Senate committee backs railroad reform bill

April 2, 2015

Sen. John Thune (R-South Dakota), chairman of the Senate Commerce Committee, on March 19 introduced legislation that would reauthorize the Surface Transportation Board (STB) for the first time in the STB’s 20-year history.

The move drew praise from the Consumers United for Rail Equity (CURE), a national coalition representing freight rail shippers. Senate Commerce Committee Ranking Member Bill Nelson (D-Florida) co-sponsored the Surface Transportation Board Reauthorization Act of 2015.

The legislation is similar to a bill sponsored last year by Thune and then-Commerce Committee Chairman Jay Rockefeller (D-West Virginia). It was approved by the committee in September 2014. This legislation would provide needed protections to rail freight shippers without any negative impact on the U.S. railroad industry.

Sen. Tammy Baldwin, D-Wisconsin, on March 24 introduced the Rail Shipper Fairness Act of 2015, a bill that would make changes to the STB. The Baldwin bill would expand the membership of the STB to five members from its current three-person structure, and would make other changes in the federal oversight of freight railroads.

On March 25, the Senate Commerce Committee unanimously approved the Thune/Nelson bill, by voice vote, without amendments.

Rail competition and antitrust enforcement was one of the issues Heartland staff and board members visited with Sen. Thune and Sen. Mike Rounds (R-S.D.) about during our recent trip to Washington D.C. as part of the American Public Power Association Legislative Rally. Electric utilities rely on rail transportation to move the vast majority of coal from mine mouths to power plants. Many coal-burning electric utilities have no choice but to receive coal shipments from only one rail carrier and thus are subject to monopolistic behavior. As a result, these rail customers are unable to negotiate the terms of their rail transportation in an open and competitive market. These “captive” rail customers are charged higher rail rates while customers with more than one viable transportation option pay lower, competitively priced rates.

Over the past several years, rail customers also have experienced numerous service and reliability problems, with no relief. Heartland resources Whelan Energy Center Unit 2 and Laramie River Station both experienced coal delivery delays throughout 2014, with stockpiles at times becoming critically low. The railroads blamed delays on weather and staffing issues. Stockpiles at both plants were at target levels and holding steady by the end of the year.

Legislative remedies are required to enhance competitive transportation and improve rail customer protection mechanisms and enforcement implemented by the STB. Absent congressional action, electric utilities and the communities they serve will continue to be subject to unnecessarily higher rates and poorer service for coal transportation.