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Rail News: Federal Legislation & Regulation

Report: U.S. freight rail regs are outdated, need updating


Federal regulation has not kept pace with the industry's transportation and should be replaced with one better-suited for today's freight-rail system, says a new report from the National Research Council's Transportation Research Board.

Current policies that were designed to protect rail shippers who lack transportation options from excessive rates are not working for shippers of most commodities, including grain, the report states. "More appropriate" procedures are necessary to resolve rate disputes without threatening the revenue railroads need to pay for infrastructure investments, according to a press release issued by the National Academies.

The report, "Modernizing Freight Rail Regulation," was mandated by Congress and was scheduled to be discussed during a Surface Transportation Board (STB) hearing scheduled for this morning.

The report noted that the Staggers Rail Act of 1980 eased regulations governing railroad pricing and operations, and allowed railroads to address decades of declining rail traffic, stagnant productivity and oversized networks. By the late 1990s, the act had worked to spur development of a financially stronger and more productive railroad industry that could compete with trucks, invest in capacity and respond to shippers' needs.

Today, about one-third of all freight traffic is moved by rail. In particular, shippers of grain, coal and chemicals remain especially dependent on rail. Since 2000, their rates have been rising faster than inflation, the report finds.

The committee that wrote the report recommended the U.S. Department of Transportation develop a new method for comparing disputed rates to those charged in competitive rail markets for comparable shipments.

The replacement would, in turn, allow the STB to use faster and more economical methods for judging whether a shipper paying an unusually high rate is entitled to relief, the report states.

The committee also recommended allowing parties in rate arbitrations to propose reciprocal switching — allowing shippers to transfer freight at the interchange of track owned by competing railroads — as a remedy for unreasonable shipping rates.

Contact Progressive Railroading editorial staff.

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