Bipartisan legislation focused on freight railroad service was re-introduced this week in the United States Senate by Tammy Baldwin (D-WI) and Roger Marshall (R-KS).
Entitled, the “Reliable Rail Service Act” (S.2071), this legislation addresses the unreliable service and high cost of shipping for American businesses, according to the senators.
This legislation comes at a time when freight railroad service has received a fair amount of attention in recent years, for various reasons, including: crew shortages, unfilled car orders, delays in transportation for carload and bulk traffic, missed switches, and increased origin dwell time for released unit trains, among others.
“Across the Badger State, our farmers, small businesses, and manufacturers rely on rail service to get their products to market and make ends meet,” said Senator Baldwin. “But when rail service is unreliable, it puts their livelihoods on the line, disrupts supply chains, and drives up costs for hardworking Wisconsin families. That’s why I am proud to work with my Republican colleague to once again introduce our Reliable Rail Service Act and help level the playing field for Wisconsin workers, grow our Made in Wisconsin economy, and keep costs down for consumers.”
And Senator Marshall said that Kansas’s farmers and ranchers depend upon reliable transport of their world-class goods to the rest of the country, and Class 1 railroads are not meeting expectations, calling it a disservice to hard-working Kansans
“This bill lays out reasonable requirements for rail carriers to meet these important obligations, and I look forward to working with Senator Baldwin on getting this to the finish line,” he said.
A key component of this legislation focuses on the need to take what the senators called a commonsense approach to addressing high costs and unreliable service by clarifying the common carrier obligation—which requires rail carriers to serve the shipping public “on reasonable request.”
“Current ambiguity around this principle has contributed to insufficient rail services and exorbitant costs for American products to get to market,” they said. “Clearly defining the ‘common carrier obligation’ has taken on greater importance as the railroad industry faces consolidation and has undertaken Wall Street practices that reduce capacity on the rail network. The bill establishes specific criteria for the Surface Transportation Board (STB) to consider when evaluating whether carriers are meeting their common carrier obligation to give shippers much-needed certainty that is lacking.”
An executive summary of the legislation said that going back to the Staggers Act of 1980, the common carrier obligation still lacks a clear definition, citing a Transportation Research Board report which stated that the common carrier service obligation remains poorly defined. It also cited a need to more clearly define it, calling it an “ambiguous principle,” given how it has taken on greater importance related to today’s market conditions, increased railroad consolidation, and railroad operating decisions, which they said have resulted in reduced freight rail network capacity.
“Rail shippers are facing significant service disruptions and sky-high prices, all while profits for the nation’s largest railroads are at record highs,” it said. “In short, railroad customers, including farmers, energy producers, and manufacturers, are left with unreliable and reduced service options at higher prices. Commonsense reform is needed to balance our nation’s freight rail transportation policy and ensure railroads provide reliable service at reasonable rates as originally intended in the Staggers Act.”
In addition to clarifying the common carrier obligation definition establishing specific criteria for the STB to consider when determining whether a rail carrier has violated its obligation, the legislation also addresses the following criteria for the STB to consider in its assessment, including:
• Impacts of reductions or changes in the frequency of transportation or service;
• Availability and maintenance of reasonable local service schedules and delivery windows;
• Impacts of reductions in employment levels;
• Impacts of reductions in equipment; and
• Whether the service reasonably meets the local operational and service requirements of the requestor
It also stated that this legislation provides STB with the necessary statutory clarity along with significant discretion and flexibility to account for variations unique to local rail carrier and shipper circumstances, providing transparency for stakeholders and improve STB’s oversight to address U.S. freight rail supply chain challenges and also lower consumer costs.
This legislation received a strong endorsement from the American Chemistry Council (ACC).
“Senators Baldwin and Marshall have proposed smart and much-needed reforms to help fix persistent freight rail service failures that are plaguing chemical manufacturers,” said Chris Jahn, President and CEO of the American Chemistry Council. “If members of Congress are serious about bringing jobs back, leading global trade, and making more in America—not China—they should back this bill. We urge Democrats and Republicans alike to support this important legislation because it will help ensure that railroads deliver on their obligation to provide reliable service to U.S. manufacturers. The Reliable Rail Service Act is a vital step toward restoring accountability and reliability in our nation’s freight rail system so the U.S. can lead in global trade and job growth. We commend Senators Baldwin and Marshall for their leadership and urge Congress to act swiftly to pass this legislation to help move more American-made goods, including chemistry. When chemistry creates, America competes.”
As previously reported, freight railroads have been under a watchful eye by the STB. That was made clear in a 2023 decision it issued, entitled “Urgent Issues In Freight Rail Service—Railroad Reporting,” explaining that rail network reliability is essential to the U.S. economy and a foremost priority for the STB itself.
STB said that various stakeholders have indicated there have substantial increases in problems arising from tight car supply and unfilled car orders, delays in transportation for carload and bulk traffic, increased origin dwell time for released unit trains, missed switches, and ineffective customer assistance. And it added that the data for key performance indicators, including velocity, terminal dwell, first-mile/last-mile service, operating inventory, and trip plan compliance “show that railroad operations remain challenged generally,” adding that “at this time, therefore, continued monitoring is needed.”
In a statement provided to LM, the Association of American Railroads (AAR) said that railroads oppose efforts to upend the market framework in place today through sweeping re-regulatory proposals like the Reliable Rail Service Act.
“These misguided reforms would impose inefficient mandates, empower bureaucratic micromanagement, and reverse over four decades of progress that have made America’s freight rail system the safest, most efficient, and most cost-effective in the world,” it said. “Re-regulating rail in this way would raise costs across the economy, deter private investment, and stifle innovation. Lawmakers should reject this push for heavy-handed government control that prioritizes special interests and blatant rent seeking over a functioning and competitive freight rail network.”
And when this legislation was reintroduced in 2023, AAR President and CEO Ian Jefferies called it unnecessary and added it would hurt customers.
“Rail service metrics are improving, the industry is hiring and the supply chain challenges of the pandemic are receding,” he said at the time. “The current standard provides the flexibility customers and railroads need in a dynamic market. Central-planning-style regulation disregards decades of success and would push railroads backward.”
Jefferies previously told LM that freight railroad carriers have made it clear that service must be restored to a level their customers deserve and expect.
“This starts with addressing the labor shortage affecting the broad economy and railroads specifically,” said Jefferies.” Multiple railroads presented clear plans and goals for hiring new train and engine employees to get headcount levels in line with market demand for rail services – which remains strong. They are also adding power where appropriate and coordinating with customers. The industry has always understood its critical role in serving the U.S. economy. It is confident in its abilities to work alongside customers to remedy issues as the year progresses. While the AAR appreciates continued engagement with the policymakers, it must be said that both the Surface Transportation Board and Congress should proceed strategically and cautiously, particularly when considering structural policy shifts. Disruptions in service should not be used to justify long-sought measures such as forced switching, as such market intervention would only complicate network operations further at a time when the focus is resorting freight fluidity. While proponents may now argue new STB regulation will improve service, their longstanding justification for these policies has been to drive down rates to below-market rates. Policy should strike a balance and disregard the whims of opportunism.”
In May 2023, the STB called for the continued monitoring of freight rail service, continuing to closely monitor weekly rail service performance data. And it observed that the data for key performance indicators, including velocity, terminal dwell, first-mile/last-mile service, operating inventory, and trip plan compliance “show that railroad operations remain challenged generally,” adding that “at this time, therefore, continued monitoring is needed.”
LM Contributing Editor and railroad and supply chain consultant Brooks Bentz told put this legislation into context, citing a meeting of the New England Shippers Advisory Board years ago, where, at the outset, the host read the minutes of prior meeting wherein shippers complained about poor service, high rates and dirty cars.
“The minutes were voted on and adopted as read,” said Bentz. “He then proceeded to announce they were the minutes of the September, 1934 meeting, basically pointing out that not much had changed. The point is that there’s perpetual tension between shippers and carriers: ‘Your rates are too high and your service stinks!’ on the one hand and ‘You don’t pay enough for us make a reasonable rate of return and provide better and more frequent service’ on the other hand. As I have said before, all this has been going on ever since the Phoenicians shipped amphorae of wine Rome 1500 years ago. In a free market world, the rate argument fails. Once rail rates rise to a certain threshold they become vulnerable to truck competition. They are also vulnerable to barge depredations in certain markets. Clearly this isn’t happening on a scale that is impactful or the rails would be adjusting price or giving up the traffic. Also, none of what I saw provided any analysis of service performance or pricing trends across all modes, which would be very helpful in understanding the facts. Common Carrier obligations have been in place since the formation of the ICC in 1887 and have sufficed fairly well since. So it begs the question: Are things truly out of whack or is this just another attempt at some form of re-regulation? These days everyone has their own ‘truth’ but the facts remain facts and should be a part of the debate.”
