Update Transportation Research Forum Annapolis MD Commissioner Francis P Mulvey March 22 2013 STB Basics Independent economic regulatory agency for the railroad industry Jurisdiction over ID: 778289
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Slide1
Surface Transportation BoardUpdate
Transportation Research ForumAnnapolis, MDCommissioner Francis P. Mulvey March 22, 2013
Slide2STB Basics
Independent economic regulatory agency for the railroad industryJurisdiction overRailroad rate and service disputesRailroad mergers and acquisitionsRail line abandonments and constructionFreight/passenger rail relationshipsLimited jurisdiction over other modes
Slide3U.S. Railroad RegulationFederal oversight of rail industry split
STB – EconomicFRA – SafetyNTSB – Accident investigationRRB – Employee issuesSome overlapE.g., safety-related tariffs with an economic impact
Slide4U.S. Railroad RegulationRegulation
by STB preempts most state regulationZoning/permitting preemptedSome state police powers preservedSTB regulation replaces antitrust laws in some instancesRailroad mergers subject only to STB reviewPrice-fixing by railroads subject to antitrust law
Slide5U.S. Railroad RegulationSTB regulates common carrier tariffs
Are rates reasonable?Are practices and tariff provisions reasonable?STB does not regulate contractual arrangementsRailroads and shippers may ship under contractContracts need not conform to all STB rules
Slide6Common Carriage/Private OwnershipRailroad network is privately owned
7 major U.S. railroadsFederal/state government support rolesRailroads are common carriersMust respond to reasonable requests for serviceSTB resolves disputes
Slide7Changes in Regulatory ApproachRailroad industry heavily regulated until Staggers Act of 1980
Staggers required agency to let market determine rail rates whenever possibleAgency can assess reasonableness of rates when effective competition is absentEntry/Exit Restrictions Eased
Slide8Changes in Regulatory ApproachPRIIA gave STB increased passenger rail responsibility
Investigate/adjudicate Amtrak OTP issuesCost allocation methodology for Amtrak state-supported routes (approved March 2012)Cost allocation methodology for NE CorridorTwo cases filed under PRIIA to dateAmtrak challenge of OTP issues on certain CN routes (pending)Cost methodology for state routes (approved March 2012)
Slide9STB Board Members
3 Board members All current members have rail transportation backgrounds
Slide10STB STAFFProfessional staff
Lawyers, economists, financial analysts, environmental and operational specialists Diverse backgrounds #1 small agency - annual federal employee survey 4 years in a row
Slide11General Rail Industry Trends
Mixed traffic volumesRapid intermodal growthMotor vehicles upCoal – declining share of total rail trafficPetroleum boom
Oil movements via rail triple in
volume
Natural gas growth
Frac sand movements
Slide12Agricultural Rail IssuesLargely flat grain rail volumes
New traffic patterns emergingEnergy policy, ethanolIncreased GlobalizationDomestic impacts from Russia, South America, Australia Longer trains, shuttle service, fewer loading points
Slide13Chemical Rail IssuesIncrease in STB cases involving chemical industry
Non-rate casesPTC cost reportingTIH liability3 pending chemical rate cases; 1 recently settled
Slide14Rail Rates IssuesDeregulation productivity gains were passed on to shippers via lower rates; studies show this has ended
Not all markets have competitive optionsFewer long-term contractsRail is capital intensive industryCapex $5.8B (2003) $13B (2013 planned)New yards, double-tracking, intermodal facilities
Slide15Rail Rate IssuesAlways a major area of contention
STB missionProtect captive shippers from monopoly abusesPermit railroads to earn sufficient revenuesBalance key to STB dispute resolutionBroad review of competition & rate issues underway
Slide16Rail Rate Case ChangesFiling fees lowered
Major changes to rate case process in 2007Improved processesReduced costsIntroduction of small/medium rate case proceduresChanges to cost of capital computation
Slide17Rail Rates Pending Issues
EP 717 –STB denied petition by railroads to consider indirect competition in rate cases when assessing whether a railroad faces effective competition (March 19, 2012)EP 715 - Rate Regulation ReformsUnder Board review; expedited schedule EP 711 – NITL Competitive Switching Proposals Initial comments/studies filed earlier this monthReply comments due in May
Slide18Rail Rates Pending Cases
DuPont v. NS (chemical)Total v. CSXT (chemical)Sunbelt v. NS (chemical)Intermountain Power Ass’n v. UP (coal)M&G v CSXT (chemical) recently settledWestern Fuels & AEPCO cases – decided but issues remain (e.g., impact of Berkshire/BNSF transaction, court challenge)
Slide19Uniform Railroad Costing SystemGeneral purpose costing system critical to regulation
Completedimproved version of online interactive URCSmajor staff review of URCS processesPending “Make-whole adjustment” rulemakingMontana v. BNSF complaintCarrier reporting changes Update of URCS software to modern platform
Slide20Practices Cases Pending
Various tariff-related issues include:Fuel surcharges challengeCoal dustTank car routingDemurrageClean carsHazmat requirementsIncreased informal shipper concerns regarding accessorial charges/costs
Slide21STB Informal Dispute ResolutionSTB’s Rail Customer and Public Assistance Program (RCPA)
Expert staff, operations knowledgeAvailable to large & small shippersGood record on resolving disputesLess expensive and acrimoniousPending rulemaking re STB mediation/arbitration process
Slide22Congressional Agenda (Senate)
LeadershipChairman Rockefeller - upcoming retirementRanking Member – Senator ThuneSequester, budget issuesFiscal cliff deal extended short line tax creditNo recent activity on STB reauthorization bill or railroad antitrust bill PTC hazmat deadline issues
Slide23Congressional Agenda (House)
LeadershipNew T&I Chairman Bill ShusterRanking Member Rep. Nick RahallNew Railroad Subcommittee Chairman Rep. Jeff Denham Ranking Member remains Rep. Corrine BrownAgency meeting with new committee members
Slide24STB FutureOpportunity for Board to address important railroad/shipper issues
Government-wide funding issuesNew STB Board member Holdover year expires end of 2013White House nomination/Senate confirmation process
Slide25Thank youAny Questions?