Rail-Shipper Panel Proposes STB Changes

An advisory panel of railroads and freight shippers that meets regularly with the Surface Transportation Board is urging Congress to adopt cargo switching rules favored by shipper groups, but it bogged down over access to competing long-haul railroads.

The Railroad-Shipper Transportation Advisory Council said in a rare "white paper" that it favors changing the law to require railroads to provide their customers with reciprocal switching to other nearby carriers, much as Canada's rail lines do. Yet the group said its members failed to agree on a related issue - whether Congress should open up a longstanding "bottleneck" rule to give rail shippers access to more long-haul competition.

Currently, a railroad serving an entire long-haul route for the shipper can refuse to even quote rates to connect with a competitor on the same route. Shipper advocacy groups say that helps create captive shippers, who cannot use rate competition to try to get lower pricing.

On other major issues of potential policy change, RSTAC took positions backing the railroad industry and urged Congress not to do more to alter the business and regulatory practices that have emerged since railroads were deregulated in 1980.

The panel issued its recommendations as the industry waits for Sen. Jay Rockefeller (D-West Virginia) to put a rail regulatory reform bill before the Commerce, Science and Transportation Committee that he chairs.

RSTAC was created under a 1995 law to advise the Department of Transportation, the STB and Congress "on rail issues affecting small shippers and small railroads." Its 15-member panel includes nine voting members from small railroad companies and small shippers, while the other six represent large railroads and shippers.

The current chairman is Rick Webb, CEO of the Watco Companies, owner of 21 short line railroads. The vice chairman is J. Reilly McCarren, who chairs the board of short line Arkansas & Missouri Railroad. RSTAC's secretary is Terry Voss, senior vice president for rail-truck transportation at grain cooperative Ag Processing.

"We understand we may be asking Congress to thread the proverbial needle with this advice," RSTAC said of its white paper proposals. The panel also indicated that not all of its nine voting members backed its recommendations.

RSTAC said railroads should not be stripped of an antitrust exemption that shields them from many types of court challenges because shipper complaints are handled by the STB. Many shippers hope Congress will remove at least some of that shielding.

RSTAC backed the current rate challenge process used by the STB, under which shippers must construct on paper a separate "stand-alone" railroad to compare against the actual railroad's costs.

It also urged Congress not to prevent the use of "paper barriers" in contracts between large carriers and short lines, clauses that lock in a small railroad's shippers to the original long-haul carrier that served their route. But RSTAC would subject the barrier clauses to a new reciprocal switching standard.

Click here to access the RSTAC white paper.

--By John D. Boyd