which is long trains and inadequate sidings, that is
certainly something that we are focused on. I don't know what
we can do about it, but it is endemic.
Mr. Carson. Thank you both, Commissioners.
I yield back, Chairman.
Mr. Payne. The gentleman yields back. We will now hear from
the gentleman from California, Mr. LaMalfa, for 5 minutes.
Mr. LaMalfa. Thank you, Mr. Chairman.
With regard to rail shipping here, we have had some great
concerns expressed on the west coast in California for being
able to receive corn and corn byproducts, partly for the
ethanol industry, ethanol production, which is very important
for the fuel mixture we have with, I think, up to 10 percent
alcohol or whether it maybe gets into E15, even E80, E85, but
we have issues with getting the product out there.
And so, what do you see as--I am told there are labor
problems, not enough labor. Is it track time? Is it--what is
it, from the Board's perspective, do you see?
And then also I want to touch on rail rates, too, versus
trucking.
Mr. Oberman. Did you say rail rates?
Mr. LaMalfa. Yes. My understanding is that rail has always
been extremely competitive with trucking. But I have
information that says it is actually--trucking has a shipping
advantage these days. And so, I don't----
Mr. Oberman [interrupting]. You----
Mr. LaMalfa [continuing]. Know if you can elaborate on
that.
Mr. Oberman. I assume you were directing that at me,
Congressman?
Mr. LaMalfa. Yes, sir.
Mr. Oberman. Yes. You have covered several very crucial
matters in one question. So, let me try to----
Mr. LaMalfa [interrupting]. Yes, let's just do the--yes,
the first part.
Mr. Oberman [continuing]. Let me try to parse them out.
Among the problems that I am aware of facing California
businesses are--but not unique to California--are, one, ethanol
plants having to literally shut down production, either because
they couldn't get raw materials--and also, one of the most
acute problems we heard was that they can't get trains of empty
cars to unload the finished product, so, they can't manufacture
more, so, they have to stop production. And that is a problem
around the country. And it is, in my view, definitely adding to
the escalation in fuel prices, because 10 percent of the
gasoline is ethanol.
Secondly, we had two startling reports, which I understand
have not totally been resolved, of some major food producers,
including poultry producers in California, who cannot get their
usual load of feed that come in long unit trains. Those
problems are directly the result of not enough crews.
If you look at the statistics that we collect, one of the
statistics is a train is holding, meaning the train has
stopped, it is not moving, either for lack of crews or lack of
locomotives. Both of those numbers have been going up through
the roof, across the boards. So, that is what is happening with
both ethanol and with the farm matters, that they are just a
matter of shortages in both areas, locomotives and crews.
In terms of rates, the complaints that I hear about people
using trucks rather than trains recently are not so much rates,
but complete lack of reliability. So, you have major shippers,
if you just look at the port problem, the amount of containers
that move by train--and a fair number do out of the ports--has
been going down, despite the number of ships sitting out there
on the ocean, because some of the major users--the Walmarts,
the Home Depots--find it more reliable to ship cross-country by
truck. At least the truck will get there, and it may be even
more expensive.
So, it is a problem of reliability, of service. I remember
Mr. Fuchs talked about the first-mile, last-mile----
Mr. LaMalfa [interrupting]. Could you elaborate on the
either lack of locomotives, or what is going on with the crews?
Mr. Oberman. Well, first of all, you need crews to drive
the locomotive.
Mr. LaMalfa. Yes, right, right, right.
Mr. Oberman. But secondly--and this came out at our
hearing--well, secondly, they mothballed thousands of
locomotives--when I say ``they,'' all the railroads together.
Those--you can't just--it is not like parking your car for a
month, and you can just start it up. They all need maintenance,
sometimes rehabilitation, before a locomotive can be returned
to service.
So, when we talked about cutting 45,000 workers, that
included the electricians and mechanics who they need in the
shops to get the locomotives fired up. So, that has been a
problem in getting more locomotives out on the lines. And then
they----
Mr. LaMalfa [interrupting]. Have these workers gotten----
Mr. Oberman [continuing]. Compounded it----
Mr. LaMalfa [interrupting]. Have they gotten other jobs, or
are they just not coming out of their COVID caves yet?
Mr. Oberman. Oh, I think most of this is beyond the COVID
problem. I think that many of these 45,000 people have found
other careers.
Mr. LaMalfa. Yes.
Mr. Oberman. And they did not come back. That has really
been across the boards.
But the final problem with locomotives--and this is just
shocking to me, and we have aimed our recent order at getting
to the bottom of this--the railroads, even when they have--so,
now these very long trains will have three or four locomotives
on them, because you need that much to move them.
But when they are not--many times the train will leave the
yard, and they will instruct the engineers to turn off one or
two of the locomotives, just to save fuel. That slows the train
down. That congests the system. And/or they issue an order--and
some of these were presented--Congressman Cohen may be
interested by some of the BN workers--they presented orders to
us from the railroad saying, don't go faster than 40 miles an
hour, even if you are on a 70-mile-an-hour track----
Mr. Payne [interrupting]. Thank----
Mr. Oberman [continuing]. Because it saves fuel.
Mr. Payne. Thank you.
Mr. Oberman. So, it is a combination of all of those
problems that are contributing to what you are hearing in
California.
Mr. Payne. The gentleman's time has expired.
Mr. LaMalfa. It is very devastating to agriculture and our
fuel supply.
Thank you.
Mr. Payne. Thank you. Now we will hear from the gentlelady
from California, Mrs. Napolitano, for 5 minutes.
Mrs. Napolitano. Thank you, Mr. Chair. I was glad to hear
all the discussion of the railroads. But it seems to me that
the railroad is not willing to do voluntarily what is necessary
or right.
My question is regarding the rail investment and profit.
Can you share what is the percentage of railroad revenue being
reinvested in workers and infrastructure versus the railroad
revenue going to investors, and how has this changed over the
past 30 years?
Mr. Oberman. Congresswoman, the connection was very hard
for me to hear the precise nature of the question. I only
caught parts of it.
Mrs. Napolitano. Can you share what the percentage of
railroad revenue being invested in workers and the
infrastructure versus railroad revenue going to investors, and
how has this changed over the last 30 years?
Mr. Oberman. Well, I can't speak with personal knowledge of
how it has changed over the last 30 years.
But certainly, in recent years, we have documented billions
and billions of dollars. I think I gave a speech last fall
documenting, in the last 11 years, about $200 billion in
combined stock buybacks and dividends going to the owners at
the same time, and that the ability for them to make those
payments was enabled almost entirely by cutting those 45,000
workers, as well as mothballing locomotives--in my view. There
is some controversy about that, but I think the line is pretty
direct.
And I think our view is that the way to change that balance
is to, through incentives and regulations, force the railroads
to meet higher service standards. I don't think they can do it
without employing more workers and locomotives, but the goal is
to get the service back.
I don't know if that was responsive.
Mrs. Napolitano. What can Congress do? Do we have to issue
more policy to enable you to be able to hold them accountable?
Mr. Oberman. Well, it is a good question. If I had a very
specific answer, I would have provided it to the committee
already. I think it is a complex matter of how to consider
reining in some of the forces of Wall Street. It is really
beyond a railroad question. I think it is a broader economic
question.
Mrs. Napolitano. Well, we need to take a look at it,
anyway.
I have significant concerns over the train length. I have
been caught in about a 15- to 20-minute wait over what I
considered 1\1/2\ miles, but it was really more like 2\1/2\
miles. And I could see the line of cars behind me. They are all
spewing fumes, waiting to get through. And of course, some of
them got out of the line and went back to some other way of
getting to their destination.
What--is it possible to--and I know the railroad is trying
to cut down on the number of employees by doing longer trains
and et cetera, but how is that affecting business, in terms of
delivery?
And the sidings are not as prevalent as they should be, or
they haven't gotten as many adequate sidings to be able to take
the length of trains.
Mr. Oberman. Well, right now we don't have the authority to
just order--directly, to order railroads to limit the length of
their trains, or at least I don't think we do. We do have
authority to direct certain service--relief of service, but it
has never been applied, nor has anybody ever asked us to apply
it to just shorten a train.
Railroad operations are extraordinarily complex. And if you
just try to pick out one problem, such as long trains, you may
well have all kinds of unintended consequences.
The overall picture, I think, is--that you raise--is a very
valid concern. I think that the extremely long trains have
complicated the service problems because, as has been referred
to, there are very few places, if any, in the country where the
extremely long trains can fit into a siding. And in many, many
corridors--since all of the merger mania of the 1980s and
1990s, the railroads have stripped out the double tracking. So,
there are many long stretches where there is only a single
track, and when one of these long trains gets on it, they
really block everything else.
And I think it is up to the railroads to reorganize how
they launch these trains in order to provide better service,
because there are places where it definitely does impact
service. But it is not just the simple matter of saying no
train can be longer than X feet, because everything is involved
in a network.
Mrs. Napolitano. Thank you very much.
Mr. Oberman. I think my colleague, Karen Hedlund, would
like to add something, Congressman, if it is OK.
Ms. Hedlund. Thank you.
Mr. Payne. The gentleman's----
Ms. Hedlund [interrupting]. Congresswoman, just one point.
The irony is that, notwithstanding the fact that there are
these long trains blocking crossings, what I have heard is that
the Alameda Corridor is running under capacity because not
enough--not--trains are going through it.
Mr. Payne. OK, thank----
Ms. Hedlund. [Inaudible.]
Mr. Payne. The gentlelady's time has expired.
Mrs. Napolitano. Thank you.
Mr. Payne. We will next hear from the gentleman from Texas,
Mr. Nehls.
Mr. Nehls. Thank you, sir.
Thank you, Chairman Oberman, for testifying before the
committee, and thank you, all the witnesses, for being here
today.
Americans are struggling with rampant inflation. The
Consumer Price Index is at 8.3 percent from a year ago. If you
go to the grocery store, it is common to see empty shelves,
rationing of goods, and out-of-control prices. For God's sake,
you have a full-blown baby formula shortage.
Supply chain issues and delays are plaguing almost every
form of transportation and leading to increased costs on
everyday goods. It doesn't matter what industry, whether it is
aviation, trucking, rail, or shipping, they are all
experiencing delays. All are trying their best to navigate
higher costs, labor shortages, unprecedented regulations,
massive uncertainty in energy prices.
And it wasn't long ago that President Biden and the smart
folks of his administration were calling inflation transitory.
Yes, transitory. It seems that reality has finally sunk in when
on Tuesday, the President announced that inflation was his
number-one domestic issue.
Every month there seems to be a new bogeyman for the Biden
administration to blame what I see as a confluence of factors:
one week it is COVID, the next it is port delays, it is the war
in Ukraine, it is greedy big oil, it is corporate America price
gouging. Today, the political folks in this administration want
to direct their attention and energy toward the greedy Class I
railroads. Never, never does this administration or this
President look at themselves in the mirror and take any
accountability for the problems they have largely created.
And Mr. Chairman, I want to ask you, but you talk a lot
about the labor shortages and the rail industry, and in your
testimony it is the rail industry has contributed to this
worsening working conditions and insufficient incentives. I say
it is a sad state of affairs. It is every industry. It is sad
that job creators in this country, no matter what industry, are
competing with the Federal Government to get their people back
to work.
And when you look at salaries, I think about the salaries.
Do you know what the average Class I rail employee makes a
year? It is about $137,000. I know Biden's inflation is bad;
$137,000 sounds like a pretty good salary to me.
Do you know what percentage of the employees are unionized
for Class I railroads? It is 84 percent. So, are you saying
that the industry with 84 percent unionization rate, and an
average salary of $137,000, has insufficient incentives to
attract talent?
Mr. Oberman. I do. I do, because those are the facts that
are presented to us.
And I would only comment, not to get into a broader
political discussion, because that is beyond my role for being
here today, and I can't comment on other industries, because
that is not what I have been asked to work on. But I can tell
you the problems in the railroad industry are self-inflicted.
Unlike almost other--I am not aware of any other industries
which have cut 30 percent of their workforce. And that began
long before President Biden took office. It began, actually,
when President Obama was in office, and continued all through
the Trump administration. And I don't see any of those
administrations had anything to do with it. It was the
railroads themselves that made those choices.
And I can tell you that at the hearings we had 2 weeks ago,
the railroads came in and proudly proclaimed that they were
trying to hire new conductors at $52,000 a year, not $137,000.
And when I asked them how they were going to compete with
Walmart hiring truckdrivers at $110,000, they didn't have an
answer. So, that is all I can add to this.
Mr. Nehls. Thank you, Mr. Chairman. You have answered my
question.
I yield back.
Mr. Payne. The gentleman yields back, and we will now hear
from the gentleman from Georgia, Mr. Johnson, for 5 minutes.
Mr. Johnson of Georgia. Thank you, Mr. Payne.
And Mr. Oberman, you nailed it, Representative Nehl's
question.
And thank you, all of the witnesses, for being here. And
also, thank you so much for the work that you all do.
Railroads provide efficient transportation of goods and
people. They have one of the lowest carbon footprints among
transportation options, and they have historically provided
stable, well-paid union jobs. But today, cost-cutting
strategies promoted by vulture capitalists on Wall Street have
downsized railroad operations to the most basic options. And as
a result, industries that depend on railroads, from agriculture
to animal welfare to passenger rail, are less resilient and
robust.
What is more, the lack of reliability of railroads has led
freight traffic to rely more on trucks than rail, exacerbating
emissions and also our looming climate crisis. And while the
hard-working team at the STB is taking these issues seriously,
Congress must help to ensure that the STB has the tools that it
needs to conduct effective oversight and to address concerns.
Now, Mr. Oberman, animal welfare requires high-quality rail
services. Delayed trains and scarce railcars are impeding crop
shipments this spring. In fact, as noted in a letter from the
USDA to STB, communications from industry suggest that some
livestock operations face potential starvation for their
animals. These disruptions pose critical threats to the
American agriculture industry broadly, the livelihoods of our
farmers and ranchers, and the lives of countless animals if the
potential required killing of herds of animals is not
addressed.
Chairman Oberman, you were quoted as saying that farmers
have been hours away from de-populating herds. Will herds of
animals be prematurely slaughtered because of delayed grain
shipments to producers?
Mr. Oberman. I think we have come close to that,
Congressman, based on reports I have heard. But so far it
hasn't happened.
I would say that we have one, I think, very strong tool to
immediately deal with these problems. And we have made it even
stronger in our proposal of a couple of weeks ago to provide
more emergency relief. So, in just the situation that you
referred to, where a livestock producer, a chicken farm or
cattle farm can't get the feed train delivered, we are
proposing to make it much easier for those customers to come in
and get an emergency order from us within a 2--I can't remember
the time period, but 2 or 3 days, very quickly, for us to order
a railroad to deliver the needed feed trains that are not
getting delivered.
So, that is the concept behind this one rule that we have
proposed, and we put out a very short comment period. So,
hopefully, we can act on it within the next--I think at this
point about 3 or 4 weeks away to being able to put that into
place, although we have an emergency service rule now that
shippers can use, and I have been told that there have been
several instances in the last couple of weeks where shippers
were on the verge of filing an emergency petition with us, and
the threat of it resulted in the railroads saying, OK, we will
deliver the trains.
So, sometimes we act more effectively by just being there
and knowing that we are not afraid to act. And this Board is
not afraid to act.
Mr. Johnson of Georgia. Well, thank you for that.
Typically, the STB regulates the rail industry over long-
time horizons, but what can the STB do immediately when a true
emergency arises, such as when huge numbers of livestock and
livelihoods are at risk, in addition to what you just talked
about?
Mr. Oberman. Well, that is our primary tool for the
immediate solution of these problems. But I think the order we
issued last week after our hearing requiring immediate filing
of service recovery plans and reporting on first-mile/last-mile
service so we can publicize this, among other things, is going
to, I think, bring the railroads, I hope, to a more accountable
situation.
They know the spotlight is on them. This hearing helps. Our
hearings helped. And the message has gone out.
It was interesting. Congressman DeFazio quoted Matt Rose's
speech from about 4 years ago, who told the railroads that they
really needed to shape up if they didn't want the Congress and
the STB running their businesses. And I think it has taken them
several years to get the message, and I am hoping they have
finally gotten it.
Mr. Johnson of Georgia. Thank you. My time has expired, and
I yield back.
Mr. Payne. The gentleman yields back. We will now hear from
the gentleman from Ohio, Mr. Balderson, for 5 minutes.
Mr. Balderson. Thank you, Mr. Chairman.
And Chairman Oberman, thank you for being here today. My
first question, Chairman, is you note that the Board has
statutory authority to order a freight railroad to allow the
operation of additional Amtrak trains over its line, and the
Board is currently completing a post-proceeding [inaudible] by
Amtrak, which is requesting access to freight lines along the
gulf coast.
When considering whether to order a freight railroad to
allow the operation of Amtrak trains over its line, does the
Board consider potential disruptions this may cause to freight
rail networks?
Mr. Oberman. Very good question, Congressman. And I will
have to answer it in generalities, because, as you said, we are
in the middle of a contested hearing on just this question.
And, in fact, whenever we get released from here we will be
going back into that hearing at our office down the street.
The statute that we operate under, which has never been
implemented in the last 50 years, but is the issue in this case
and, I think, the issue in the situation you are referring to,
provides that we shall order the Amtrak service onto a rail
line. However, we must take into consideration ``unreasonable
impairment of freight service.'' So, the Congress has mandated
us to do exactly what you just asked, and we are doing it.
And yes, it is very important to make sure that Amtrak and
the freight railroads run cooperatively and fluidly, and there
is a constant tension there, which is what we were set up to
moderate.
So, I think the direct answer to your question is, yes, we
consider interference with freight.
Mr. Balderson. OK, thank you. I had kind of a followup on
that, but you pretty much answered that for the process.
I would like to follow up on some questions I asked to
representatives of the rail industry and shippers during a
subcommittee hearing on March 8th.
Does the Surface Transportation Board have any concerns
that proposed changes to the reciprocal switching could impact
future investments by the railroads into their own
infrastructure?
Mr. Oberman. Well, I hear that concern from the railroads.
It is not one that, speaking for myself, I would ignore. I
think it is vastly overstated.
What came out at the hearing was the exploration, led
somewhat by me, but I think all of us were interested in--is
how to implement a loosened, somewhat loosened, reciprocal
switching rule that would provide necessary relief and more
competition to the industry with minimizing disruption of
current freight.
The railroads constantly say that STB should keep our noses
out of it, and let the market decide. And I have many answers,
but my usual answer is, I believe in letting the market decide.
But for the market to decide, there has to be a market. And in
many, many parts of this country, there simply is no market.
Shippers are captive to one railroad, and that is what the
reciprocal switching concept is aimed at.
Mr. Balderson. Thank you for that answer. I appreciate your
time.
Mr. Chairman, I yield back my remaining time. Thank you.
Mr. Payne. Thank you. The gentleman yields back. We will
now hear from the gentlelady from Nevada, Ms. Titus, for 5
minutes.
Ms. Titus. Thank you, Mr. Chairman, and I thank the
witnesses for being here.
I was very interested in that last question, because we are
trying to get Amtrak restored between Las Vegas and Los
Angeles. And we are having trouble dealing with the private
railroads and the use of some of the lines and things, because
we have to import everything to Las Vegas, whether it is
flowers, or lobsters, or whatever. We have got to have that
freight operating effectively. So, I am curious to learn more--
and we can do this offline--about the interaction between
Amtrak and the freight lines in that part of the country, not
just in Florida.
I wanted to ask you--or let me just say first, it used to
be that the trains were the good guys, and not the truckers.
They had less pollution, they didn't tear up the roads, they
respected unions, they had more safety, and they were better
for climate change.
We see the truck industry instead--they lack drivers, but
what they want to do is hire people who are 18 years old; not
have rest periods; they don't recognize many unions, some of
these trucking companies; and they tear up the roads and don't
pay their fair share to help to fix them. Now it seems like
railroads are trying to go in the same direction as trucking,
and I don't think that is a very good example to follow. So, I
am like you. I hope they are hearing this, and kind of reform
their ways.
I guess I would ask you if you could talk a little bit
about what might have been available through the CARES Act, or
some of the recovery bills, or even the bipartisan
infrastructure bill that went to maybe help railroads. I know
there was money there for workers who were laid off maybe to
get unemployment. But was there anything in there that you see
as making perhaps an improvement, or a difference in the way
railroads operate if they can access some of this money, either
directly or indirectly, through some of the investments in
infrastructure?
Mr. Oberman. Congresswoman, let me say a couple of things
quickly in response to what you said. And if you don't mind, I
am going to then shift over to Member Hedlund, who spent a
number of years at the FRA, and has a lot more knowledge about
the Government handing out money to railroads than I do. And I
think she could give you a more fulsome answer.
I will say that we are very conscious of our obligation
under the statutes with regard to Amtrak and its service.
And I am sure you know, by the way--you didn't mention it,
and I can't much talk about it because it is pending, but there
is a pending proceeding before us to establish a high-speed
passenger rail line between Las Vegas and Los Angeles----
Ms. Titus [interposing]. Yes.
Mr. Oberman [continuing]. Which should provide, I would
think, some great boon to the Las Vegas economy once that gets
built, assuming it does get built.
Ms. Titus. I want it to get built, and I want you to speed
that up. We have been working on it 40 years. It is time to
build that speed train.
Mr. Oberman. You know what? We have acted on every one of
the matters that have come before us on that thing, since I
have been on the Board, pretty quickly. It is really the people
who are building it who are--we are waiting for them, as well.
I guess that is all I could say at this point.
Let me switch it over----
Ms. Titus [interrupting]. I will pass that word onto them.
Thank you, sir.
Mr. Oberman. Pardon? I didn't hear that.
Voice. She will pass it on.
Mr. Oberman. Oh, OK.
Ms. Titus. I just said I will pass the word onto them.
Mr. Oberman. Oh, yes, please do.
Anyway, if you don't mind, I would like to switch this over
to Member Hedlund.
Ms. Titus. I appreciate it.
Mr. Oberman. Thank you.
Ms. Hedlund. Thank you, Congresswoman Titus.
The money that has been made available in the IIJA for
railroads, a total of $66 billion, a good share of that is
going to go into the Northeast Corridor, which is owned by
Amtrak, used by commuter rail and also by Conrail.
But the majority of it will probably wind up going into
investments in our existing freight railroads for the benefit
of passenger rail. And that was also the case with the Recovery
Act when I was at the Department of Transportation.
And without question, although these investments will be
made for the benefit of passenger rail--and I am sure the FRA
and the Department will require agreements between the State
sponsors and--or grantees and the railroads, that they
guarantee that those investments will yield whatever the
objective of the project is, whether it is additional round
trips or reduced travel time, that they will guarantee that.
But those investments inevitably also benefit the railroads
themselves. If you build additional or longer sidings, it also
is going to benefit the freights because it means that two long
trains can pass each other, not just that a long train can
allow Amtrak to pass.
Mr. Payne. Thank you----
Ms. Hedlund [interrupting]. So, I think there is a great
deal of money available. It is up to the Department of
Transportation----
Mr. Payne [interrupting]. Thank you.
Ms. Hedlund [continuing]. To decide where that goes.
But my observation would be that it is going to benefit
more than just passenger rail.
Ms. Titus. Thank you, Mr. Chairman.
Mr. Payne. Thank you very much. The gentlelady's time has
expired. We will now go to Mr. Johnson of South Dakota.
Mr. Johnson of South Dakota. Thank you, Chairman Payne.
Mr. Chairman, you noted in your testimony some concern and
critique of the railroads' layoffs. I think you had noted that
they had reduced their labor force by 29 percent in the
preceding 6 years. I think some 45,000 jobs.
When you have raised this issue with the Class I's, what
response do they give you? I just want to put some further
context on this issue.
Mr. Oberman. Congressman, I have never heard a response
that made any sense. So, it is very hard for me to articulate
their position.
And I have asked. And in fact, I am hoping to shed some
light on this in our requirement that they give us recovery
plans. I have asked repeatedly of the Class I executives when I
have either met with them in public or at our hearings, ``Do
you have any plans to restore any portion of those 45,000
jobs?''
I have never suggested they should hire all of those
positions back, but it is quite clear to me that they don't
have a cushion. As I have said many times, you wouldn't send a
football team out on the field without a backup quarterback.
But what the railroads have done is just that: they have set
the rail crew levels at levels where they have no backup. So,
when there was COVID, when there is a vortex, when there is any
disruption of workers getting to the job, the trains stop
running.
Their attitude so far has been, well, we are just trying to
fill the holes we have now. If you look at their employment
levels over the last 2 years, they have barely managed to
increase the levels they had after they made the additional 20-
percent cut in labor at the beginning of the pandemic. So, they
don't give me an answer, at least one that I could articulate.
Mr. Johnson of South Dakota. So--and I assume, when we are
talking about not hiring back, I mean, I suppose we should
probably look at these workforce adjustments in two ways.
I mean, one would be the 45,000 you are talking about over
6 years. Let's call those efficiency-focused reductions. And
then you have got the furloughs that were done during COVID,
which I think probably would have been more market conditions,
volume-driven. I mean, I assume they have recovered the
workforce levels coming out of COVID, by and large.
Mr. Oberman. They have not. That is really why we are
having the problem.
And I wouldn't call those 45,000 efficiency reductions.
They call them that. But it is not efficient when you get to a
workforce that is so low without a backup that the trains stop
running. And we were having a lot of service complaints before
COVID. They have been greatly exacerbated since COVID.
And I think what was a foolish business decision--and I
have said so, and I will say it again--is that when COVID hit
in March of 2020, no one knew how long it was going to last.
Was it a month, a 10-year program, or somewhere in between? And
no one knew when freight rail demand would come back.
And remember, when you lay off an experienced engineer or
conductor--and there is no assurance they will come back, and
many of them did not, they went into other industries--to
replace that person under FRA restrictions and just general
common sense requires 6 months of training. So, you make a
precipitous business decision that I am going to cut 20 percent
of my workforce, which is what most of the Class I's did
between March and June of 2020, not knowing when you are going
to need them back, but when you do need them you are at least 6
months away, assuming you can find them.
So, these were really irresponsible business decisions, in
my view, and it is why we are suffering to today, and why they
cannot restore enough workers to even, as the other congressman
was saying, to get feed trains to chicken farms. They just
can't do it in every situation.
Mr. Johnson of South Dakota. Yes. I mean, Mr. Chairman, I
mean, it is my understanding that, in general, after furloughs,
90 percent of those workers return in short order. Now, that
has been my understanding; that has not been the case in this
situation. It has been closer to 65 or 70 percent.
Might it--I mean, you used the word ``irresponsible.'' I
mean, given that 90 percent normally return, is that
description a bit harsh on your part?
I mean, were they operating under reasonable assumptions,
given history?
Mr. Oberman. I don't think so, because the pandemic was
something new. No one could predict the future.
I am not aware of that figure of 90 percent, and I don't
know that it is 65 percent now. I know that the rail labor have
shown me statistics where hundreds of people are leaving
voluntarily now because of working conditions, and I think that
was a disincentive to people coming back.
One of the things that happened in late 2020 and 2021 is
that they would bring workers back from furlough for a month,
then they would furlough them again. And a number of workers
have told me and union leaders have said that after bouncing
back and forth once or twice, it was such a hardship on their
families that many people just walked out the door.
So, I think it was--I don't think it is a----
Mr. Johnson of South Dakota [interrupting]. My time has
expired, sir. Thank you for your comment.
Mr. Chairman, I yield back.
Mr. Payne. I would like to thank the gentleman for yielding
back. We next have the gentleman from California, Mr. Huffman,
for 5 minutes.
Mr. Huffman. Thank you, Mr. Chairman, and let me thank
Chair Oberman and the members of the Surface Transportation
Board for being with us here today. This is very enlightening.
I would like to use my time on a slightly different
subject. I would like to ask the Board about their policies
relating to railbanking, and specifically when there is an
abandonment filing pre-coordination for the conversion of a
rail line to a trail, and another entity comes along expressing
interest in acquisition. I am curious about the factors that
the Surface Transportation Board applies in considering those
situations, so, let me start with the local community support.
How much weight would the STB give to local community
support for one of these alternatives over the other in a
scenario like that?
Mr. Oberman. And you are talking specifically, Congressman,
about conversion of an unneeded rail line to a trail use?
Mr. Huffman. Correct.
Mr. Oberman. We always hear and listen very intently to
communities.
I think there is generally a lot of support on the Board. I
certainly support the concept of being able to convert rail
lines for trail use. It is good for the environment, it is good
for the local population. And I think we, generally, have been
very supportive.
Sometimes these requests languish for years and years, and
there is a certain point at which we have to act on them. We
have some legal restrictions and some due process property
rights restrictions, but generally we are very supportive of
community input on these issues.
Mr. Huffman. I appreciate that, Mr. Chairman.
I wonder also about the financial viability of an entity
that might come along and oppose railbanking, suggest that they
have an interest in reviving a functionally abandoned rail
line. How important to your consideration would the financial
viability of an entity like that be?
Mr. Oberman. You are saying of a line that has been
discontinued, but then an entity wants to reinstate it for rail
service?
Mr. Huffman. Yes, and is opposing the railbanking
alternative.
Mr. Oberman. Well, we listen to those requests.
We generally are mandated by statute to make it easy for
rail lines to come into existence. That is one of our jobs. And
there is a, I guess, a spectrum on how much we look at
financial viability.
Generally speaking, we take the view that the market will
determine whether a rail line is viable. But there have been
cases. There was one involving a proposal to build a
multibillion-dollar railroad around Chicago, but the applicant
only had $150 in the bank. This preceded me. That is an
example, an extreme one, where we look at financial viability.
But----
Mr. Huffman [interrupting]. That is very helpful.
Mr. Oberman [continuing]. Normally----
Mr. Huffman [interposing]. Yes. Thank you.
Mr. Oberman [continuing]. Normally, we don't.
Mr. Huffman. Mr. Chair, and then finally, in a situation
like that, would the Board require that entity to engage with
the community and the public in an open and transparent way?
In other words, if they are secretive about who they are,
about where their funding comes from, is that a factor that you
would consider?
Mr. Oberman. Well, it is not an issue that has come before
us, but I generally believe in full disclosure. And when we get
those kinds of applications, we have the ability to insist on a
more fulsome application if the facts would warrant, which
would include revealing the basic financial structure of the
entity and so forth.
Mr. Huffman. All right.
Mr. Oberman. So, I think the general answer to your
question is yes, but I think it is very much case-specific.
Mr. Huffman. Mr. Chairman, I really appreciate that. I do
believe that where existing rail lines can continue to be used
for rail they should be, and where abandoned lines can be
brought back into rail service in a way that makes economic
sense and has public support, that should happen, too.
But I ask these questions because there is a railroad in my
district that abandoned that line through the Eel River Canyon
a long time ago. It just cost far too much to operate it. It
has fallen into terrible disrepair. And that incumbent railroad
and local communities have struck a deal to do something that
does make sense, to create the 320-mile Great Redwood Trail,
the longest continuous railbank trail in America.
And just as the Surface Transportation Board was
considering the application for abandonment, a very shadowy LLC
came along to propose an interest in taking it over for a coal
export scheme that is very unlikely to happen. It certainly is
at odds with the climate policies expressed by the
administration and Secretary Buttigieg.
So, I just hope that these factors will be on your mind as
you discharge your responsibility, and very much appreciate
[inaudible].
Mr. Payne. The gentleman's time has expired. We will now
hear from Mrs. Steel from California for 5 minutes.
[No response.]
Mr. Payne. She is not there? OK.
Next we will hear from the gentleman from Massachusetts,
Mr. Lynch, for 5 minutes.
Mr. Lynch. Why, thank you, Mr. Chairman. I want to thank
the Board members for attending and helping the committee with
its work.
I do want to correct the record. So, there was an earlier
statement by one of my colleagues that the average rail worker
earned about $137,000 a year. I just about fell out of my
chair. I was going to go apply. We are having trouble getting
rail workers in Massachusetts, because we--as the Chair has
mentioned, we lost--and one of my colleagues on the Republican
side mentioned--we lost 45,000 rail workers over the past few
years.
But according to salary.com, it lists the salary as between
$48,000 and $80,000. The average salary is about $64,000.
Electrical engineers, obviously, get paid on the higher end.
ZipRecruiter.com, as well, lists the salary between $24,000 and
$60,000. And actually, it comes out to between $18 an hour and
$28 an hour. So, that is what they are making.
And the Bureau of Labor Statistics, which does this for a
living, reports that the average salary is $64,150 a year. So,
I just wanted to disabuse anyone of that notion that they are
making more than double that.
I met with the BLE, the Brotherhood of Locomotive
Engineers, Teamsters, the other night. And they have told me
that they have been 2 years without a contract, and that they
were having trouble holding on to people because most people
can't go a couple of years. And it may be a couple of more
years before they ever see a raise.
I see there is a need for workers, and $64,000 is OK. We
should be able to attract people at that salary, I wish it was
more. And I see the service is going down, and I am just--it is
sort of a paradox, where we need workers at a decent salary and
yet we can't seem to get a collective bargaining agreement for
any of these rail unions. They have all been without a contract
for a couple of years.
And I am just curious if any of the members there have any
sense of what is causing that reluctance on the part of the
carriers, the rail companies, to come to the table and work out
an agreeable solution.
Mr. Oberman. Well, it is the question of the hour, I think,
Congressman.
And I didn't want to contradict the other congressman.
There is a lot of overtime in the rail industry, and there are
some workers who make----
Mr. Lynch [interrupting]. There is not enough workers.
Mr. Oberman [continuing]. Yes, who make $137,000. I didn't
have the average numbers at hand. I am glad you offered them,
but I didn't think he was on target, but I wasn't sure I was
calculating it.
We don't have jurisdiction over the rail labor contracting.
And of course, there is a national bargaining session going on
as we speak. And then there is an entire statutory provision
that you all have created many decades ago for Presidential
emergency boards, and so forth. And I am not enough of a labor
expert to tell you whether that is a help or a hindrance to
their reaching a contract.
But I think we have seen a general trend, where the
railroads have been--they have been not spending enough money
on their workforces. But what I hear----
Mr. Lynch [interrupting]. I do want to--if you don't have a
ready answer, I would rather move on.
Mr. Oberman. Sure.
Mr. Lynch. Mr. Primus, it is good to see you. It has been a
while, but it is good to see you doing well. I know you had
comments in the press a while ago about the diminution of
service and the extension of--the delays.
Some companies are saying that the delays--their delivery
times are increased by 15 to 20 percent. I am just wondering if
you have any thoughts about the long-term impacts of that on
the supply chain, and of cost to consumers?
Mr. Primus. Yes, I do. And it is good to see the delegation
represented here this morning.
On your previous question, I will just say this also. You
can see the attention that the railroads have given to labor
when you look at how much they have cut the labor force, and
how much they are not respecting and looking out for their best
interests. You can see that. They are giving more money to
their shareholders. There hasn't been one major bonus or pay
raise in those years, those couple of years that they have been
working us out of COVID and getting folks back on. No hint
towards that.
With respect to service, absolutely. Service degradation is
the reason why we are paying more in food prices. It is a
reason why we are seeing increases, even though it dropped last
month, increases in gas prices. You are going to see problems
in these powerplants, these coal-fired powerplants. They are
not getting coal. You can see it in water treatment plants.
They are not getting the chemicals to treat the water.
So, yes, I mean, service is going directly to the
consumers. It is affecting and hurting the consumers, not just
in the pocketbook, but also with their health and with their
safety.
Mr. Lynch. Thank you.
Thank you, Mr. Chairman. I yield back. Thank you for your
courtesy.
Mr. Payne. The gentleman yields back. I will now hear from
my good friend, the gentleman from Illinois, Mr. Davis, for 5
minutes.
Mr. Rodney Davis of Illinois. Thank you to my good friend,
the chairman. It is great to see you, my friend. I appreciate
being able to walk right into the hearing and come up next in
questions. What a coincidence, or the chairman is giving me
some preference, but I would say it is probably more a
coincidence, sir.
Great to see the members here today of the Board. We
appreciate the opportunity to hear from you. I am actually the
lead Republication on the House Administration Committee here
in Congress. And the issue I am going to bring up today relates
more to some of the issues we have been facing there, but they
impact many of the issues that we talked about today.
I have had discussions with folks in the election space who
have serious concerns with a paper shortage in the upcoming
elections. Most recently, I convened a roundtable discussion on
this topic to hear from stakeholders about the critical need to
use paper for ballots and for other election materials. I am
committed to helping broker a solution for these concerns to
ensure that elections officials have the materials they need.
As you know, several commodities are exempt from STB
oversight, including forest products and paper. I understand
the STB has considered revoking some or all of the commodity
exemptions for a decade now.
I will start with you, Mr. Oberman, home State guy. Do you
have any updates on the STB's consideration of these
exemptions?
Mr. Oberman. Thank you, Congressman. I think the last time
I was in your office I was chairman of Metra, and look what
happened to me.
[Laughter.]
Mr. Oberman. The answer is that we have a pending rule
change to lift those exemptions. And it has taken a long time
because the industry wanted us to consider a much more sort of
an economic analysis of how we have done it. We thought we had
a solution, and it turned out not to be one. So, that rule is
still pending.
But I will say that we have the ability to lift an
exemption for purposes of a specific case. We just did that in
a pending matter involving a different kind of commodity. And I
had heard, when I first joined the Board, a number of
complaints from the forestry industry, the paper industry,
about a lack of service and de-marketing by railroads. But I
have to say I have not heard such a complaint recently.
But if there are such concerns, those shippers can come to
us right now, and ask us for relief and also to lift the
exemption for the purpose of that proceeding. And it is
something that we would listen to, and they won't have to wait
for the overall rule if they have a valid complaint for lack of
service. So, if that is going on--and I am not aware of it, but
I hope that you will encourage those folks to come--bring it to
our attention immediately, and we will try to deal with the
problem.
Mr. Rodney Davis of Illinois. Well, I certainly will. And I
appreciate the opportunity to hear that update.
The election and having faith in our election systems, it
is too important to be disrupted by a product shortage that, if
we can address together, we can make sure that that does not
happen.
Did anybody else up at the dais have any comments on this?
Mr. Oberman. I would say, by the way, based on the cases we
are hearing right now, there doesn't seem to be a shortage of
paper. You ought to see the paper that the lawyers are filing
with us.
Mr. Rodney Davis of Illinois. Well, and I asked the same
question when we had the roundtable. But it is a certain type
of paper that is not being produced as much by producers that
is required for election administrators and election equipment
to operate effectively. And that is what is concerning to us.
So, I appreciate being able to have the ability to work
with you all to see if there is a problem remaining as we move
closer to the elections this year that we can work in a very
collaborative way to make sure that doesn't happen.
I don't see your name tag on the end. I apologize.
Ms. Hedlund. Right. I am also originally from Illinois.
Mr. Rodney Davis of Illinois. Oh, great. Where at?
Ms. Hedlund. The South Side of Chicago.
Mr. Rodney Davis of Illinois. OK. Well, I am really far
South Side of Chicago.
Ms. Hedlund. Yes, right.
[Laughter.]
Ms. Hedlund. This is stunning, what you have said. As I
expressed earlier, we are worrying about world famine, and now
you are telling us we should be worrying about saving our
democracy.
Mr. Rodney Davis of Illinois. Well, and that is why we
wanted to have the roundtable with the producers, and ensure
that our election administrators, election equipment providers
had a voice, and to really offer concerns.
And my main concern in bringing this up here today is
really to be able, again, to collaborate with the STB if we see
that that shortage actually happens.
Now, hopefully it won't. Hopefully, the problem, bringing
it to the attention of producers months ago may have corrected
it, and I certainly hope so. But it is something that I think
the STB needs to be concerned about, and I will let you know
what we hear, based on the feedback from Mr. Oberman.
So, thank you. I yield back the balance of my time.
Mr. Payne. The gentleman yields back. And we will now hear
from the gentleman from Illinois, Mr. Garcia, for 5 minutes.
Mr. Garcia of Illinois. Thank you, Chairman Payne and Chair
DeFazio, for holding this hearing, and thank you to the STB
Board for appearing today. I, of course, want to recognize my
friend and STB Chairman, Marty Oberman, who is here today.
Marty and I, of course, served together in the Chicago City
Council during a very tumultuous period, but also historic.
So, great to see you, Marty.
Since 2015, the Class I railroads have reduced the
workforce by 29 percent, resulting in tens of thousands of job
losses, of course. It is clear from the recent hearings that
the Surface Transportation Board had on freight rail service
that these cuts have resulted in the Class I railroads being
unable to provide the level or quality of rail service that we
need.
I strongly support Chair Oberman and the Surface
Transportation Board's plans to implement regulations and
policies that will address the negative consequences that these
job cuts have had on railroads, its workers, Amtrak, and
shippers.
Chair Oberman, certain rail shippers complain of railroad
de-marketing, meaning that railroads are refusing to serve
them, or are placing onerous conditions on service because the
railroads feel that these shippers cannot be served at the
railroads' desired profit margin. Do you believe that this is
happening?
And if so, do you believe that such practices are
consistent with the common carrier obligation?
Mr. Oberman. Excellent question, Congressman. And you are
the only congressman I can call Chuy, so, I will.
Mr. Garcia of Illinois. Thank you.
Mr. Oberman. We started life together, political life.
There is little doubt in my mind, based on a large number
of anecdotal reports and some data, that the railroads have
been engaged in--the Class I's--in de-marketing for a number of
years.
And if you look at the statistics about carloads and
growth, or lack thereof, you will see that over the last 1\1/2\
decades or so, as the economy has grown substantially, carloads
on railroads have not, which means there is a negative impact
on marketing many kinds of commodities which ought to be on
rail, but which are not as profitable as some others, and so,
the railroads have assiduously tried to avoid that kind of
business because it doesn't make their numbers look as good for
their stock prices.
I do think a de-marketing effort by railroad, if it can be
proven, does implicate the common carrier obligation. And it is
something that we have the current authority to look at.
Part of the problem is getting these affected shippers to
bring their complaints to us on a case-by-case basis. They are
expensive, they are time-consuming. And a lot of shippers, I
think, who are de-marketed just find it easier to move their
stuff on truck, rather than engage in complex litigation.
But it is one of the areas--just thinking back to Chairman
DeFazio's inquiry about the common carrier obligation--that I
would love to be able to explore in more detail, and see if we
can't come up with a way to counter the incentives for de-
marketing. But it is definitely a real phenomenon, Chuy.
Mr. Garcia of Illinois. Yes, sir. Well, thank you,
Chairman.
Another question. Commuter railroads currently have very
limited abilities to bring cases before the Surface
Transportation Board when it comes to matters like negotiations
with freight railroads on adding service or resolving time
performance issues.
As Congress considers reauthorization of the STB, do you
believe that strengthening the ability for commuter railroads
to bring these matters before the Surface Transportation Board
would help resolve some of these important issues?
Mr. Oberman. I do. I can look at this from both sides of
that aisle, because I had the experience at a commuter railroad
of having to interact with the Class I's. And generally, Metra
had good relationships with Class I's, but there were points of
contest.
But we are well suited, I think, to manage those kinds of
relationships because we already are assigned to manage the
interrelationships between passenger rail on Amtrak that Amtrak
provides and freight rail. And while commuter rail is different
from, certainly, from long-distance or intercity Amtrak
service, the concepts of being cognizant, of making sure that
rail service functions fluidly while still providing passenger
service over the same right-of-way, is one that we are very
experienced with.
And I have been asked about that. I don't think we need to
lobby for more duties because we are filled up. But if the
Congress wanted to ask this Board to be in the position to
mediate some of those relationships, I think we would be a
suitable place to do it.
Mr. Garcia of Illinois. Thank you so much, Marty.
And Mr. Chairman, I yield back.
Mr. Payne. Thank you, the gentleman yields back. We will
now hear from the gentlelady from California, Mrs. Steel, for 5
minutes.
Mrs. Steel. Thank you very much, Mr. Chairman. Thank you to
the witness, Mr. Oberman.
Significant disruptions to our Nation's supply chain have
had a ripple effect, hitting American families in their wallets
as inflation continues its grip on our Nation.
Burdensome regulatory efforts can impose significant
operational disruptions on the freight transportation sector. A
recent proposal by the Board, which would require railroads to
turn over traffic to competitors, would ultimately increase the
complexity of moves, increase network fluidity, and exacerbate
current difficulties with the supply chains. At a time when the
Federal Government is investing significant resources in
identifying and addressing issues that disrupt supply chains,
it seems counterintuitive to pursue regulatory policies that
could further slow down the flow of goods.
Mr. Oberman, will you commit to ensuring that the Board
fully considers the impact of these proposals on the
functioning of the supply chain before taking any action?
Mr. Oberman. Congressman, thank you for the question. We
are in the process of doing just that, and we always consider,
because it is our job, the impact of what we do on freight rail
operations.
But I will just repeat what I alluded to earlier, and that
is for the--currently, the supply chain has been so bollocksed
up by the railroads that anything we could do, I think, would
only improve the situation. And that is what we are trying to
do before we act.
Mrs. Steel. Thank you for your commitment.
As it relates to the supply chain crisis, can you share
with the committee all of the data and evidence you have
asserting that freight rail service has solely become both
inconsistent and unreliable?
Mr. Oberman. All the data we have is at your command,
Congressman, and I think we do supply the committee now with
anything that you have asked for. But we are happy to do it.
The more sunshine we can shed on this situation, the better.
Mrs. Steel. I really appreciate that, your answer.
And I yield back, Mr. Chairman.
Mr. Payne. Thank you. The gentlelady yields back.
That concludes the questions that we have from Members at
the hearing today.
I would like to again thank each of the witnesses for your
testimony today.
And I ask unanimous consent that the record of today's
hearing remain open until such time as our witnesses have
provided answers to any questions that may be submitted to them
in writing.
I also ask unanimous consent that the record remain open
for 15 days for any additional comments and information
submitted by Members or witnesses to be included in the record
of today's hearing.
Without objection, so ordered.
This subcommittee stands adjourned.
[Whereupon, at 12:01 p.m., the subcommittee was adjourned.]
Submissions for the Record
----------
Prepared Statement of Hon. Sam Graves, a Representative in Congress
from the State of Missouri, and Ranking Member, Committee on
Transportation and Infrastructure
Thank you, Chair Payne, and thank you to our witnesses for being
here today.
In follow-up to the March 8th hearing, which examined stakeholder
perspectives on the Surface Transportation Board's reauthorization, we
will hear testimony today from the Board itself.
This year alone, the STB has multiple important issues before it,
including several large rulemakings, the review of a significant merger
proposal, and the potential resumption of Amtrak service on the Gulf
Coast.
The Surface Transportation Board Reauthorization Act of 2015 was
the STB's first reauthorization since 1996, which occurred after a
thorough and deliberative analysis of ways the Board could better
function based on a review of its operations in the roughly 20 years
prior.
Recently, the STB has received funding through continuing
resolutions. The Fiscal Year 2022 appropriations bill passed last year
would provide a full year of funding for the agency.
It is important to hear from the Board on its current workload, its
needs, and how Congress can potentially support its important mission
without negatively impacting the STB's ample workload.
I look forward to hearing more from the STB members on these
issues.
Thank you, Chair Payne. I yield back.
Prepared Statement of Hon. Eddie Bernice Johnson, a Representative in
Congress from the State of Texas, Submitted for the Record by Hon.
Donald M. Payne, Jr.
Thank you, Chairman Payne and Ranking Member Crawford for holding
today's hearing. I would also like to thank our outstanding witnesses
for testifying before us today.
I want to use my time to educate the members of the Surface
Transportation Board (STB) on the proposed I-20 Corridor passenger rail
project. This critically important passenger rail service will provide
new transportation options for our Southern region, generate economic
development and good-paying jobs, reduce highway congestion, and
promote energy efficiency.
As the STB reviews the merger application filed by Canadian Pacific
Railway Limited (CP) and Kansas City Southern Railway Company (KCS), I
strongly encourage the STB to include the use of passenger rail on this
line as a condition when deciding this case.
The I-20 Corridor Council, a multi-state coalition of mayors and
other elected officials, councils of governments, business and economic
development leaders, chamber and tourism representatives, college and
university presidents along the route have been vocal in strong support
for this passenger rail connections for many years. In fact, Members of
Congress, I-20 Corridor Coalition members, and other interested parties
have contacted the Surface Transportation Board (STB) to express their
support for making the use of passenger rail a condition in the sale of
this rail property to Canadian Pacific.
The proposed I-20 Corridor passenger rail project would not only
provide an East-West connection between two of our nation's fastest-
growing urban mega-regions (greater Dallas/Fort Worth, with 7.5 million
in population, and greater Atlanta with 6 million), but would also
connect the rural communities and smaller cities along the route to
these new areas and beyond. The railroad tracks for this 815-mile route
between Fort Worth and Atlanta are already in place, with Amtrak
service currently operating on much of the line.
There is a 345-mile portion between Marshall, Texas and Meridian,
Mississippi which, like the rest of the route, already has existing
right of way but does not currently have passenger rail service. All
that would be needed is relatively modest funding for rail sidings and
an agreement with the host railroads in coordinating freight and
passenger rail service.
Two comprehensive studies have already been completed on the I-20
Corridor rail route. The first study, completed by Amtrak, determined
that the proposed route would have strong ridership numbers and be
economically viable. The second study, completed by the Texas
Department of Transportation and the I-20 Corridor Council,
demonstrates that the capacity could be increased to allow new
passenger service and improved freight along the route for a cost of
less than some $100 million. The study also found that freight traffic
would not be adversely affected by this expanded passenger service.
This project has the potential to provide new tourism dollars to
the region, a link to other local and regional rail and transit hubs, a
new emergency evacuation route, and access to numerous superb
institutions of higher learning on or near the route, including more
than twenty Historically Black Colleges and Universities.
In a recent meeting that I and members of the I-20 Corridor Council
had with Amtrak President Stephen Garner, he expressed that this
project was a good opportunity to create synergies with other long-
distance routes and agreed to update the analysis done in 2015.
At the request of the freight railroads, Congress enacted the Rail
Passenger Service Act of 1970 creating Amtrak, which allowed freight
railroads to concentrate on their profitable freight business in return
for agreeing to accommodate and facilitate Amtrak operations.
Unfortunately, some freight railroads continue to thwart passenger
rail's access to their lines and fail to make them a priority during
operations.
Knowing how important the I-20 Amtrak project is to the Southern
region of our country and knowing that freight railroads continue to
violate the Rail Passenger Service Act, I strongly encourage the board
to make the use of passenger rail a condition in the Canadian Pacific
and Kansas City Southern merger, and advocate for passenger rail
whenever possible.
Statement of Ian Jefferies, President and Chief Executive Officer,
Association of American Railroads, Submitted for the Record by Hon.
Donald M. Payne, Jr.
On behalf of the freight railroad members of the Association of
American Railroads (AAR), thank you for the opportunity to submit this
statement for the record. AAR's members include the seven Class I
freight railroads and many other railroads that together account for
the vast majority of U.S. freight railroad mileage, revenue, employees,
and traffic. Amtrak is also a member of AAR, as are various commuter
railroads that, in aggregate, account for more than 80 percent of U.S.
commuter railroad trips. I was pleased to testify before this
Subcommittee on March 8, 2022, with other Surface Transportation Board
(STB) stakeholders, and I appreciate the opportunity to update the
Subcommittee on several new issues that have since arisen.
Railroads are proud to play a major role in extremely complex
global supply chains, working in coordination with steamship lines,
truckers, ports, drayage providers, and owners of chassis, shipping
containers, and warehouses, as well as manufacturers, wholesalers, and
retailers of goods. To ensure freight is delivered safely, efficiently,
and when expected, every stakeholder must do their part to maintain a
consistent flow of freight and avoid bottlenecks, and under normal
circumstances, railroads do just that. That said, current circumstances
are not normal, and, for many of our customers, rail service in recent
months has not been of the quality they have come to expect. Railroads
recognize that poor service is not a recipe for growth and know
improvement is necessary.
The causes of recent rail service issues are numerous, often
overlapping, and sometimes beyond the control of any single railroad.
Railroads are working tirelessly to tackle these service challenges and
remain fully committed to restoring service to the high levels their
customers deserve and railroads themselves expect.
It is important to note that even with these service constraints,
railroads today are moving a tremendous amount of freight safely and
effectively. In the first quarter of 2022, railroads moved more
chemicals than in any other quarter in history, the second most grain
for a first quarter since 2011, and the fourth most intermodal units
for a first quarter in history. In the first 16 weeks of 2022, rail
coal volumes were up 7.8 percent, food carloads were up 8.1 percent,
and carloads of crushed stone, sand, and gravel were up 11.9 percent
over the same period in 2021.
In this statement, I will more thoroughly discuss a few specific
factors that have contributed to recent rail service challenges and
steps railroads are taking to overcome them.
The COVID-19 Pandemic
Over the past two years, supply chain disruptions stemming from the
COVID-19 pandemic have been non-stop and cascading, with significant
impacts to global manufacturing capability, demand, employment, and
consumption patterns. Around the world, global trade has been disrupted
as COVID-19 cases impeded vessel operations, caused slowdowns or near-
complete cessation of port activities, and impacted operations at far-
flung manufacturers and raw material providers. Meanwhile, variations
in state and local stay-at-home orders caused further unpredictability
in production and volumes for certain industries.
A rapid, unexpected shift in consumer spending patterns compounded
these problems. Retailers assumed the sudden drop in consumer spending
at the start of the pandemic would persist and were unprepared when the
economy quickly recovered and demand for all kinds of goods rose
sharply. Retailers have been playing catch-up ever since.
Like consumer spending, rail traffic fell sharply when the pandemic
began but rebounded quickly thereafter; most notably rail intermodal
traffic rose sharply despite predictions that such volumes would stay
weak for months to come. Some weeks in late 2020 and the first half of
2021, U.S. railroads were handling more than 300,000 containers and
trailers per week, levels no one expected when the pandemic began.
These significant gains in rail intermodal volumes paralleled gains in
activity at our nation's ports. Eventually ports, railroads, and other
supply chain participants became bogged down, resulting in the current
supply chain challenges our nation is facing.
For railroads, the single most problematic supply chain development
over the past year has been the unwillingness or inability of many rail
customers to effectively manage their flow of traffic, especially
intermodal containers, into and out of rail terminals. Freight must be
cleared out to make room for new freight moving in, and rail terminals
were not designed for, and cannot physically accommodate, long-term
storage of significant amounts of freight. Further, when rail terminals
become congested, trains will back up on the mainlines serving those
terminals, causing further delays that cascade across rail's highly
interconnected network and that negatively impact railroads' ability to
serve all their customers.
Railroads have been using various operational levers at their
disposal to ameliorate congestion on their networks and enhance system
fluidity, including providing financial incentives to customers to
encourage weekend in-gating at certain facilities or to take a
container out when containers are brought in to expedite freight flows.
Railroads are working with their customers to better understand their
needs and adjusting equipment use to improve their operations,
including pulling equipment out of storage, prepositioning resources
where needed regionally to meet customer demand, maximizing the
effective utilization of truck chassis, and even re-routing traffic
from one terminal to another or reopening shuttered terminals to
minimize congestion.
The pandemic's ongoing impacts on commerce will require dedication
and hard work to overcome. For their part, railroads will continue to
work with their customers and supply chain partners and use all the
tools at their disposal to ensure they continue to meet the nation's
current and future freight transportation demand. This is an evolving
process, but railroads know how important it is and will continue to
strive for further improvements.
Workforce Needs
Railroads greatly appreciate the skill and professionalism of their
employees. But, like firms in virtually every industry today and
despite offering very competitive pay and benefits, railroads face
significant difficulty in attracting and retaining enough qualified
employees. In 2020, the average U.S. Class I freight rail employee
earned total compensation of $135,700. By contrast, the average
compensation of a U.S. employee in 2020 was $87,000, just 64 percent of
the rail industry's compensation.
The labor market today is as tight as it has ever been, and
railroads face intense competition for potential employees. According
to the Bureau of Labor Statistics, the overall national unemployment
rate in March 2022 was 3.6 percent, barely above its 40-year low of 3.5
percent immediately prior to the pandemic. There were approximately
11.3 million job openings as of February 2022, more than 60 percent
higher than in a typical month before the pandemic. In recent months,
there have been an unprecedented 1.8 job openings for every unemployed
person. The transportation, warehousing, and utilities industries had
489,000 job openings in February 2022. Manufacturing had another
808,000 job openings, and construction 381,000. Men and women drawn to
these industries are often the same ones who might be interested in
railroad operating jobs.
Railroads are working extremely hard to fill available openings
through hiring bonuses, refer-a-friend payments, and other incentives.
Railroads are also encouraging their current employees to help meet
demand, including through vacation buybacks and incentive payments to
move to high-demand regions of the network.
Railroads are making progress. The number of ``train and engine''
employees on Class I railroads--the men and women in the locomotive
cabs operating trains--was higher in March 2022 than in nearly two
years. Individual railroads have hundreds of people in their training
pipelines and are confident that workforce issues will become
increasingly less vexing in the months ahead.
Some have suggested that if railroads had employed extra workers
pre-pandemic, they would not be facing labor shortages now. However, it
is important to remember that the number of workers employed by
railroads pre-pandemic would not have changed the number of workers
needed for railroads to operate during the pandemic. Additional workers
pre-pandemic would simply have increased the number of workers who were
furloughed during the pandemic and would likely have little impact on
current labor shortages.
Finally, the particularities of the railroad operating and
regulatory environment present unique hiring, training, and retention
challenges not faced by many other industries when addressing the
current labor shortage. Hiring and training new railroad operating
employees is a time- and resource-intensive process that is heavily
regulated by the Federal Railroad Administration (FRA). Before
performing duties as a qualified train crew member, prospective
employees must undergo rigorous classroom, field, and on-the-job
training and be able to pass applicable railroad operating and safety
rules exams. They must also demonstrate to railroad managers that they
can perform their real-world duties in a safe, regulatory-compliant
manner and show that they are qualified on the physical characteristics
of the territories over which they operate. All told, this process
takes a minimum of several months, and the overall path to becoming a
conductor and eventually a certified locomotive engineer could take
years. Railroads need a constructive partner at the FRA in approving
innovative, efficient ways to train and certify new employees without
impacting safety.
Role for Regulators
Railroads understand the legitimate interest of the STB and other
policymakers in current rail service issues. In fact, just two weeks
ago railroads participated in the STB's two-day hearing that examined
this matter, along with a broad group of stakeholders, including rail
customers, rail labor, policymakers, and financial analysts. During
that hearing, railroads respectfully suggested that members of the STB
and other policymakers should exercise caution and refrain from taking
actions in haste that could inadvertently impede the ability of
railroads to be responsive to customer needs.
For example, some have claimed that implementing a ``forced
switching'' rule would improve rail service. As I testified before this
Subcommittee earlier this year, that is incorrect. There is no reason
to believe forced switching would improve the service challenges
railroads are facing today. Instead, forced switching would add
tremendous operational complexity, negatively impact rail operations,
and undermine the incentives for private infrastructure investment.
Conclusion
The most immediate task of our nation's railroads is to help our
economy recover and reach its full potential. Railroads are well aware
that their service levels are not currently what they, their customers,
or policymakers want them to be. And as I just noted, the STB has been
very engaged on service issues: in addition to the two-day rail service
hearing, in the last several months, the Board proposed a revised
emergency service rule and invited comments from stakeholders on first-
mile/last-mile data issues, all while considering other non-service-
related issues. We hope that the STB will continue to engage with the
railroads in a constructive and thoughtful way as we work through this
phase of recovery. Resolving these challenges will require flexibility,
innovation, and determination--characteristics the rail industry and
its employees have demonstrated many times in the past.
Letter of April 21, 2022, from the Agricultural Transportation Working
Group to the Surface Transportation Board, Submitted for the Record by
Hon. Eric A. ``Rick'' Crawford
April 21, 2022.
Surface Transportation Board,
395 E St., S.W.,
Washington, DC 20423.
Dear Surface Transportation Board Members:
The undersigned members of the Agricultural Transportation Working
Group (ATWG) strongly urge the Surface Transportation Board (Board) to
immediately seek resolution of the current nationwide freight rail
service challenges and take appropriate measures to deter, and
hopefully prevent future service failures of the magnitude currently
being experienced.
The farmers, ranchers, food and beverage manufacturers, processors,
package suppliers, farm supply dealers and agricultural product
marketers that comprise our collective memberships support and sustain
millions of American jobs. Our members provide safe, abundant,
affordable, and sustainably produced human and animal food, fiber and
agricultural products that are essential to the health and well-being
of tens of millions of U.S. and global consumers. Competitive and
reliable railroad freight transportation is essential to meet these
objectives.
Reliable and cost-competitive railroad freight service is essential
because U.S. agricultural producers and agribusinesses compete in the
global market for agricultural products ranging from raw commodities to
value-added products, such as meat, poultry, dairy, cotton and
biofuels. Economic multipliers associated with the U.S. food and
agricultural sector accrue to the broader U.S. economy, particularly in
terms of job creation and economic growth. According to data from the
U.S. Department of Commerce, as well as analysis conducted by the U.S.
Department of Agriculture, the food and agricultural sector contributes
$1.1 trillion to the U.S. gross domestic product--a 5 percent share--
and supports more than twenty-two million full- and part-time U.S.
jobs--constituting 11 percent of total U.S. employment.
The current inability of several Class I carriers to provide
reliable rail service to their customers is impacting farmgate
commodity prices and elevating food prices for consumers. Neither of
these outcomes is beneficial for individual Americans and the U.S.
economy. While several factors contribute to these carriers' rail
service challenges, we consistently hear that significant reductions in
train crew numbers and other personnel have severely hamstrung the rail
carriers' ability to maintain their prior levels of service, to
overcome the typical day-to-day issues that affect railroad service
plans, and to respond to changes in rail freight demand. Moreover, the
mismatch between the importance of reliable and cost-effective freight
rail transportation to our nation's economy and the lack of effective
competition between the Class I railroads remains of great concern to
the ATWG members.
The ATWG believes future service challenges can be deterred, or
even prevented, through increased competition, and by implementing
financial incentives for railroads to perform more efficiently
utilizing the same concepts that railroads use to incentivize their
customers to be more efficient. For this reason, the ATWG applauds the
Board's recent decision to accept public comments on the Petition for
Rulemaking in Docket No. EP 768 filed by the North America Freight Car
Association, the National Grain and Feed Association, the Chlorine
Institute, and the National Oilseed Processors Association. The
petition asks the Board to adopt rules that will permit rail customers
to levy financial penalties on railroads for their inefficient use of
private railcars, which make up many of the cars that haul processed
agricultural commodities. The ATWG believes the Board should also
explore other ways to utilize these principles to incentivize the Class
I railroads to provide more reliable service for rail carrier provided
railcars that haul most of the raw agricultural commodities.
We urge the Board to expeditiously conclude its work in Docket No.
EP 711 (Sub-No. 1) for the purpose of establishing reciprocal switching
rules that enable the creation of rail-to-rail competition at
qualifying interchanges between carriers. We also believe rail service
will improve through additional data reporting, such as first-mile,
last-mile rail service reporting, and by the Board developing guidance
on the Board's expectations for rail carriers in meeting their
statutory obligation to provide service upon reasonable request
pursuant to 49 U.S.C. Sec. 11101. Lastly, we believe some rail service
challenges can be forestalled by requiring all the Class I railroads to
develop annual rail service assurance plans, which will provide a basis
for the Board and industry stakeholders to conduct annual assessments
of intended service versus actual service, and to identify and address
potential issues that otherwise may result in future service
deficiencies.
The ATWG urges the Board to quickly adopt these proposals to
encourage better freight rail service now and in the future.
Sincerely,
Agricultural Transportation Working Group
Agricultural Retailers Association.
American Farm Bureau Federation.
American Feed Industry Association.
American Sheep Industry Association.
American Soybean Association.
American Sugar Alliance.
Consumer Brands Association.
Corn Refiners Association.
Equipment Dealers Association.
Forest Resources Association.
Fresh Produce Association of the Americas.
Growth Energy.
Hardwood Federation.
Institute of Shortening and Edible Oils.
Leather and Hide Council of America.
National Aquaculture Association.
National Association of Wheat Growers.
National Corn Growers Association.
National Cotton Council.
National Council of Farmer Cooperatives.
National Farmers Union.
National Grain and Feed Association.
National Grange.
National Milk Producers Federation.
National Oilseed Processors Association.
National Pork Producers Council.
North American Meat Institute.
North American Millers' Association.
Pet Food Institute.
Specialty Soya and Grains Alliance.
The Fertilizer Institute.
USA Rice.
U.S. Wheat Associates.
CC: President Joseph R. Biden
Tom Vilsack, Secretary of U.S. Department of Agriculture
Pete Buttigieg, Secretary of U.S. Department of Transportation
Debbie Stabenow, Chair, Senate Agriculture Committee
John Boozman, Ranking Member, Senate Agriculture Committee
David Scott, Chair, House Agriculture Committee
Glenn ``GT'' Thompson, Ranking Member, House Agriculture Committee
Maria Cantwell, Chair, Senate Commerce Committee
Roger Wicker, Ranking Member, Senate Commerce Committee
Peter DeFazio, Chair, House Transportation and Infrastructure
Committee
Sam Graves, Ranking Member, Transportation and Infrastructure
Committee
Statement of Patricia Davitt Long, President, Railway Supply Institute,
Submitted for the Record by Hon. Eric A. ``Rick'' Crawford
Chairman Payne, Ranking Member Crawford, and Members of the
Subcommittee:
Thank you for convening this hearing to focus on the Board Member
views on Surface Transportation Board Reauthorization and for the
opportunity to submit comments for the record.
As way of background, the Railway Supply Institute (RSI) is an
international trade association representing more than 160 companies
involved in the manufacture of goods and services in the locomotive,
freight car, maintenance of way, communications and signaling, and
passenger rail industries. RSI members provide critical products to
Class I and short line freight railroads, shippers, Amtrak, and transit
authorities nationwide and work with these customers to create new
products or services that drive enhancements in safety and efficiency
across their networks.
These systems are supported by an extensive, domestic railway
supply industry that has been a dynamic and vital part of the U.S.
economy for more than 200 years, encompassing 125,000 jobs across all
50 states and paying an average wage 40 percent higher than the
national average.\1\ This industry also contributes billions of dollars
to the national economy every year, producing $10.7 billion in federal
taxes and over $6 billion in state and local taxes every year.\2\
Without this robust domestic rail supply industry, our nation's
passenger and freight railroads simply could not meet their customers'
needs.
---------------------------------------------------------------------------
\1\ Tracking the Power of Rail Supply, The Economic Impact of
Railway Suppliers in the U.S. https://www.rsiweb.org/Files/EIS%202018/
RSI-Infographic%20FINAL.pdf
\2\ Id.
---------------------------------------------------------------------------
As you may know, the Railroad-Shipper Transportation Advisory
Council (RSTAC) is a stakeholder committee of the Surface
Transportation Board (the Board) which was established pursuant to the
ICC Termination Act of 1995 (Public Law 104-88, 109 Stat. 803). The
Council consists of senior officials representing large and small
shippers, and large and small railroads as well as ex-officio members
including the Secretary of the Department of Transportation as well as
the members of the Board.
The RSTAC also provides advice on regulatory and legislative policy
matters to the Board, the Secretary of Transportation, the Senate
Committee on Commerce, Science and Transportation, and the House
Transportation and Infrastructure Committee.
The significant transportation policy matters upon which the RSTAC
advises are focused, with particular attention, to issues of importance
to small shippers and small railroads including, pursuant to the
statute; car supply, rates, competition, and effective procedures for
addressing legitimate shipper and other claims.
However, for nearly three decades since the forming of the RSTAC,
freight railcar ownership has shifted away from railroads, with non-
railroad entities now owning 74% of the entire freight railcar fleet.
From time to time the RSTAC has invited freight railcar lessors to make
presentations at its meetings, however discussions about car
availability and other similar matters regularly take place without any
representation from lessors, who as owners of 57% of the North American
fleet are best informed about fleet composition. Only an Act of
Congress can provide freight railcar lessors, and the RSTAC, with any
regular representation.
About Independent Leasing Companies
57% of the 1.6 million freight railcars in North America
are owned by non-railroad, independent leasing companies. Of the
remainder, 17% are owned by shippers, 16% by railroads, and 10% by TTX
Company.
Today, the replacement value of the non-railroad-owned
railcar fleet is estimated to be in excess of $100 billion.
Proposed Technical Change
The RSTAC was created by statute and as such is not
subject to the Federal Advisory Committee Act. Thus, the only way for
lessors to be regular participants in RSTAC meetings is to amend the
statute to provide for such representation. RSI is proposing a
technical change to 49 U.S. Code Sec. 1325. Railroad-Shipper
Transportation Advisory Council which would add two non-voting seats to
the RSTAC that shall be comprised of representatives of freight railcar
lessors.
This proposed change would ensure that the RSTAC's advice to the
Secretary, the Board, and to Congress, consists of first-hand knowledge
and input from the constituency which owns the majority of freight
railcars in North America.
Conclusion
RSI members will continue investing and doing all we can to support
our railroad and shipper customers in serving the mobility and economic
development needs of communities across the country. We appreciate the
opportunity to provide these recommendations on critical issues
affecting our industry and will continue working with Members of
Congress to formulate policies that enhance rail safety, security, and
efficiency.
Appendix A
Proposed changes to 49 USC 1325.
Railroad-Shipper Transportation Advisory Council
SEC. Railroad-Shipper Transportation Advisory Council amendments.
(a) Subsection (a) of section 1325 of title 49, United States
Code, is amended by striking ``19'' and inserting in lieu thereof
``21'',
(b) Paragraph (1) of such subsection 1325 (a) of title 49, United
States Code is amended by inserting ``the railcar leasing,''
immediately before ``and rail shipper industries.'',
(c) Paragraph (3) of such subsection 1325 (a) of title 49 United
States Code, is amended by;
(1) striking ``6'' and inserting in lieu thereof ``8'',
(2) striking ``Chairman).'' and inserting in lieu thereof
``Chairman) and''
(3) adding at the end thereof the following new subparagraph,
``(C) two shall be representatives of rail car lessors.'',
(d) renumbering paragraphs ``(4)'' and ``(5)'' as paragraphs
``(5)'' and ``(6)'' respectively, and--
(e) inserting the following new paragraph (4)--
``(4) For purposes of this section the terms ``rail car
leasing'' and ``rail car lessors'' shall mean entities--
``(A) that own a variety of different types of rail cars and
lease such rail cars to railroads or shippers under contracts that
require the lessor to provide maintenance and administrative services,
and
``(B) that are not owned or controlled by an entity or
entities which are rail carriers or shippers.''
Position Paper from the Railway Supply Institute, Submitted for the
Record by Hon. Eric A. ``Rick'' Crawford
Support Railcar Lessor Representation on the Railroad-Shipper
Transportation Advisory Council (RSTAC)
ISSUE: The RSTAC currently lacks representation from independent
freight railcar lessors. RSI supports the addition of two non-voting
seats to the RSTAC to provide representation for freight railcar
lessors. This would ensure the Council's advice to USDOT, the STB, and
Congress has the first-hand knowledge and input from the constituency
that owns the majority of freight railcars in North America.
BACKGROUND: The Railroad-Shipper Transportation Advisory Council
(RSTAC) is a statutory Council that provides advice on regulatory,
policy, and legislative matters to the Surface Transportation Board
(STB), the Secretary of Transportation, the Senate Committee on
Commerce, Science and Transportation, and the House Transportation and
Infrastructure Committee. The Council consists of senior officials
representing large and small shippers and railroads, as well as ex-
officio members including the Secretary of the Department of
Transportation and the five Surface Transportation Board members.
For nearly three decades since the forming of the RSTAC, freight
railcar ownership has shifted away from railroads, with non-railroad
entities now owning 74% of the entire freight railcar fleet. However,
leasing companies still lack any form of representation on the Council.
Only an Act of Congress can provide freight railcar lessors with
nonvoting representation on the RSTAC.
About the RSTAC
The Railroad-Shipper Transportation Advisory Council
(RSTAC) was established pursuant to the ICC Termination Act of 1995
(Public Law 104-88, 109 Stat. 803) to advise the STB, USDOT, and
relevant congressional committees on key policy issues affecting the
industry.
The RSTAC is directed by statute to provide input on
``rail transportation policy issues it considers significant, with
particular attention to issues of importance to small shippers and
small railroads including car supply [emphasis added], rates,
competition, and effective procedures for addressing legitimate shipper
and other claims.''
The RSTAC is currently comprised of a mix of 19 voting
and non-voting members. 9 voting seats are split evenly between small
shippers and Class II or III railroads, while the remaining non-voting
seats are currently split between the ex officio members,
representatives of the Class I railroads, and representatives of large
shipper organizations.
About Independent Leasing Companies
57% of the 1.6 million freight railcars in North America
are owned by non-railroad, independent leasing companies. Of the
remainder, 17% are owned by shippers, 16% by railroads, and 10% by TTX
Company.
Today, the replacement value of the non-railroad-owned
railcar fleet is estimated to be in excess of $100 billion.
Proposed Amendment
A proposed amendment to 49 U.S. Code Sec. 1325.
Railroad-Shipper Transportation Advisory Council would add two non-
voting seats to the RSTAC that shall be comprised of representatives of
freight railcar lessors.
Appendix
----------
Questions from Hon. Peter A. DeFazio to Martin J. Oberman, Chairman,
Surface Transportation Board
Question 1. The Class Is finally acknowledge they have a service
problem, but in statements made before us three months ago and your
Board a month ago, they don't acknowledge that there is a fundamental
problem with the industry as a result of Wall Street's influence. Your
testimony states that the STB has sole authority over railroad mergers
and acquisitions.
Question 1.a. Do you have the authority to review the acquisition
if a non-railroad carrier seeks to purchase a Class I, or the ever-
consolidating short-line railroad industry?
Answer. We do not presently have the authority to review the
acquisition of a Class I carrier by a non-railroad carrier where the
non-railroad carrier does not otherwise control another rail carrier.
See 49 U.S.C. Sec. 11323(a). Where the non-railroad carrier already
controls another railroad carrier, the Board has authority to review
the acquisition of other railroads by the non-railroad carrier.
Accordingly, the Board has authority to review the acquisition of a
short-line railroad carrier by a non-railroad carrier holding company
if the holding company already controls another railroad carrier.
Question 1.b. Based on what has happened with Wall Street's focus
on operating ratios and its subsequent disastrous impact to rail
service, do you think that is good for railroad shippers or American
consumers for the STB to not have this authority?
Answer. In my view, the Board should have such authority so that
the Board can consider whether any such acquiror of a Class I railroad
will prioritize things like shareholder returns over service when
determining whether the merger is consistent with the public interest
under 49 U.S.C. Sec. 11324.
Question 2. We are now a month out from your emergency orders to
require service recovery plans and additional reporting information.
You stated at the time that the action to require this additional
information ``may not be the final result'' and that the Board's
decision was ``an immediate step.'' You also highlighted the rail
service problems causing inflationary pressures on both food and fuel.
These are emergencies.
Question 2.a. Is the Board preparing to take additional corrective
action?
Answer. Yes, on June 13 the Board entered a follow up order to its
May 6 order critiquing the carriers ``service recovery plans'' and
ordering corrections to the initial filings by the Class Is and
additional information. We will carefully monitor the carriers' actual
conduct in attempting to recover for their service deficiencies. I
would like the Board to take action soon on the proposal in Revisions
to Regulations for Expedited Relief for Service Emergencies, EP 762,
which, if adopted, would make changes to the Board's processes for
providing relief in times of emergency. In addition, the Board is
advancing several rulemakings that could have the effect of increasing
the leverage of rail users to secure better rail service: Final Offer
Rate Review, EP 755, a rulemaking that would establish a final offer
procedure for challenging railroad rates in small rate disputes; Joint
Petition for Rulemaking to Establish a Voluntary Arbitration Program
for Small Rate Disputes, EP 765, a rulemaking that would establish an
arbitration procedure for challenging railroad rates in small rate
disputes; and Reciprocal Switching, EP 711, a rulemaking that would
amend the Board's regulations concerning reciprocal switching. These
proposed rules, if adopted, could provide additional tools to
ameliorate the recent service problems. The Board is also considering
using its authority to permanently collect more detailed information on
service reliability and has been considering comments recently filed on
this topic from interested parties.
Question 2.b. Will you seek to use your directed service authority
at 49 USC 11123?
Answer. As of this writing, the Board has received a petition for a
directed service order under 49 U.S.C. Sec. 11123, and on June 17
issued an order granting that petition in part. I will not hesitate to
encourage the Board to utilize its authority under this statute when
appropriate to remedy serious service deficiencies.
Question 2.c. Why has the Board not issued civil penalties
authorized at 49 USC 11901?
Answer. In its June 13 order issued in Docket EP 770 (Sub-No. 1),
the Board threatened civil penalties against certain carriers who
violated the Board's prior order requiring the production of service
recovery plans. The Board has indicated its willingness to issue
penalties under 49 U.S.C. Sec. 11901 in situations where rail carriers
have violated a Board statute, regulation, or a Board order and when it
determines that penalties will provide the correct incentive. Another
incentive would be for rail users to seek monetary damages for
violation of the common carrier obligation, unreasonable practices, or
breach of contract.
Question 3. Rail labor and rail shippers have rarely agreed on
things, but they both recommend that we do a better job of defining the
common carrier obligation. It is my understanding that railroad tariffs
and contracts do not include agreed upon service delivery metrics or
remedies that can be pursued when those service delivery metrics are
not met.
Question 3.a. Does erratic service constitute meeting the common
carrier obligation?
Answer. Depending on the specific circumstances of the particular
shipper and the reported service failures, in my view, erratic service
over a period of time could rise to the level of violating the common
carrier obligation.
Question 3.b. What about forcing shippers to accept less frequent
service?
Answer. Similarly, in my view, this is a very fact specific inquiry
and under appropriate circumstances, less frequent service forced upon
a shipper could constitute a common carrier violation.
Question 3.c. How about not showing up at all?
Answer. Again, depending on the circumstances, a carrier's failure
to provide service upon request may result in violation of the common
carrier obligation.
Question 3.d. Should tariffs or contracts with railroads include
service delivery requirements and agreed upon remedies when the service
delivery requirements are not met?
Answer. Yes, provided the service delivery requirements are
sufficiently detailed to meaningfully stipulate the service that must
be performed. To be clear, while I support the inclusion of service
requirements in rail transportation contracts, review and enforcement
of those agreements is generally within the jurisdiction of the courts,
not the Board.
Question 4. Both the USDOT and the USDA, along with a Wall Street
analyst who testified at your emergency rail service hearing, suggested
that financial incentives should be part of the solution to our current
rail service problems.
Question 4.a. How often has the STB assessed fines for poor
service?
Answer. The STB has exercised its authority to impose penalties
only once since it was created in 1996. In that instance, the STB
imposed a $250,000 penalty on a railroad carrier for knowingly
violating Board orders requiring that the carrier provide certain
information on blocked crossings. The Board imposed this penalty under
49 U.S.C. Sec. 11901(a). The total amount of the penalty reflected the
fact that the Board had imposed a penalty for multiple days during
which the violation remained unabated.
Question 4.b. Why aren't you assessing these fines more often?
Answer. The Board can issue fines and penalties when a rail carrier
has violated a Board statute, regulation, or a Board order. In some
instances, which are infrequent, a carrier subject to our jurisdiction
will fail to fully adhere to our licensing authority, for example, and
we have used the threat of fines to help bring that carrier into
compliance. Shippers and rail users, whether in service or rate
complaints, are generally more interested in seeking redress through
monetary damages as compensation for their injuries, not the imposition
of monetary penalties, which are paid to the U.S. Treasury.
Question 4.c. Are there other financial incentives we should be
considering in reauthorization, such as increasing fines or something
else?
Answer. I would support Congress increasing the dollar amount of
fines authorized under 49 U.S.C. Sec. 11901, and providing that the
Board can impose those fines for violation of the common carrier
obligation without, under the appropriate circumstances, requiring a
showing of intent.
Question 4.d. Railroads have the ability to assess demurrage and
accessorial fines and yet two-thirds of the nation's railcars are
privately-owned or leased. There does not seem to be any financial
incentive for railroads to provide good service. Should railcar owners
have the ability to assess damages when the railroads do not provide
promised service in a timely way?
Answer. This very issue--whether private car owners and lessors
should be entitled to compensation from railroads for delay in
returning private cars--is pending before the Board. The Board issued a
decision on April 1, 2022 and sought public and stakeholder comment.
The comment period closes on August 1, 2022. I look forward to
reviewing the comments and moving forward with this proceeding informed
by the views we receive.
Questions from Hon. Stephen F. Lynch to Martin J. Oberman, Chairman,
Surface Transportation Board
Question 1. I want to know more about the environmental impacts of
rail and how the board can impact climate change. Rail is three to four
times more fuel efficient than trucks, on average, meaning moving
freight by rail rather than truck reduces greenhouse gas emissions by
up to 75 percent. I understand several companies would like to ship by
rail as a way of meeting their own environmental goals. I believe we
need policies that encourage more freight to move by rail because what
we hear is happening is that Wall Street is pushing the railroads to
only carry the most profitable freight leaving companies scrambling to
move their freight by truck.
Question 1.a. Mr. Oberman, how do we make sure we're moving more
freight by rail if the freight railroads themselves aren't aggressively
seeking to grow?
Answer. The Board can encourage moving freight by rail by providing
counter incentives to the Wall Street pressures you identified in your
question. While I understand the railroad carriers' efforts to provide
a return to their shareholders, the carriers are nonetheless part of a
regulated industry which requires that they also conduct their
businesses in the public interest. They have market power with respect
to certain geographies and commodities, and with that power comes
important public responsibilities. There is a point where the drive for
ever greater shareholder profits cannot be permitted to corrode the
public interest. In my view, the carriers have gone beyond that point
in recent years, and I have been encouraging the Board and its staff to
explore mechanisms which will create a better balance within the
railroad carriers' incentive structure so that they more appropriately
consider the needs of present and potential rail customers in order to
move more freight from highways to rail.
Question 1.b. What is the STB's role in that?
Answer. The Board's broad responsibility is to protect the public
interest in having a reliable, safe, efficient, and accessible
interstate rail network. The Board does so by, among other things,
enforcing the carriers' common carrier obligation, by providing a forum
for captive shippers to challenge unreasonable rates, by closely
scrutinizing the potential competitive effects and other impacts to the
public of railroad combinations, and by providing transparency where
appropriate.
Question 1.c. Is it enforcing their common carrier obligation?
Answer. Yes, but we can and should do more and, as I stated at the
hearing, I am actively exploring ways to put more teeth in the common
carrier obligation through regulations and case decisions.
Questions from Hon. Peter A. DeFazio to Patrick J. Fuchs, Member,
Surface Transportation Board
Question 1. If Amazon, UPS, FedEx, and even the USPS can track a
package, why can't the Class I railroads spend a little bit of their
record profits and provide customers accurate tracking and arrival
estimates? The technology exists, so why hasn't STB mandated that?
Answer. Current rail service problems are exacerbated by imprecise
tracking data and inaccurate arrival estimates. Many rail customers
need greater supply chain visibility to better plan their operations
and mitigate the effects of delays.
I am aware of several rail carrier initiatives to improve
customers' visibility. First, some carriers and suppliers have created
a coalition,\1\ called RailPulse, to create a neutral telematics
platform with car-based GPS and other sensor-derived data. With
assistance from the Federal Railroad Administration and the
Commonwealth of Pennsylvania, RailPulse has recently partnered with
RailInc to operate the platform and started work on its pilot
iteration. Second, certain Class I rail carriers are linking
locomotive-based GPS data to specific cars in the train consist. Third,
some carriers, and independent companies, are building new application
programming interfaces to integrate different data sources and provide
an improved user experience. Finally, on a longer-term basis, some
companies, in collaboration with rail carriers, are working to develop
battery-electric rail cars that would provide real-time tracking data.
In short, rail carriers are deploying capital and pursuing
opportunities to upgrade their tracking technology.
---------------------------------------------------------------------------
\1\ The coalition now includes: one of the two largest carriers
both in the East (Norfolk Southern) and in the West (Union Pacific);
two of the largest holders of short line rail carriers (Genesee &
Wyoming and Watco); and three major suppliers (GATX Corporation,
TrinityRail, and The Greenbrier Companies).
---------------------------------------------------------------------------
When I have questioned carriers, suppliers, and customers as to why
progress has not happened sooner, most state that carriers' automatic
equipment identification (AEI) system, which uses radio frequency tags
to track rolling stock as it passes trackside readers installed in many
areas, reduces the marginal benefit of GPS or similar changes. To be
clear, because the AEI system has gaps in coverage and therefore in the
provision of real-time data, rail customers would still benefit from
more comprehensive car tracking. Beyond the existence of the AEI
system, many state that characteristics of the rail industry create
complications for visibility enhancements, such as the frequency by
which cars traverse on multiple carriers (potentially implicating
separate carrier platforms), the different ownership structures of
cars, and the security requirements of a mode that uses fixed guideways
to transport a significant amount of hazardous chemicals. However,
while these challenges may have slowed the deployment of visibility
improvements, the aforementioned initiatives suggest the industry is
now making progress in the absence of a mandate.
That is not to say the Board does not have an important role in
overseeing rail service and practices. The Board has taken action to
increase information available to customers. In response to current
service problems, the Board's order on service recovery plans included
a requirement that certain carriers report, for the first time, service
reliability indicators--and six-month performance targets \2\--on trip
plan compliance \3\ and first-mile / last-mile service.\4\ Separately,
after considering rail customers' concerns about carriers' demurrage
charges, which are affected by rail service, the Board issued a final
rule requiring rail carriers to include on or with their demurrage
invoices the original estimated time of arrival of each car, as well as
other car information.\5\ The Board is also continually examining ways
to improve our data collection, and it recently requested comment on
increasing the transparency of first-mile / last-mile service data.\6\
---------------------------------------------------------------------------
\2\ Urgent Issues in Freight Rail Serv.--R.R. Reporting (May 6
Order), EP 770 (Sub-No. 1), slip op. at 4 (STB served May 6, 2022)
(requiring ``BNSF, CSXT, NSR, and UP to file service recovery plans
explaining the specific actions that each carrier will take to improve
service and the specific metrics by which it will evaluate its progress
toward such improvements . . . [and including], at a minimum, a time
series of key service performance indicators for the past 36 months
and, for each indicator, a target that the carrier expects to hit at
the end of the six-month reporting period'' (citations omitted)).
\3\ The May 6 Order requires all Class I carriers to submit on a
weekly basis for six months beginning May 18, 2022: ``(i) For rail cars
moving in manifest service, the percentage of cars constructively or
actually placed at destination within 24 hours of the original
estimated time of arrival. (ii) For the following types of unit trains
(grain unit, coal unit, automotive unit, crude oil unit, and ethanol
unit), the percentage of trains constructively or actually placed at
destination within 24 hours of the original estimated time of arrival.
(iii) For intermodal traffic, the percentage of trains that arrive at
destination within 24 hours of the original estimated time of arrival.
For movements involving more than one rail carrier in each of the
specified categories, the destination for the upstream carrier shall be
treated as the interchange location with the subsequent railroad.'' May
6 Order, EP 770 (Sub-No. 1), slip op. at 6 (footnote omitted).
\4\ The May 6 Order requires all Class I carriers to submit on a
weekly basis for six months beginning May 18, 2022: ``For each
operating division and for the system, the percentage of scheduled
spots and pulls that were fulfilled.'' May 6 Order, EP 770 (Sub-No. 1),
slip op. at 6.
\5\ Demurrage Billing Requirements, EP 759 (STB served April 6,
2021).
\6\ First-Mile / Last-Mile Service, EP 767 (STB served Sept. 2,
2021) (seeking information on potential first-mile / last-mile (FMLM)
service issues and the design of potential metrics to measure such
service).
---------------------------------------------------------------------------
The regulatory process for an industry-wide tracking technology
mandate, which would involve operational, economic, and legal
considerations, would take a significant amount of time and staff
resources during a period of accelerating technological progress in the
industry as well as urgent on-going proceedings at the Board. As such,
I think the Board's focus and resources are best directed at continuing
to further immediate public accountability for service reliability and
expeditiously and fairly adjudicating the proceedings before it, rather
than mandating industry-wide tracking technology. However, I expect the
Board would consider the accuracy of tracking and arrival estimates if
presented in case-specific service and practice proceedings.
Question 2. A number of shippers whose commodities are currently
exempt from the STB's purview would like to be able to file a complaint
with the STB.
Do you think it makes sense to review the list of commodity
exemptions every five years?
Answer. The Board is currently conducting a review of its commodity
exemptions, and I have carefully considered rail customer comments on
that pending proceeding.\7\ As a general matter, the Board should
continually evaluate market conditions and other industry changes,
particularly as they relate to underlying policy rationales for
existing regulations. The Board should also expeditiously and fairly
consider requests for regulatory changes.
---------------------------------------------------------------------------
\7\ See generally, Docket No. EP 704 (Sub-No. 1), Review of
Commodity, Boxcar, & TOFC/COFC Exemptions.
---------------------------------------------------------------------------
Beyond our on-going review, the Board has acted on both class and
individual exemptions. For example, the Board issued a final rule that
revoked, in part, the class exemption that covered rail transportation
of certain agricultural commodities so that the exemption would not
apply to the regulation of demurrage, thereby making the agricultural
commodities exemption consistent with similar class exemptions covering
non-intermodal rail transportation.\8\ In response to individual rail
customer requests, the Board also has enabled further consideration of
complaints by finding partial revocation of certain exemptions,
applicable to particular customers, necessary to carry out the rail
transportation policy at 49 U.S.C. 10101.
---------------------------------------------------------------------------
\8\ Exclusion of Demurrage Regulation from Certain Class
Exemptions, EP 760 (STB served Feb. 28, 2020).
---------------------------------------------------------------------------
I expect our on-going exemption review will address current
circumstances, and the Board can address changing circumstances on its
own initiative (based on continuous market and industry evaluation) or
in response to petitions for rulemaking or individual petitions for
exemption revocation. Through these available processes, the Board can
ensure its effectiveness by continuing to improve its data analytics
capability, transportation industry expertise, and data collection, so
that the Board can respond nimbly--on a continuous basis--to changing
circumstances and individual petitions. In addition, when its review is
not cabined to a particular set of regulations, the Board might be more
open to considering the effects of a changed circumstance on its
regulations more broadly. As a result, the Board's focus and resources
should be directed toward increased effectiveness in continuous market
and industry evaluation, which would render unnecessary a fixed
interval review on a specific set of regulations.
Question from Hon. Stephen F. Lynch to Robert E. Primus, Member,
Surface Transportation Board
Question 1. For intercity rail, I want to be certain we are
ensuring that intercity rail is safe and that we can expand services.
Since the STB has economic and certain approval authorities for
intercity passenger rail, I want to make sure that areas that the
average rider would consider important are deemed important by the STB.
Will the STB conduct on-time performance investigations even
without being petitioned? Which routes do you anticipate investigating?
Answer. As a strong supporter of passenger rail, I share both your
interest in the expansion of intercity passenger rail service and
concerns related to its often poor On-Time Performance (OTP) metrics.
Across the country, there is a real desire to expand intercity
passenger rail service, for it holds the promise of not just connecting
communities, but potentially generating growth opportunities for areas
that today are cut off from economic centers in their respective state
and/or region. From the very beginning of his Administration, President
Biden aptly prioritized the need to build a more robust national
intercity passenger rail network and Congress, in a bipartisan and
bicameral manner, subsequently provided the necessary funding in the
Infrastructure Investment and Jobs Act, to bring this vision into
reality.
However, the ultimate success of this effort will not be predicated
on the President's vision, or the infusion of capital provided by
Congress. Rather, it will be determined by the cooperation of the
freight railroads who control most of the rail network in the country
and who, by and large, have not been amicable partners when it comes to
allowing intercity passenger rail service to operate efficiently along
its lines. At issue is preference. Though the Rail Passenger Service
Act of 1970, which created Amtrak, specifically called for intercity
and commuter rail service provided for or by Amtrak to be given
preference over that of freight trains, to date, that has not been the
case. In fact, freight train interference is the leading cause of rail
passenger delays and has been so since Amtrak was brought into
existence.
In the Passenger Rail Investment and Improvement Act of 2008,
Congress authorized the Board to investigate and adjudicate issues as
they relate to the on-time performance of Amtrak's intercity passenger
rail service. Following the Federal Railroad Administration's adoption
of a final rule establishing metrics and standards for measuring the
performance and service quality of Amtrak's intercity passenger trains,
the Board has worked to establish a new Passenger Rail Unit to better
address the concerns of intercity passenger rail OTP. This Unit and the
Board as a whole will use its investigatory powers in addition to
responding to formal complaints brought forward by concerned parties.
Certainly, there are intercity passenger routes today that have
historically operated on the poorer side of the OTP spectrum, and the
Board is actively addressing passenger rail OTP issues on our Nation's
most troublesome routes.
Question from Hon. Stephen F. Lynch to Karen J. Hedlund, Member,
Surface Transportation Board
Question 1. For intercity rail, I want to be certain we are
ensuring that intercity rail is safe and that we can expand services.
Since the STB has economic and certain approval authorities for
intercity passenger rail, I want to make sure that areas that the
average rider would consider important are deemed important by the STB.
Will the STB conduct on-time performance investigations even
without being petitioned? Which routes do you anticipate investigating?
Answer. The Board is closely monitoring Amtrak's customer on-time
performance (OTP) statistics, with particular attention to long-
distance, Northeast Corridor, and state-supported routes. The Board is
well aware that Amtrak's OTP is often poor, particularly with respect
to long-distance trains, which comprise nine of the ten worst-
performing routes (all below 55%). (OTP by route appears in data
published by the Federal Railroad Administration (FRA) under Section
207 of the Passenger Rail Investment and Improvement Act of 2008
(PRIIA), and can be found online at https://railroads.dot.gov/elibrary/
fy22-q1-customer-otp.)
Section 213 of PRIIA directs the STB ``to determine whether and to
what extent delays or failure to achieve minimum standards are due to
causes that could reasonably be addressed by a rail carrier over whose
tracks the intercity passenger train operates or reasonably addressed
by Amtrak or other intercity passenger rail operators.'' In preparation
for undertaking these responsibilities, the Board has appointed a
Passenger Rail Unit (PRU) Development Team to determine and fill
staffing \1\ and contracting needs, develop database capabilities, and
craft strategies for addressing potential OTP investigations.
---------------------------------------------------------------------------
\1\ Section 22309 of the bipartisan Infrastructure Investment and
Jobs Act authorized up to ten new positions to staff the PRU.
---------------------------------------------------------------------------
While no complaint has yet been filed, the Board is analyzing the
FRA data and evaluating options for investigation including actively
working to develop appropriate investigative procedures ``to review the
accuracy of the train performance data and the extent to which
scheduling and congestion contribute to delays.''
Some of the issues I expect will be examined are:
(1) To what extent do the current procedures of Amtrak and the
host railroads for reporting, describing, and adjudicating train delays
fairly portray the predominant cause of, and entity responsible for,
each such delay.
(2) With respect to freight-train interference, to what degree is
the host railroad simply ignoring Amtrak's right of ``preference''
under 49 U.S.C. 24308(c) in dispatching trains.
(3) Is the host railroad giving Amtrak advance notice of
circumstances that will result in delays to Amtrak trains.
(4) For routes on which the FRA and/or states have made
investments in new infrastructure to reduce delays and/or increase
frequencies, is the host railroad living up to its commitments set
forth in any ``Service Outcomes Agreement'' entered into by the
relevant parties.
(5) Why state-supported routes generally perform better than long-
distance routes.
Finally, we are aware that adoption by the Class I carriers of
``Precision Scheduled Railroading'' and similar operating approaches,
in addition to recent labor reductions, has created challenges for both
Amtrak and shippers. See, e.g., Urgent Issues in Freight Rail Service,
EP 770 (STB served May 5, 2022) (describing the various potential
causes of the current service crisis and shipper testimony received at
the Board's April 2022 rail service hearing). We endeavor to have the
carriers remedy the current freight service crisis while successfully
addressing the OTP requirements of intercity passenger service.
[all]
File and source
- File
- CHRG_chrg-117hhrg48459_chrg-117hhrg48459.htm
- Size
- 256,348 bytes
- SHA-256
- 013cea0bad781d286fe0e5edf2828f19aa779181d6b832539e35d7d44bcab14e
- Original
- No public link identified.