[Senate Hearing 114-208]
[From the U.S. Government Publishing Office]
S. Hrg. 114-208
NOMINATIONS TO THE
SURFACE TRANSPORTATION BOARD
AND THE FEDERAL MARITIME COMMISSION
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
MAY 6, 2015
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
JOHN THUNE, South Dakota, Chairman
ROGER F. WICKER, Mississippi BILL NELSON, Florida, Ranking
ROY BLUNT, Missouri MARIA CANTWELL, Washington
MARCO RUBIO, Florida CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire AMY KLOBUCHAR, Minnesota
TED CRUZ, Texas RICHARD BLUMENTHAL, Connecticut
DEB FISCHER, Nebraska BRIAN SCHATZ, Hawaii
JERRY MORAN, Kansas EDWARD MARKEY, Massachusetts
DAN SULLIVAN, Alaska CORY BOOKER, New Jersey
RON JOHNSON, Wisconsin TOM UDALL, New Mexico
DEAN HELLER, Nevada JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado GARY PETERS, Michigan
STEVE DAINES, Montana
David Schwietert, Staff Director
Nick Rossi, Deputy Staff Director
Rebecca Seidel, General Counsel
Jason Van Beek, Deputy General Counsel
Kim Lipsky, Democratic Staff Director
Chris Day, Democratic Deputy Staff Director
Clint Odom, Democratic General Counsel and Policy Director
C O N T E N T S
----------
Page
Hearing held on May 6, 2015...................................... 1
Statement of Senator Thune....................................... 1
Statement of Senator Nelson...................................... 2
Statement of Senator Manchin..................................... 36
Statement of Senator Klobuchar................................... 39
Statement of Senator Blumenthal.................................. 41
Statement of Senator Cantwell.................................... 45
Witnesses
Daniel R. Elliott III, Nominee to be a Member of the Surface
Transportation Board........................................... 3
Prepared statement........................................... 4
Biographical information..................................... 6
Mario Cordero, Nominee to be a Commissioner of the Federal
Maritime Commission............................................ 12
Prepared statement........................................... 14
Biographical information..................................... 15
Appendix
Letter dated May 6, 2015 to Hon. John Thune, Hon. Bill Nelson,
Hon. Deb Fischer and Hon. Cory Booker from Chris Jahn,
President, The Fertilizer Institute............................ 49
Response to written questions submitted to Mario Cordero by:
Hon, John Thune.............................................. 50
Response to written questions submitted to Daniel R. Elliott III
by:
Hon. John Thune.............................................. 52
Hon. Deb Fischer............................................. 54
Hon. Jerry Moran............................................. 55
NOMINATIONS TO THE
SURFACE TRANSPORTATION BOARD.
AND THE FEDERAL MARITIME COMMISSION
----------
WEDNESDAY, MAY 6, 2015
U.S. Senate,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:03 a.m. in
room SR-253, Russell Senate Office Building, Hon. John Thune,
Chairman of the Committee, presiding.
Present: Senators Thune [presiding], Nelson, Wicker, Blunt,
Fischer, Gardner, Cantwell, Klobuchar, Blumenthal, Schatz, and
Manchin.
OPENING STATEMENT OF HON. JOHN THUNE,
U.S. SENATOR FROM SOUTH DAKOTA
The Chairman. This hearing will come to order.
Today we are going to consider the nominations of Daniel
Elliott to be the--to be a Member, I should say, of the Surface
Transportation Board and Mario Cordero to be a Commissioner at
the Federal Maritime Commission. Both nominees have either
served or are serving their respective independent agencies as
Chairman, and both have previously been confirmed by the Senate
by voice vote.
As the Committee knows well, the STB plays an important
role as the independent Federal agency with regulatory
authority over freight railroads. Among other things, the STB
is charged with resolving railroad rate and service disputes
and reviewing proposed railroad mergers.
Mr. Elliott previously joined the STB as its Chairman in
2009. During his tenure, he worked on important policy
questions concerning competitive access, class exemptions from
regulation, revenue adequacy, and rate regulation. These are
complex and interrelated issues that this Committee and various
stakeholders believe that the Board must confront more
effectively. That's why I have worked with Ranking Member
Nelson to pass a bill out of this Committee that would reform
the STB, known as the STB Reauthorization Act of 2015, or
Senate bill 808.
Among other things, our bill would allow Board members to
speak to one another, and improve the Board's ability to
function as Congress intended since it was established in 1995
as the successor to the Interstate Commerce Commission. Our
bill would also allow the board to initiate some
investigations, not just respond to complaints, and require the
STB to establish a database of pending complaints and prepare
quarterly reports on them.
I'm hopeful that the Senate will be able to pass this
bipartisan STB reform bill in the near future.
Turning to our other nominee before us today, Mario Cordero
joined the FMC in 2011, and has served the last two years as
Chairman. The FMC is the regulator tasked with maintaining an
efficient and competitive international ocean transportation
system, protecting the public from unlawful, unfair, and
deceptive ocean practices, and resolving shipping disputes. The
FMC also conducts oversight of marine terminal operators, and
the agency played a role in resolving the severe port
congestion on the West Coast that languished for nearly 10
months and caused billions in economic losses to businesses and
our economy earlier this year. As Chairman, however, Mr.
Cordero has also inherited some challenges with FMC personnel
issues. For example, a recent Inspector General Workplace
Evaluation Report noted that FMC employees feel legacy
leadership challenges at the agency have left a negative
imprint on the organization that has not been fully resolved.
I'll be asking Mr. Cordero about these issues today and
some of the other challenges the FMC is faced with regarding
globalization and the increasing strain being experienced at
our Nation's ports.
While we must fulfill our obligation to carefully conduct
oversight of these nominees and related independent agencies, I
also recognize the complexities that exist when it comes to the
challenges they face. We appreciate your willingness to serve
in these important positions and I look forward to your
testimony today.
With that, I will turn to our distinguished Ranking Member,
Senator Nelson, for any remarks you'd like to make.
STATEMENT OF HON. BILL NELSON,
U.S. SENATOR FROM FLORIDA
Senator Nelson. Thank you, Mr. Chairman, our distinguished
chairman.
Railroads and ports, they're quite important to this
country and the demand for rail service is growing by leaps and
bounds. Rail increasingly is moving a great deal of freight and
just maintaining the network doesn't just happen on its own, it
takes huge investments. Railroads are investing nearly $30
billion a year and they are hiring thousands of new employees
to maintain this rail system.
CSX, for example, in 2013, invested $210 million just in
Florida alone. And while the railroads are making the big
investments, decisions at the Surface Transportation Board are
going to have a long-lasting impact on our railroads and
therefore on our country's economy. And it's important that
these decisions don't discourage private investment in rail
infrastructure.
Now, the other area, subject area, is the ports. My state,
we have quite a few deep water ports. Mr. Cordero, if
confirmed, would sit on the Federal Maritime Commission, which
makes sure that our Nation's ports are competitive. It's
absolutely vital to this country's economy.
To give you an example. In a recent report, Florida ports
generated more than 680,000 jobs; $96 billion in economic
value; more than 3 million containers; and 14 million cruise
passengers.
A few months ago, I was down in Panama to see the expansion
of the canal. They say it will be completed in April 2016. It's
likely, I think, to slip a little further but what they will
maintain are the locks, the existing locks, but the new and
expanded locks so that the large ships from Asia can come
through. And that's going to be an even more efficient way of
shipping a lot of the containers to get to the East Coast just
to go through the canal. But for the system to work, we need
Federal partners that will help keep our ports safe, strong,
and secure in working with the ports as they integrate all of
the different modes of transportation.
And so, I look forward to the witnesses.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Nelson.
With that, we will turn to our witnesses and begin with Mr.
Elliott.
Mr. Elliott, please proceed.
STATEMENT OF DANIEL R. ELLIOTT III, TO BE A MEMBER OF THE
SURFACE TRANSPORTATION BOARD
Mr. Elliott. Thank you, Chairman Thune. Thank you, Ranking
Member Nelson, Members of the Committee.
I would like to thank you for this opportunity to appear
before you today. It is an honor to be nominated by the
President to return to the Board for a second term.
Chairman Thune, thank you in particular for your deep
interest in freight rail issues both in South Dakota and
throughout the nation, including your sponsorship of the
Surface Transportation Board Reauthorization Act of 2015 and
your work with the Board on rail service issues. I would also
like to thank Ranking Member Nelson, who I know has long been
interested and involved in transportation issues. And I would
also like to thank my family for their support, my wife Nawara,
and my stepson Bennett. Becker could not be here today because
he has a choir concert.
It was a true privilege to have been Chairman of the
Surface Transportation Board between 2009 and 2014. I have been
involved in the rail industry issues for more than 20 years as
a lawyer practicing before agencies and then as STB Chairman.
It has been remarkable to see the industry continue to grow
from bankruptcies of the 1970s to what is a rail renaissance.
Today, the freight rail industry carries more than 1.7 billion
tons of freight a year, including everything from agricultural
products, energy products, manufacturing inputs, and retail
goods. The freight rail industry also hosts passenger carriers
from Amtrak to local commuter railroads.
Recent changes in the freight rail traffic mix, some
unanticipated by railroads, along with other factors, cause
well-documented stress on the rail network. Service quality
suffered as a result. I led the board in both formal and
informal actions to promptly address these issues including:
held two major hearings in 2014 focused on service issues;
issued orders related to fertilizer, agricultural, and coal
traffic; required rail carriers to submit extensive data on
service performance; regularly coordinated with Federal and
State government officials; and I met with many carriers and
shippers and sent Board staff to the field throughout the
country.
This multipronged approach focused the rail industry on
rectifying service issues, anticipating upcoming stress on the
network, and communicating effectively with customers and
stakeholders. If confirmed, I will press the Board to take all
necessary action to promote a reliable and efficient rail
network. This is also the right time for a thorough examination
of rail economic regulatory policy much of which was adopted
decades ago and applied to a very different rail industry.
Should I be confirmed, I will continue the process I initiated
to examine its core policies as applied to a modernized
industry to ensure that the agency continues to meet the
regulatory policy goals laid out by Congress. That includes
ongoing reviews of competitive access, rate regulation, revenue
adequacy, and commodity exemptions. Board assessment of these
issues does not necessarily mean that there should be a sea
change in the way railroads are regulated. Rather, we must be
confident that our methods and policies take into account both
the changes in the industry and sound economic policies.
I also want to continue to work to make sure the Board's
processes are fair, efficient, and accessible. It is no secret
that the Board's rate case process is time-consuming and
expensive. During my tenure, the Board initiated several rate
reforms specific to rate case processes and accessibility, and
lowered fees for non-rate complaints as described in my written
statement. But there is more to do. Last year, I initiated an
examination of whether agricultural shippers have true access
to the Board's rate process and also engaged an independent
firm to study rate reasonableness methodologies used in other
industries and throughout the world. This is the time to
consider new ideas and invite our stakeholders to participate
so that the Board has the most effective and accessible
regulatory process we can.
If confirmed, I also look forward to continued reforms that
increase the Board's ability to process cases efficiently and
effectively. I understand the concern that things take too long
and want to continue the hard work of serving the Board's
stakeholders as quickly and transparently as possible. I have
implemented many new policies to improve the case process at
the Board as set forth in my written statement, and I am
committed to find innovative ways for the Board to improve its
customer service and leverage the considerable staff talent
that we have.
Thank you, again, for the opportunity to appear before you
and I look forward to your questions.
[The prepared statement and biographical information of Mr.
Elliott follow:]
Prepared Statement of Daniel R. Elliott III, Nominee to be a Member of
the Surface Transportation Board
Chairman Thune, Ranking Member Nelson, members of the Committee, I
would like to thank you for this opportunity to appear before you
today. I had the privilege to serve as the Surface Transportation
Board's Chairman from 2009 to 2014, and it is an honor to be nominated
by the President to return to the Board for a second term.
Before I begin my remarks, I would like to thank Chairman Thune for
your deep interest in freight rail issues both in South Dakota and
throughout the Nation, including your sponsorship of The Surface
Transportation Board Reauthorization Act of 2015 and your work with the
Board on rail service issues. I would also like to thank Ranking Member
Nelson, who I know has long been interested and involved in
transportation issues. And I would like to thank my family for their
support: my wife Nawara and my stepsons Bennett and Becker.
I feel so fortunate to have been Chairman of the Surface
Transportation Board during what has been a critical period in the rail
industry. And I do not use the word ``critical'' lightly. On the brink
of financial ruin in the 1970s, the freight rail industry in 2013
originated more than 1.7 billion tons of freight. The commodities
carried by rail are used to stock our pantries, heat our homes, supply
our Nation's manufacturing sector and fulfill many other needs. And a
host of passenger rail carriers--from Amtrak to local commuter
railroads--utilize freight rail lines, thereby reducing congestion on
the Nation's highways.
Recent changes in the freight rail traffic mix, some unanticipated
by the railroads, caused well-documented stress on the rail system.
Service quality for many rail shippers suffered, especially during
2014. The Board's role in such situations is key and, if confirmed, I
will continue to make sure the agency keeps service quality for all
shippers a focus. During my tenure, the agency undertook major steps to
improve rail service. The Board held two major hearings in 2014 on
service issues; issued orders related to fertilizer, agricultural and
coal traffic; required rail carriers to submit extensive data on
service performance on an interim basis; proposed rules that would
require service performance data reporting on a permanent basis; and
regularly coordinated with our counterparts in other parts of Federal
and state government. I met with many carriers and shippers to resolve
service issues, and I sent Board staff to the field in South Dakota,
North Dakota, Minneapolis, and Montana to do the same. I firmly believe
that the Board's even-handed efforts focused the rail industry on
rectifying service issues, anticipating upcoming stress on the network,
and communicating effectively with customers and stakeholders on a
real-time basis. If confirmed, I will press the Board to take all
necessary action to promote a reliable rail network, including ensuring
that the Board and other agencies, as well as shippers, have the data
needed to properly assess rail service difficulties. Ultimately, I
think we are in the midst of a necessary assessment of infrastructure
demands that requires coordination among our Nation's rail carriers,
their customers, local communities and policy makers. I am proud of the
Board's ability to bring these diverse parties to the table. That sort
of collaboration goes a long way toward ensuring that our efficient
freight rail network continues to be the envy of the world.
The rail industry's growth also makes this an important period for
a thorough examination of rail economic regulatory policy. Many of the
agency's longstanding policies were adopted decades ago when the rail
industry was struggling to stay alive. Now that the industry is both
financially healthier and restructured with far fewer large railroads,
I believe the Board should continue the process I started to examine
its core policies to ensure that they fit today's modern rail industry
and meet the goals that Congress laid out for the agency. Throughout
this inquiry, the Board must fulfill the mandate we received from
Congress--balancing the 15 Rail Transportation Policy factors in the
Interstate Commerce Act in a manner that serves the public.
To this end, over the last 5 years, I led the Board to an ongoing
review of competitive access, rate regulation, revenue adequacy,
commodity exemptions and other core policies. The Board has initiated
proceedings to examine these important issues so that it can make a
determination as to whether any of its processes and policies should
change, and if so, how. Board assessment of these issues does not
necessarily mean that there should be a sea change in the way railroads
are regulated. Rather, it means that we have to be confident that the
manner in which the Federal Government regulates rail rates and
competition is the product of thoughtful decision-making that takes
into account a modernized rail industry and sound economic policies.
The Board also has a continuing responsibility to make sure that
our processes are fair, efficient and accessible. The Board's rate case
process is complicated, time consuming and expensive--a view that I
know is shared by the agencies' stakeholders. During my tenure, the
Board initiated several reforms, including the adoption of rules that
(1) clarified certain revenue allocation issues in large rate cases,
(2) raised the award caps for smaller rate cases, and (3) changed the
interest rate for damage awards. In addition, in several recent complex
rate cases, the Board developed a modified test for the threshold
market dominance inquiry. I also thought that it was important to
reduce the fees the Board charges for non-rate related complaints and
the Board did just that in 2011, lowering fees from $20,600 to $350.
But there is more to do to make sure that all of our stakeholders
have a meaningful path to the Board. During my tenure, the agency
initiated an examination of whether agricultural shippers have true
access to the Board's rate reasonableness process and also engaged an
independent firm to study the wide variety of rate reasonableness
methodologies used in other industries and throughout the world. This
is the time to consider new ideas and invite our stakeholders to
participate in that process so that the Board has an effective
regulatory process that makes sense today.
If confirmed, I also look forward to continuing reforms that
increase the Board's ability to process cases efficiently and
effectively. I know that shippers and railroads alike believe that it
takes too long to adjudicate cases at the Board. I understand that
concern and want to continue the hard work of serving the Board's
stakeholders as quickly and transparently as possible. During my
tenure, I restructured several Board departments to increase efficiency
and accountability. After several years of budget uncertainty that
impacted the agency's ability to hire on a large scale, I am pleased
that in 2014 the Board hired 15 employees. These strategic hires will
enhance the agency's ability to move cases more expeditiously. In 2014,
I set up a program that allows the Board to use Administrative Law
Judges from other agencies to resolve disputes related to discovery--
thus freeing up Board staff to focus on the substantive aspects of
cases. I was pleased to see that the first cases were assigned to an
ALJ under that program just a few weeks ago. I also began an
examination of how the Board processes the most complex cases--how
teams from various offices are assigned, how they work together, how
internal deadlines are established and monitored. The Board's FY 2016
budget request reflected the growth in resource demands for rate cases
in particular. If confirmed, I commit to find innovative ways for the
Board to improve its customer service and leverage the considerable
staff talent we have.
Finally, I want to continue my work in turning the Board into more
of a problem solver and not just an adjudicator. I grew the Board's
alternative dispute resolution program, increasing the agency's use of
mediation and broadening our arbitration rules. I bolstered the Rail
Customer Public Assistance program, which helps many smaller shippers
that may not be in a position to file a formal case at the Board. The
program has resolved thousands of transportation matters since the
beginning of my term, and is cited by rail shippers and rail carriers
alike as a tremendous success at the agency.
Thank you again for the opportunity to appear before you. If
confirmed, I look forward to rejoining the Board and working with my
fellow Board Members and Board staff to continue the progress that we
have made.
______
a. biographical information
1. Name (Include any former names or nicknames used): Daniel Robert
Elliott III.
2. Position to which nominated: Chairman of the Surface
Transportation Board.
3. Date of Nomination: November 12, 2014.
4. Address (List current place of residence and office addresses):
Residence: Information not released to the public.
Office: Surface Transportation Board, 395 E Street, SW, Suite
1220, Washington, DC 20423.
5. Date and Place of Birth: December 1, 1962; Ann Arbor, Michigan,
USA.
6. Provide the name, position, and place of employment for your
spouse (if married) and the names and ages of your children (including
stepchildren and children by a previous marriage).
Spouse--Nawara T. Omary, Senior Technical Project Manager,
Sprint Corporation; children: James Bennett Spear, 16; Justin
Becker Spear, 11.
7. List all college and graduate degrees. Provide year and school
attended.
Ohio State College of Law, J.D., 1989
University of Michigan, B.A., 1985
8. List all post-undergraduate employment, and highlight all
management level jobs held and any non-managerial jobs that relate to
the position for which you are nominated.
Bishop, Cook, Purcell & Reynolds (now Winston & Strawn LLP),
Washington, D.C. 1989-1990.
Marshman, Snyder, Berkley & Kapp, Cleveland, Ohio 1990-1991
Chester Giltz & Associates, Cleveland, Ohio 1991-1992
United Transportation Union, Lakewood, Ohio 1993-2009. One of
my responsibilities in this position was to monitor and handle
cases at the Surface Transportation Board.
Surface Transportation Board, Washington, D.C. 2009 to present.
I am the chief executive of the agency and thus responsible for
its regulatory agenda and overall management.
9. Attach a copy of your resume. A copy is attached.
10. List any advisory, consultative, honorary, or other part-time
service or positions with Federal, State, or local governments, other
than those listed above, within the last five years. None.
11. List all positions held as an officer, director, trustee,
partner, proprietor, agent, representative, or consultant of any
corporation, company, firm, partnership, or other business, enterprise,
educational, or other institution within the last five years.
DRE RE, LLC, Owner
12. Please list each membership you have had during the past ten
years or currently hold with any civic, social, charitable,
educational, political, professional, frate1nal, benevolent or
religious organization, private club, or other membership organization.
Include dates of membership and any positions you have held with any
organization. Please note whether any 3such club or organization
restricts 1nembership on the basis of sex, race, color, religion,
national origin, age, or handicap.
Cleveland Tenants Organization, Board Member, 1997-2009
Fairmount Presbyterian Church, 1995-2009, Deacon, Trustee,
Elder
Christian Legal Services, Board Member, 2006
American Bar Association, Member, 2008-2009
Supreme Court of Ohio Bar, 1989-2009
13. Have you ever been a candidate for and/or held a public office
(elected, non-elected, or appointed)? If so, indicate whether any
campaign has any outstanding debt, the amount, and whether you are
personally liable for that debt. No.
14. Itemize all political contributions to any individual, campaign
organization, political party, political action committee, or similar
entity of $500 or more for the past ten years. Also list all offices
you have held with, and services rendered to, a state or national
political party or election committee during the same period.
Barack Obama, President, 2008--$2,000
Sherrod Brown, U.S. Senate, 2006--$1,250
Sherrod Brown, U.S. Senate, 2012--$2,500
15. List all scholarships, fellowships, honorary degrees, honorary
society memberships, military medals, and any other special recognition
for outstanding service or achievements. None.
16. Please list each book, article, column, or publication you have
authored, individually or with others. Also list any speeches that you
have given on topics relevant to the position for which you have been
nominated. Do not attach copies of these publications unless otherwise
instructed.
Books/Articles:
The Railway Labor Act, Senior Editor (BNA 2d ed. 2005 & Supps.
2006-2007)
The Railway Labor Act Bargaining Dilemma, Journal of
Transportation Law, Logistics and Policy Volume 74 (2007)
The Railway Labor Act Cumulative Supplement, Contributing
Editor (BNA 1998, 2000 & 2001)
The Shore Line Status Quo Requirement, Cleveland State Law
Review Volume 46 (1998)
Speeches:
Surface Transportation Board Update, American Short Line and
Regional Railroad Association, Southern Region
Naples, Fla. (2014)
Surface Transportation Board Update, The Fertilizer Institute
North American Transportation Conference
Tucson, Ariz. (2014)
Surface Transportation Board Update, South Dakota Farmers'
Union
Aberdeen, SD (2014)
Rail Service Update, American Bakers' Association
Washington, D.C. (2014)
The Surface Transportation Board's Enforcement of PRIIA
Chicago, Ill. (2014)
Spring 2014 Update, North American Rail Shippers Association
San Francisco, Calif. (2014)
Spring 2014 Update, Industrial Minerals Association
Washington, D.C. (2014)
Spring 2014 Update, National Coal Transportation Association
Hilton Head, SC (2014)
Fall 2013 Update, Rail Trends Conference
New York, NY (2013)
California Short Line Railroad Association Annual Meeting
San Diego, CA (2013)
North American Rail Shippers Association
Baltimore, MD (2013)
Railtrends
New York, NY (2012)
Nat. Assoc. of Rail Shippers
Chicago, IL (2012)
Dahlman-Rose Transportation Conference
New York, NY (2011)
RBC Capital Markets
Miami, FL (2010)
Midwest Shipper's Association
Minneapolis, MN (2010)
A New Philosophy for the STB, Association of Transportation Law
Professionals
Washington, D.C. (2010)
American Short Line and Regional Railroad Association
Orlando, Fla. (2010)
National Coal Transportation Association
San Antonio, Texas (2010)
Freight Rail Sustainability: Opportunities and Barriers,
Transportation Research Board
Washington, D.C. (2010)
The Need for Change and Openness, Wolfe Research Transport
Conference
Washington, D.C. (2009)
Railroading in the Warren Buffett Era, Washington Chapter
Transportation Research Forum
Washington, D.C. (2009)
The Green Technologies of Rail and Steel, Steel Manufacturer's
Association
Washington, D.C. (2009)
CREATEing a New Chicago, William 0. Lipinski Symposium on
Transportation Policy
Chicago, Ill. (2009)
17. Please identify each instance in which you have testified
orally or in writing before Congress in a governmental or non-
governmental capacity and specify the date and subject matter of each
testimony.
Letter to Senator Rockefeller and Senator Thune re S. 2777,
Surface Transportation Board Reauthorization Act of 2014,
September 16, 2014
Letter to the Record, U.S. Senate Committee on Commerce,
Science, and Transportation Hearing, Freight Rail Service:
Improving the Performance of America's Rail System, September
10, 2014
Testimony Before U.S. Senate, Committee on Commerce, Science,
and Transportation, Hearing on Federal Role in National Rail
Policy, September 15, 2010
Testimony Before U.S. Senate Committee on Commerce, Science,
and Transportation, Hearing on Nomination to be Chairman of the
Surface Transportation Board, July 29, 2009
18. Given the current mission, major programs, and major
operational objectives of the department/agency to which you have been
nominated, what in your background or employment experience do you
believe affirmatively qualifies you for appointment to the position for
which you have been nominated, and why do you wish to serve in that
position?
My experience over the last 5 years as Chairman of the Surface
Transportation Board, as well as my prior experience as a lawyer for
the United Transportation Union, qualify me for a reappointment to the
chairmanship of the Board. Based on my work at the United
Transportation Union, I came to the Board already familiar with both
the governing statute and the top issues affecting the rail industry.
Since joining the Board in 2009, I have led the Board to a review of
important policy questions that must be reexamined in light of changing
conditions, including competitive access, paper barriers, class
exemptions from regulation, revenue adequacy and rate regulation. Many
of these questions--which are complex and interrelated--have not been
addressed by the Board in a comprehensive fashion for decades. I
believe I am best suited to continue the Board's efforts so that the
agency can complete its reviews and revise its approaches as warranted.
19. What do you believe are your responsibilities, if confirmed, to
ensure that the department/agency has proper management and accounting
controls, and what experience do you have in managing a large
organization?
If confirmed, I will continue to have responsibility for the
management and operation of the Surface Transportation Board. Thus, I
will continue to ensure that the Board has the necessary tools to
fulfill its mandate and that the Board carries out its duties with the
highest degree of fiscal and ethical accountability. Over the last 5
years, my management achievements include (a) developing and hiring new
members of the Senior Executive Service, (b) restructuring Board
departments to increase efficiency, (c) growing the Board's public
assistance program, and (d) effectively utilizing the Board's budget to
achieve mission-critical objectives. If confirmed, I will continue to
ensure that the Board follows all applicable statutes and regulations.
20. What do you believe to be the top three challenges facing the
department/agency, and why?
The first challenge facing the Board is the serious degradation of
rail service levels that began this past winter. These service problems
are the result of a combination of factors: dramatic changes in the
rail traffic mix and volume, extre1ne winter weather conditions, and
management and resource decisions by rail carriers. Rail carriers'
recent difficulty in providing acceptable levels of service has
impacted both freight rail shippers and passenger rail customers. Under
my direction, the Board has been proactive in addressing rail service
issues by closely monitoring rail service metrics, issuing targeted
orders that improve service levels and increase accountability, holding
numerous hearings/meetings to gain stakeholder input, and making Board
staff available to resolve immediate service crises. The Board must
continue to facilitate the resolution of service issues so that
interstate commerce flows as smoothly and efficiently as possible in
support of the U.S. economy.
The second challenge facing the Board is the need to reassess long-
standing policy positions in light of a dramatically altered railroad
industry. Due in large part to the efficiency gains that resulted from
the Staggers Act, a rail industry that was on the brink of ruin in the
late 1970s is now enjoying a sustained period of healthier profits and
increased ability to attract capital. It is critical that the Board
carefully consider whether its major policies are effective in
fulfilling our Congressional mandate in today's environment. To this
end, I have led the Board to review competition, rate regulation, paper
barriers and commodity exemptions. I am also leading the Board's
efforts to implement the Passenger Rail Investment and Improvement Act
of 2008, the statute designed to improve Amtrak's on-time performance.
The third challenge facing the Board is reducing the complexity,
cost, and processing time of the cases that come before it. Rail
shippers have long complained that the Board's rate regulation
processes are too complicated and expensive to provide meaningful
relief. During my tenure, I have shepherded a number of reforms
intended to address this issue, such as completing a rulemaking that
raised/eliminated the award caps for the simplified methods of rate
regulation, initiating a proceeding to examine whether current rate
methodologies are adequate for agricultural shippers, and awarding a
contract for an independent study of alternative rate methodologies.
The increased complexity of rate regulation also taxes the agency's
resources. I have initiated a review of the Board's internal rate
procedures aimed at reducing errors and increasing efficiencies in the
Board's processing of rate cases. In FY2014, a modest increase in the
Board's budget enabled me to increase the Board's staffing levels. The
agency must continue to improve its ability to process all cases
efficiently.
b. potential conflicts of interest
1. Describe all financial arrangements, deferred compensation
agreements, and other continuing dealings with business associates,
clients, or customers. Please include information related to retirement
accounts: None.
2. Do you have any commitments or agreements, formal or informal,
to maintain employment, affiliation, or practice with any business,
association or other organization during your appointment? If so,
please explain: No.
3. Indicate any investments, obligations, liabilities, or other
relationships which could involve potential conflicts of interest in
the position to which you have been nominated.
The only relationship that may present any appearance of a conflict
of interest would be my former employer, United Transportation Union,
which has appeared before the Board as a party in various proceedings
both before and after I joined the Board.
4. Describe any business relationship, dealing, or financial
transaction which you have had during the last ten years, whether for
yourself, on behalf of a client, or acting as an agent, that could in
any way constitute or result in a possible conflict of interest in the
position to which you have been nominated.
See Answer 3.
5. Describe any activity during the past ten years in which you
have been engaged for the purpose of directly or indirectly influencing
the passage, defeat, or modification of any legislation or affecting
the administration and execution of law or public policy.
I appeared before the State of Minnesota legislative committees for
one day in March of 2005 to speak in support of a rail safety bill on
the issue of preemption.
6. Explain how you will resolve any potential conflict of interest,
including any that may be disclosed by your responses to the above
items.
My past affiliation with the United Transportation Union has never
had any effect on my decisions at the Surface Transportation Board and,
if confirmed, that will continue to be the case. Consistent with my
Ethics Agreement in 2009, I have recused myself when applicable from
any case before the Board that involves any United Transportation Union
matter on which I worked during my employment there. Moreover, having
been a member of the Supreme Court of Ohio, I have abided and will
continue to abide by the Ohio Rules of Professional Conduct and Code of
Professional Responsibility with regard to any conflicts of interest
provisions.
c. legal matters
1. Have you ever been disciplined or cited for a breach of ethics
by, or been the subject of a complaint to any court, administrative
agency, professional association, disciplinary committee, or other
professional group? If so, please explain: No.
2. Have you ever been investigated, arrested, charged, or held by
any Federal, State, or other law enforcement authority of any Federal,
State, county, or municipal entity, other than for a minor traffic
offense? If so, please explain.
I was arrested once in 1986 in Columbus, Ohio for disorderly
conduct and open container in a vehicle (not driving). I pled guilty to
these two minor misdemeanors and paid a fine. I was also charged with
two separate housing violation actions in 2008 in Shaker Heights, Ohio.
Both cases were dismissed.
3. Have you or any business of which you are or were an officer
ever been involved as a party in an administrative agency proceeding or
civil litigation? If so, please explain.
I was involved in two eviction cases as a plaintiff in 2006 in
Shaker Heights, Ohio. Both cases were decided in my favor plus back
rent.
4. Have you ever been convicted (including pleas of guilty or nolo
contendere) of any criminal violation other than a minor traffic
offense? If so, please explain.
See Answer 2.
5. Have you ever been accused, formally or informally, of sexual
harassment or discrimination on the basis of sex, race, religion, or
any other basis? If so, please explain: No.
6. Please advise the Committee of any additional information,
favorable or unfavorable, which you feel should be disclosed in
connection with your nomination.
Agency was voted Best Place to Work in Federal Government for Small
Agencies by the Partnership for Public Service all four years I served
as Chairman. Agency also received Most Innovative Agency from the
Partnership the two years the award has existed. The agency also
received the highest effective leadership score for all four years.
d. relationship with committee
1. Will you ensure that your department/agency complies with
deadlines for information set by congressional committees? Yes.
2. Will you ensure that your department/agency does whatever it can
to protect congressional witnesses and whistle blowers from reprisal
for their testimony and disclosures? Yes.
3. Will you cooperate in providing the Committee with requested
witnesses, including technical experts and career employees, with
firsthand knowledge of matters of interest to the Committee? Yes.
4. Are you willing to appear and testify before any duly
constituted committee of the Congress on such occasions as you may be
reasonably requested to do so? Yes.
______
Resume of Daniel R. Elliott
Summary
An experienced government executive and attorney in the fields of
transportation economic regulation and railway labor. Leading a Federal
independent regulatory agency for the last five years to numerous
personnel awards and innovative policy changes.
Experience
August 2009 to present--Chairman, Surface Transportation Board
Appointed to the Board and designated Chairman by President
Obama. Responsibilities include management of the agency and
its $31 million dollar budget, creation of economic regulatory
policy, and issuance of administrative decisions on various
types of cases.
Contact with members of U.S. Congress and state and Federal
Executive Branch leadership to inform them of and explain
activities at the Board; confer with corporate and trade
association heads on relevant transportation matters and the
state of the rail industry on a regular basis; testify at
congressional hearings regarding railroad issues; and give
speeches often at large trade association conventions as well
as smaller group meetings.
Manage a staff of 140. Revitalized the agency by making
organizational changes and increased morale through an open
door policy. Agency was awarded Best Place to Work in Federal
Government for Small Agencies by the Partnership for Public
Service all four years of my tenure, Most Innovative Agency for
the two years the award has existed, and highest effective
leadership score for all four years.
Rule on and draft case decisions that come before the Board,
including complex rate challenges, rail construction projects,
Amtrak performance, mergers and acquisitions, and a large
variety of other matters; create and review railroad economic
regulatory policies informally and formally through studies and
Board proceedings, such as revising rate case processes to make
them more accessible, devising a new arbitration and mediation
program, beginning proceedings on revenue adequacy, reciprocal
switching, grain rail rates, auditing and review of rate case
processes, studying new rate regulatory methods, among others.
1993-2009--Associate General Counsel, United Transportation Union
Handled Federal agency matters in front of the Surface
Transportation Board, National Mediation Board, National Labor
Relations Board, and Department of Labor. Duties included
testimony, trials, and drafting pleadings.
Labor and employment litigation on behalf of union mainly
involving cases in Federal district and appellate courts.
Served as sole counsel on United Transp. Union v. Gateway
Western Ry. Co., 284 F.3d 710 (7th Cir. 2002); Ryan v. Union
Pacific R.R. Co., 286 F.3d 456 (7th Cir. 2002); and Adirondack
Transit Lines, Inc. v. United Transp. Union, Local 1582, 305
F.3d 82 (2d Cir. 2002).
1991-1992 · Associate, Chester Giltz & Associates
Commercial and residential real estate appraisal.
1990-1991--Associate, Marshman, Snyder, Berkley & Capp
Research and drafting memoranda and motions for general
litigation practice.
1989-1990--Associate, Bishop, Cook, Purcell & Reynolds
Research and drafting memoranda for general litigation
practice.
Education
May 1989--Juris Doctor, Ohio State College of Law
May 1985--Bachelor of Arts, Political Science, University of
Michigan
Varsity track letterman 1982-1983
The Chairman. Thank you, Mr. Elliott.
Mr. Cordero?
STATEMENT OF MARIO CORDERO, TO BE A COMMISSIONER OF THE FEDERAL
MARITIME COMMISSION
Mr. Cordero. Chairman Thune, Ranking Member Nelson, and
Members of the Committee, it is a pleasure and an honor to be
here today to discuss my nomination for a second term as
Commissioner of the Federal Maritime Commission. With me here
today is my wife, Gloria, my wife of approximately 41 years.
Having served nearly 4 years at the Commission, I
appreciate the Committee considering my reappointment to
continue leading the Federal Maritime Commission, a small
independent agency with a large global responsibility.
I want to acknowledge my fellow Commissioners, Rebecca Dye,
Richard Lidinsky, Michael Khouri, and William Doyle. As
Chairman, I have the administrative responsibility to keep our
agency headed in the right direction, but the full Commission,
as a collegial body, is the engine that propels the agency
forward. In that respect, the advice, support, and committed
participation of my fellow Commissioners has been key to the
FMC's success. Also, let me express to the Commission staff my
deep admiration for each of them and the work that they do day
in and day out, despite Federal workplace challenges.
Recognizing the importance of working in a positive atmosphere,
facing these challenges has been my priority for the FMC since
I joined the Commission in 2011. By taking substantive steps to
address employee engagement, I will continue to build on the
FMC's organizational strengths.
I referred to the Commission as a small agency with large
global responsibilities, and so it is. The FMC, as of today,
has 119 employees and operates on a very lean budget. The FMC's
work includes monitoring more than 300 active liner shipping
agreements in the trans-Pacific, Latin American, trans-
Atlantic, and other U.S. trades; vetting and licensing
thousands of ocean transportation intermediaries; enforcing the
prohibited act provisions of the Shipping Act; providing
mediation services and assistance with cargo shipment problems
and cruise passenger issues; and overseeing the activities and
impacts of government-controlled foreign carriers and foreign
shipping laws and practices.
Those activities advance two strategic goals: to maintain
an efficient and competitive international ocean transportation
system in the U.S. trades; and to protect the shipping public,
the American exporter, importer, consumer, and producers from
unfair, unlawful and deceptive ocean transportation practices.
In effect, the FMC exercises a role similar to that of the
Federal Trade Commission but in the international liner
shipping arena. I am pleased to report that we have the in-
depth expertise to accomplish those goals.
Ultimately, the Commission works to protect the American
importer, exporter, and consumer.
The importance of the Commission's regulatory role is
imperfectly measured by the number of agreements we review and
monitor, the number of transportation intermediaries we vet,
the number of enforcement actions we take, and the number of
American shippers we assist each day. Its impact is large but
mainly unseen by the American consumer and shipper. The
Commission's efforts to ensure a fair, efficient, and
competitive liner shipping system is felt in the family budgets
and oversea trade opportunities of all Americans and many
American industries.
Last week, a trade journal attributed an interesting
comment to the Chairman of a major European shipper
organization. In discussing changes taking place in the liner
shipping industry, he reportedly ``expressed regret that the
European Commission did not have the same resources as the FMC
to devote to the oversight of the ocean shipping industry.''
That is a sentiment I understand and appreciate. On the
same journal's annual list of the most influential people in
the container shipping industry, it ranked the FMC as number
ten as we continue to keep a very close eye when considering
the interest of the U.S. public during a period of
consolidation in container shipping trades.
The liner shipping industry is currently involved in a
dynamic series of major changes, occasionally bordering, quite
frankly, on the chaotic. As it adjusts to the financially
challenging market situation that has existed in the past
several years and is likely to continue for several more, the
Commission has had and will continue to have multiple roles
with respect to those ongoing industry changes. We evaluate the
potential effects of the new, large, multi-carrier alliances
and closely monitor competitive behavior once they take effect
so that the Commission can react early to adverse changes if
those changes are necessary.
As you may be aware, the congestion at U.S. ports has
increased significantly which negatively impacts our import and
export communities. The Commission has been involved in
proactive outreach efforts to reduce the likelihood of future
port-related congestion. We are working with our nation's
ports, our shippers, our trucking companies, and carriers to
identify key problems and issues and encourage cooperative
efforts among those stakeholders to mitigation and/or correct
the problem. In light of the challenges related to global
alliances, the Commission has engaged with fellow global
international regulators, the European Union, and the Chinese
Ministry of Transportation to exchange views on a global liner
industry. That outreach process began with the Global
Regulatory Summit in December 2013 here in Washington. A second
discussion is being planned for this summer.
If confirmed, I look forward to working with the Committee
to ensure that our Nation benefits from fair, efficient, and
competitive ocean transportation system.
Thank you for your kind consideration. I will be happy to
answer any questions you may have.
[The prepared statement and biographical information of Mr.
Cordero follow:]
Prepared Statement of Mario Cordero, Chairman,
Federal Maritime Commission
Chairman Thune, Ranking Member Nelson, and Members of the
Committee, it is a pleasure and an honor to be here today to discuss my
nomination for a second term as Commissioner of the Federal Maritime
Commission. Having served nearly four years at the Commission, I
appreciate the Committee considering my reappointment to continue
leading the Federal Maritime Commission--a small independent agency
with large global responsibilities.
I want to acknowledge my fellow Commissioners, Rebecca Dye, Richard
Lidinsky, Michael Khouri, and William Doyle. As Chairman, I have the
administrative responsibility to keep our agency headed in the right
direction, but the full Commission, as a collegial body, is the engine
that propels it forward. In that respect, the advice, support, and
committed participation of my fellow Commissioners has been key to the
FMC's success. Also, let me express to the Commission staff my deep
admiration for each of them and the work they do, day in and day out.
The FMC does excellent work and will continue to do so, despite Federal
workplace challenges. Recognizing the importance of working in a
positive atmosphere, facing these challenges has been my priority for
the FMC since I joined the Commission in June 2011. By taking
substantive steps to address employee engagement, I will continue to
build on the FMC's organizational strengths.
I referred to the Commission as a small agency with large global
responsibilities, and so it is. The FMC has 119 employees and operates
on a very lean budget. The FMC's work includes monitoring more than 300
active liner shipping agreements in the trans-Pacific, Latin American,
trans-Atlantic, and other U.S. trades; vetting and licensing thousands
of ocean transportation intermediaries; enforcing the prohibited act
provisions of the Shipping Act; providing mediation services and
assistance with cargo shipment problems and cruise passenger issues;
and overseeing the activities and impacts of government-controlled
foreign carriers and foreign shipping laws and practices.
Those activities advance two strategic goals: to maintain an
efficient and competitive international ocean transportation system in
U.S. trades; and to protect the U.S. shipping public--American
exporters, importers, consumers, and producers--from unlawful, unfair,
and deceptive ocean transportation practices. In effect, the FMC
exercises a role similar to that of the Federal Trade Commission but in
the international liner shipping arena, and I am pleased to report that
we have the in-depth expertise to accomplish those goals.
Ultimately, the Commission works to protect American importers,
exporters, and consumers. Our Bureau of Trade Analysis is responsible
for monitoring agreements among some of the world's largest vessel
operators to ensure that carriers do not abuse the limited antitrust
immunity that they receive pursuant to the Shipping Act. I will add
that our Bureau of Enforcement does have a no-nonsense reputation in
dealing with unlawful, unfair, and deceptive practices. Also, our
Bureau of Certification and Licensing ensures that ocean transportation
intermediaries have the experience needed to handle international
shipments competently and that they maintain the required financial
responsibility to protect U.S. consumers of their services.
The importance of the Commission's regulatory role is imperfectly
measured by the number of agreements we review and monitor, the number
of transportation intermediaries we vet, the number of enforcement
actions we take, and the number of American shippers we assist each
day. Its impact is large but mainly unseen by the American consumer and
shipper. Last year, roughly 11.9 million twenty-foot equivalent units
(TEUs) of U.S. exports and 19.2 million TEUS of imports transited U.S.
ports, a large portion going to or coming from Asia but with
considerable volumes moving to and from Europe and Latin America as
well. The Commission's efforts to ensure a fair, efficient, and
competitive liner shipping system is felt in the family budgets and
overseas trade opportunities of all Americans and many American
industries.
Last week, a trade journal attributed an interesting comment to the
chairman of a major European shippers' organization. In discussing
changes taking place in the liner shipping industry, he reportedly
``expressed regret that the European Commission did not have the same
resources as the FMC to devote to the oversight of the ocean shipping
industry.'' That is a sentiment I understand and appreciate. On the
same journal's annual list of the most influential people in container
shipping, the Commission was ranked as number ten as we continue to
keep a close eye when considering the interests of the U.S. public
during a period of consolidation in the container shipping trades.
The liner shipping industry is currently involved in a dynamic
series of major changes--occasionally bordering on the chaotic--as it
adjusts to the financially challenging market situation that has
existed for the past several years and is likely to continue for
several more. Not just in U.S. trades, but globally. Following the
world-wide recession of late 2008 through 2009, the growth in
international trade has been slower than the on-going expansion of
liner fleets. Carriers' revenues have been negatively affected. To
reduce costs and enhance efficiencies, carriers are ordering larger,
fuel-efficient vessels that can provide economies of scale and lower
fuel costs. The expense and risk of investing in and operating these
huge vessels, coupled with the lines' expansive service networks, could
easily have led to significant merger and acquisition activity--and,
thereby, resulted in greater market concentration. That has not
happened. Instead the lines established cost-reducing, multi-carrier,
operational agreements, informally known as ``alliances,'' that
preserve the member lines' independent marketing and pricing.
Significantly, such market concentration did not occur as these
agreements were required to be filed, reviewed, and monitored by the
Commission in order to operate.
In addition, many lines cut costs by exiting unprofitable, non-core
businesses. In particular, they have largely divested their truck
chassis assets--the trailers used to carry ocean containers between
seaports and inland distribution centers, warehouses and rail heads.
What chassis ownership and provisioning to its customers will
ultimately look like is still a work-in-progress.
Given China's slowing economic growth, the precarious financial
situation in Europe, and the poor GDP growth forecasts for some of
Latin America's largest economies, the lines are expected to continue
to face market-driven revenue pressures--despite the reduction in their
fuel costs from low oil prices. In short, incentives for alliances to
intensify their operational cooperation--and concerns about the
competitive consequences--are unlikely to diminish soon.
The Commission has had, and will continue to have, multiple roles
with respect to these on-going industry changes. We evaluate the
potential effects of the new, large, multi-carrier alliances and
closely monitor their competitive behavior once they take effect so
that the Commission can react early to adverse changes if necessary.
We also oversee agreements under which various stakeholder
organizations work out ways to ensure that enough chassis are available
at U.S. ports when and where they are needed, and discuss other steps
to help reduce marine terminal congestion. FMC staff also works with
shippers, truckers, and other affected parties to help them address
issues related to shipment delays and associated charges which result
in increased and/or unforeseen costs.
As you may be aware, congestion at U.S. ports has increased
significantly which negatively impacts our import and export
communities. The Commission has been involved in pro-active outreach
efforts to reduce the likelihood of future port-related congestion. We
are working with our Nation's ports, shippers, trucking companies, and
carriers to identify likely problem issues and encourage cooperative
efforts among those stakeholders to mitigate or correct them. In light
of the challenges related to alliances, the Commission has engaged with
its fellow global regulators, the European Commission and the Chinese
Ministry of Transportation, to exchange views on the global liner
industry. That outreach process began with the Global Regulatory Summit
in December 2013. A second discussion is being planned for this summer.
If confirmed, I look forward to working with the Committee to
ensure that our Nation benefits from a fair, efficient and competitive
ocean transportation system.
Thank you for your consideration. I will be happy to answer any
questions you may have.
______
a. biographical information
1. Name (Include any former names or nicknames used): Mario
Cordero.
2. Position to which nominated: Commissioner, Federal Maritime
Commission.
3. Date of appointment: Nominated January 13, 2015.
4. Address (List current place of residence and office addresses):
Residence: Information not released to the public.
Office: 800 N. Capitol Street NW, Washington, DC 20573.
5. Date and Place of Birth: August 31, 1952; Los Angeles, CA.
6. Provide the name, position, and place of employment for your
spouse (if married) and the names and ages of your children (including
stepchildren and children by a previous marriage).
Gloria Cordero, spouse--owner, Cordero & Associates
Celine Cordero, daughter, 38 years of age
Mario Andres Cordero, son, 35 years of age
7. List all the college and graduate degrees. Provide year and
school attended.
Santa Clara University School of Law, J.D. 1975-1978
University of Southern California 1974-1975
California State University Long Beach, B.A. 1970-1974
8. List all post-undergraduate employment and highlight all
management level jobs held and any non-managerial jobs that related to
the position for which you are nominated.
Chairman, Federal Maritime Commission, 2013 to present
Washington, D.C.
Commissioner, Federal Maritime Commission, 2011-2013
Washington, D.C.
Commissioner, Board of Harbor Commissioners, 2003-2011
Port of Long Beach, CA
Senior Attorney, Law Office of Wayne Singer, 2009-2011
Long Beach, CA
Adjunct Instructor of Political Science (part-time), 1995-2011
Long Beach City College
Counsel, Safeco Insurance, 2007-2008
Long Beach, CA
Attorney, Adelson, Testan & Brundo, 2001-2006
Long Beach, CA
Attorney, Altman & Shoemaker, 1998-2001
Encino, CA
Attorney, Ochoa & Sillas, 1996-1998
Los Angeles, CA
Attorney, Robin, Carmack & Gonia, 1993-1996
Tustin, CA
Attorney, Nezin, Maher & Johnson, 1988-1993
Tustin, CA
Counsel, Industrial Indemnity Insurance 1987-1988
Los Angeles, CA
Attorney, State Compensation Insurance Fund 1986-1987
Los Angeles, CA
Sole Practitioner, 1982-1986
Long Beach, CA
9. Attach a copy of your resume. A copy is attached.
10. List any advisory, consultative, honorary, or other part-time
service or positions with Federal, State, or local governments, other
than those listed above, within the last five years. None.
11. List all positions held as an officer, director, trustee,
partner, proprietor, agent, representative, or consultant of any
corporation, company, firm, partnership, or other business, enterprise,
educational, or other institution within the last five years.
President, Association of Pacific Ports, 2010-2011
Vice President, Association of Pacific Ports, 2009-2010
Member, Board of Directors, 2008-2011
California League of Conservation Voters
Member, Board of Directors, 2004-2011
Museum of Latin American Art
Member, Board of Directors, 2005-2009
St. John Bosco High School
12. Please list all membership you have had during the past ten
years or currently hold with any civic, social, charitable,
educational, political, professional, fraternal, benevolent or
religious organization, private club, or other membership organization.
Include dates of membership and any positions you have held with any
organization. Please note whether any such club or organization
restricts membership on the basis of sex, race, color, religion,
national origin, age or handicap.
None of the following organizations restrict membership in any way,
and I have not served on any of the organizations below since May 2011.
California League of Conservation Voters, Board of Directors,
2008-2011
Miller Children's Hospital, Advisory Council, 2007-2011
Museum of Latin American Art, Board of Directors, 2004-2011
St. John Bosco High School, Board of Directors, 2005-2009
Long Beach Bar Association, Committee Chair, 2003-2004
Mexican American Bar Association, Committee Chair, 2001-2003
State Bar of California 1980 to present
Bar of the U.S. District Court, Central District of California,
1980 to present
13. Have you ever been a candidate for and/or held a public office
(elected, non-elected, or appointed? If so, indicate whether any
campaign has any outstanding debt, the amount, and whether you are
personally liable for that debt.
I was appointed to the Long Beach Harbor Commission. There was no
campaign; therefore, no debt incurred.
I was appointed to the Federal Maritime Commission. There was no
campaign; therefore, no debt incurred.
14. Itemize all political contributions to any individual, campaign
organization, political party, political action committee, or similar
entity of $500 or more for the past ten years. Also, list all offices
you have held with, and services rendered to, a state or national
political party or election committee during the same period.
I have not held any office or provided any service to a State or
National political party and/or election committee.
I have made contributions to the following individuals:
Mayor Bob Foster, Long Beach, CA--2006--$500.00; 2010--$500.00
Mayor Beverly O'Neill, Long Beach, CA--2002--$500.00
15. List all scholarships, fellowships, honorary degrees, honorary
society memberships, military medals, and any other special
recognitions for outstanding service or achievements.
Stanley T. Olafson Award for Advancement of World Trade, 2014
Alternative Fuel Vehicle Institute, 20/20 Vision Award, Public
Servant Award, 2009
Community Hispanic Association, Community Award, 2008
League of California Cities/Latino Caucus, Public Servant
Environmental Leadership Award, 2007
Mexican American Bar Association, Attorney of the Year Award,
2007
16. Please list each book, article, column, or publication you have
authored individually or with others. Also list any speeches that you
have given on topics relevant to the position for which you have been
nominated. Do not attach copies of these publications unless otherwise
instructed.
I have authored one article, ``Port & Counter Port: Lawsuit will
slow cleanup,'' which appeared in the Long Beach Press Telegram on
February 17, 2008.
As a Port of Long Beach Harbor Commissioner, I gave the following
speeches relevant to the position to which I have been nominated:
Latin American Delegation Port Conference
Addressed port operations and environmental policy.
2005, 2007, 2008
Hemispheric Latin American Conference
Addressed sustainable practices at ports.
Attended two conferences hosted in Panama, Brazil.
Mexican Pacific Port Conference
Addressed cooperative agreements on security and
environmental technology.
2007 Conference, hosted by the Ports of Long Beach and
Los Angeles
2009 Conference, hosted by the Port of Manzanillo,
Mexico
Addressed the subject of international trade with an
emphasis on western hemispheric relations on behalf of
the Port of Long Beach before an audience of maritime
legal professionals.
2006, Buenos Aires, Argentina
American Association of Port Authorities
Participated in panel presentations concerning
environmental initiatives and sustainable policy.
2005, 2007, Port of Long Beach, CA
Texas Corridor Transportation Coalition Conference
Addressed efficient transportation of goods.
2005, 2006
Fast Freight Clean Air Conference
Addressed sustainable, environmental port operations.
2007, Los Angeles, CA
2008, New York City, NY
Footwear Logistics Distribution Conference, Recycle Exporter
Association
Addressed sustainable practices and advancement of
exports.
2010
As a Federal Maritime Commissioner, I have given the following
speeches relevant to the position to which I have been nominated:
The Biogas USA West Conference
Addressed sustainable shipping practices.
Oct. 2011, San Francisco, CA
The Global Shippers Forum Addressed port infrastructure.
Nov. 2011, Atlanta, GA
World LNG Fuels Conference
Addressed environmental maritime practices.
Jan. 2012, Houston, TX
Panama Week
Addressed expansion of Panama Canal and U.S. port
infrastructure.
Mar. 2012, Washington, DC
The XXI Latin American Congress of Ports
Addressed sustainability in Latin American port
development.
Apr. 2012, Antigua, Guatemala
Logistics Conference, Sala de Las Americas
Addressed role of the Federal Maritime Commission.
Aug. 2012, Bogota, Columbia
FIATA World Congress
Addressed port logistics and infrastructure.
Oct. 2012, Los Angeles, CA
Organization of American States
Addressed sustainable port practices.
Nov. 2012, Washington, DC
Transportation Research Board
Addressed maritime infrastructure and freight policy.
Jan. 2013, Washington, DC
Association of Pacific Ports
Addressed sustainable port practices.
Apr. 2013, Seattle, WA
International Association of Ports and Harbors
Addressed international trade.
May 2013, Los Angeles, CA
Los Angeles Custom Brokers Freight Forwarders Association
Addressed port infrastructure.
Sept. 2013, Long Beach, CA
Port Tech Expo
Addressed global technology and ports.
Sept. 2013, Los Angeles, CA
Marine Log Global Greenship Conference
Addressed sustainable port practices.
Sept. 2013, Washington, DC
International Warehouse Logistics Association
Addressed sustainable port practices.
Sept. 2013, Los Angeles, CA
2013 CONECT Round Table
Participated in round table discussion on international
trade.
Oct. 2013, Washington, DC
International Propeller Club
Addressed Federal Maritime Commission's role and
regulatory responsibilities.
Oct. 2013, Washington, DC
California Association of Port Authorities
Addressed port infrastructure and policy.
Oct. 2013, Seattle, WA
Inaugural Conference on Creating an Environmentally Sustainable
Maritime Industry
Addressed sustainable port and maritime practices.
Oct. 2013, San Pedro, CA
Western Cargo Conference
Addressed efficiency of maritime transportation.
Oct. 2013, Rancho Mirage, CA
National Association of Waterfront Employers
Addressed consolidation of vessel carrier industry.
Oct. 2013, Washington, DC
Sixth SeaCargo Americas Conference
Addressed port development.
Nov. 2013, Miami, FL
2014 Port Productivity Conference
Addressed challenges facing U.S. ports.
Feb. 2014, Fort Lauderdale, FL
Pulse of the Ports Peak Season Conference
Addressed competitive environment of maritime industry.
Apr. 2014, Long Beach, CA
40th Annual NCBFAA Conference
Addressed Commission regulations affecting ocean
transportation intermediaries.
Apr. 2014, Summerlin, NV
Valparaiso Sustainable Ports Seminar
Addressed sustainable port practices.
May 2014, Valparaiso, Chile
FuturePorts
Gave welcoming remarks.
June 2014, San Pedro, CA
South Carolina International Trade Conference
Addressed port infrastructure.
Sept. 2014, Charleston, SC
5th Annual PortTech Los Angeles Expo
Addressed innovative port technology.
Sept. 2014, Los Angeles, CA
17. Please identify each instance in which you have testified
orally or in writing before Congress in a governmental or non-
governmental capacity and specify the date and subject matter of each
testimony.
House Committee on Transportation & Infrastructure,
Subcommittee on Coast Guard and Maritime Transportation,
testimony on FMC 2014 FY Budget request--Apr. 16, 2013
House Committee on Transportation & Infrastructure,
Subcommittee on Coast Guard and Maritime Transportation,
testimony on regulatory review--Sept. 10, 2013
House Committee on Transportation & Infrastructure,
Subcommittee on Coast Guard and Maritime Transportation,
testimony on FMC Re-authorization--Oct. 29, 2013
House Committee on Transportation & Infrastructure,
Subcommittee on Coast Guard and Maritime Transportation,
testimony on FMC 2015 FY Budget request--Mar. 26, 2014
Senate Committee on Commerce, Science, and Transportation,
confirmation hearing--Nov. 30, 2010
18. Given the current mission, major programs, and major
operational objectives of the department/agency to which you have been
nominated, what in your background or employment experiences do you
believe affirmatively qualifies you for appointment to the position for
which you have been nominated, and why do you wish to serve in that
position?
For the past three years, I have served on the Federal Maritime
Commission (FMC) and currently serve as Chairman, effective April 1,
2013. As Chairman, I am the chief executive and administrative officer
of the FMC.
In the role of Chairman, I provide management direction to relevant
directors at the FMC, and ensure the efficient discharge of their
statutory responsibilities.
The FMC carries out important statutorily-mandated programs aimed
at maintaining an efficient and competitive international ocean
transportation system; protecting the public from unlawful, unfair, and
deceptive ocean transportation practices; and resolving shipping
disputes. In addition, the FMC's oversight of ocean common carriers,
ocean transportation intermediaries, and marine terminal operators is
an important element in the effort to protect our Nation's seaports.
Prior to joining the FMC in June 2011, I served eight years on the
Board of Harbor Commissioners for the Port of Long Beach (POLB), the
second largest port in the Nation. The Board is charged with the
exclusive control to manage and set policy in relation to the Harbor
District. The duties include providing for the needs of commerce,
navigation, and operations related to international trade.
My experience as POLB Harbor Commissioner provided me with first-
hand experience on many aspects, not only with regard to port
operations, but in addition, paramount issues faced by the maritime
community, both in the domestic and international arenas.
My desire to continue to serve on the Federal Maritime Commission
as Chairman stems from the positive experiences I gained at the FMC and
the Port of Long Beach, which specifically addressed challenging issues
presented before an independent regulatory commission and one of the
Nation's largest port complexes.
I have dedicated the past 11 years to the maritime/port industry,
an industry that not only is vital to the Nation's economy, but one for
which I have exhibited a personal passion with regard to the relevant
issues of international trade, goods movement, and sustainable
development.
19. What do you believe are your responsibilities, if confirmed, to
ensure that the department/agency has proper management and accounting
controls, and what experience do you have managing a large
organization?
First, as Chairman of the FMC I have presided over the Performance
and Accountability Report for Fiscal Year 2013 (PAR) submitted by the
agency. The Fiscal Year 2013 independent financial audit, performed by
the Inspector General, resulted in an unqualified opinion. In the
Statement of Assurance section of the PAR, I provided my assurance that
the FMC has no material weaknesses, significant deficiencies, or
instances of non-compliance with the laws and regulations to report.
The goals and objective of the Commission are dependent on a keen
partnership between the Commission and its management staff. My
responsibility would continue to involve not only ensuring the proper
oversight, but being proactive on the issues before the Commission by
ensuring the staff is accountable to the policies expressed by the
Commission and responsive to the needs of the industry and consumers.
Second, my service at the Port of Long Beach provided valuable
experience in oversight of management and accounting controls. The
gross operating revenue for the Port of Long Beach in Fiscal Year 2009
(a down year) was estimated at $311.4 million. In 2008, the revenue sum
exceeded $360 million. Total employees at the POLB approximated 400.
The Government Finance Officers Association of the United States and
Canada (GFOA) awarded a Certificate of Achievement for Excellence in
Financial Reporting to the POLB, for year ending September 30, 2008.
This was the 26th consecutive year the POLB had received this
prestigious award. Serving on the Board of Harbor Commissioners has
provided relevant experience, which has recognized the POLB as a leader
in the industry.
20. What do you believe to be the top three challenges facing the
department/agency and why?
First, a paramount concern is furthering economic recovery. In this
regard, our ability to facilitate commerce and specifically promote
policies to advance exports, given the trade imbalance of export-import
containerization, is essential. Promoting the Administration's National
Export Initiative is central to the domestic economy and serves to
provide a positive impact to the economy.
Second, the emergence of global alliances among ocean carriers
brings new dynamics to the Commission's oversight role. This mandates
we balance the potential benefits of the cost savings and environmental
efficiencies resulting from the coordinated deployment of newer, larger
vessels with the potential harm that could come from a concentration of
decision-making power in terms of port coverage, sailing schedules, and
necessary capacity in the appropriate trade lanes. As part of reviewing
the competitive impact of a global alliance, oversight of the changes
in capacity is paramount. Specifically, realignment of previously
independently operated service strings and how those capacity changes
might affect shippers, given current market conditions.
A third challenge is budgetary in nature. As noted, the FMC is an
independent agency charged with the regulation of U.S. oceanborne
foreign commerce valued at $930 billion annually. In its oversight
role, the FMC's legislative mandate is not only vital to the Nation's
economy, but ever more important given the increased immunity
agreements filed by ocean carriers and marine terminals at our Nation's
port authorities. For Fiscal Year 2015, the FMC submitted budget
request totals of $25,660,000, which includes salaries and benefits for
124 full-time equivalent employees. The requested amount represents
minimal spending levels necessary to effectively conduct the
Commission's basic day-to-day operations and to meet the
responsibilities Congress has entrusted to the agency. While the agency
will continue to use its limited resources wisely, I would be remiss
not to raise our budgetary issue as one of the top three challenges
facing the agency.
b. potential conflicts of interest
1. Describe all financial arrangements, deferred compensation
agreements, and other continuing financial dealings with business
associates, clients, or customers. Please include information related
to retirement accounts: None.
2. Do you have any commitments or agreements, formal or informal,
to maintain employment, affiliation, or practice with any business,
association, or other organization during your appointment? If so,
please explain: None.
3. Indicate any investments, obligations, liabilities, or other
relationships which could involve potential conflicts of interest in
the position to which you have been nominated.
In connection with the nomination process, I have consulted with
the FMC's designated agency ethics official to identify potential
conflicts of interest. Any potential conflicts of interest will be
resolved in accordance with the terms of an ethics agreement that I
have entered into with the FMC designated agency ethics official and
that has been provided to this Committee. I am not aware of any other
potential conflicts of interest.
4. Describe any business relationship, dealing or financial
transaction which you have had during the last ten years, whether for
yourself, on behalf of a client, or acting as an agent, that could in
any way constitute or result in a possible conflict of interest in the
position to which you have been nominated.
In connection with the nomination process, I have consulted with
the FMC's designated agency ethics official to identify potential
conflicts of interest. Any potential conflicts of interest will be
resolved in accordance with the terms of an ethics agreement that I
have entered into with the FMC designated agency ethics official and
that has been provided to this Committee. I am not aware of any other
potential conflicts of interest.
5. Describe any activity during the past ten years in which you
have been engaged for the purpose of directly, or indirectly
influencing the passage, defeat, or modification of any legislation or
affecting the administration and execution of law or public policy.
None.
6. Explain how you will resolve any potential conflict of interest,
including any that may be disclosed by your responses to the above
items.
Any potential conflicts of interest will be resolved in accordance
with the terms of an ethics agreement that I have entered into with the
FMC's designated agency ethics official and that has been provided to
this Committee.
c. legal matters
1. Have you ever been disciplined or cited for a breach of ethics
by, or been the subject of a complaint to any court, administrative
agency, professional association, disciplinary committee, or other
professional group? If so, please explain: No.
2. Have you ever been investigated, arrested, charged, or held by
any Federal, State, or other law enforcement authority of any Federal,
State, county, or municipal entity, other than for a minor traffic
offense? If so, please explain: No.
3. Have you or any business of which you are or were an officer
ever been involved as a party in an administrative agency proceeding or
civil litigation? If so, please explain.
In the fall of 2007, I appealed an unemployment benefit reduction
that I had received from the State of California Employment Development
Department. From December 2006 to February 2007, I had received
unemployment from the State of California while I was between jobs.
Months later, I received a notice of repayment because the benefit
calculation did not account for a stipend of $100 per meeting that I
received as a Commissioner for the Port of Long Beach. I appealed the
notice on the issue of whether the stipend was considered income. The
Department denied my appeal, and I promptly repaid approximately $500
in unemployment benefits.
In 1989, a malpractice suit filed by one of my previous firms'
clients named every attorney at the firm. I was quickly dismissed by
the Plaintiff because I had not had any significant involvement in the
matter at issue.
4. Have you ever been convicted (including pleas of guilty or nolo
contendere) of any criminal violation other than a minor traffic
offense? If so, please explain: No.
5. Have you ever been accused, formally or informally sexual
harassment, or discrimination on the basis of sex, race, religion, or
any other basis? If so, please explain.
A former agency employee named her then-acting supervisor in an
informal EEO complaint filed with the FMC's EEO Director. The complaint
is unclear as to specific allegations against me other than conclusory
allegations, but appears to state claims relating to an application for
the Inspector General position. I had no role in the resume screening
process or the first round of interviews. I have a one-fifth
representation under the IG Act; accordingly, my role was limited to
the final round of interviews like that of every of other Commissioner.
6. Please advise the Committee of any additional information,
favorable or unfavorable, which you feel should be disclosed in
connection with your nomination. None.
d. relationship with committee
1. Will you ensure that your department/agency complies with
deadlines for information set by congressional committee? Yes.
2. Will you ensure that your department/agency does whatever it can
to protect congressional witnesses and whistle blowers from reprisal
for their testimony and disclosure? Yes.
3. Will you cooperate in providing the Committee with requested
witnesses including technical experts and career employees, with
firsthand knowledge of matters of interest to the Committee? Yes.
4. Are you willing to appear and testify before any duly
constituted committee of the Congress on such occasions as you may be
reasonably requested to do so? Yes.
______
Resume of Mario Cordero
Experience
Federal Maritime Commission, Washington, D.C.
Chairman, April 2013 to Present
Commissioner, June 2011 to April 2013
Nominated by President Obama and Confirmed by the United States Senate
Acts as Chief Executive and Administrative Officer of the Commission;
administers policies and ensures the efficient discharge of the agency.
Provides management direction with respect to all matters concerning
overall Commission workflow, resource allocation (staff and budgetary),
work priorities, and managerial matters.
Law Office of Wayne Singer, Long Beach, CA
Senior Attorney specializing in workers' compensation defense. November
2009 to June 2011
Safeco Insurance, Long Beach, CA
House Counsel exclusive to workers' compensation defense, February 2007
to December 2008
Adelson, Testan & Brundo, Long Beach, CA
Attorney specializing in workers' compensation defense and related
employment law. August 2001 to Dec. 2006
Altman & Shoemaker, Encino, CA
Attorney specializing in workers' comp defense and related employment
law. 1998 to 2001
Ochoa & Sillas, Los Angeles, CA
Attorney specializing in workers' comp defense, civil litigation and
political advocacy. 1996 to 1998
Educator, Long Beach, CA
Long Beach City College
Political Science and California Politics, 1996 to 2011
Education
Santa Clara University School of Law, San Jose, CA
Juris Doctor, 1978
Languages
Fluent in Spanish
Licenses
Admitted to The State Bar of California, 1980
Admitted to Bar of the U.S. District Court, Central District
of California, 1980
Affiliations
Member, The State Bar of California
Member, Long Beach Bar Association, Long Beach, CA Past
Chair, Workers' Compensation Committee
Member, Mexican-American Bar Association, Los Angeles, CA
Past Chair, Workers' Compensation Committee
Awards
Stanley T. Olafson Award 2014
Los Angeles Chamber of Commerce ``. . .honoring ``an individual
who has contributed in the advancement of world trade.''
National 20/20 Vision Award 2009
The Alternative Fuel Vehicle Institute, Las Vegas, NV
Attorney of the Year 2007
Mexican American Bar Association, of Los Angeles County
Environmental Award 2007
League of California Cities
References available upon request
______
Addendum One
Federal Maritime Commission, Washington, D.C.
The FMC is the independent Federal agency responsible for
regulating the U.S. international ocean transportation system for the
benefit of U.S. exporters, importers and the U.S. consumer.
Designated Chairman by President Obama: April 1, 1013
Nominated Commissioner by President Obama: September 17,
2010
Confirmed by U.S. Senate: April14, 2011
Sworn into office: June 2, 2011
This FMC Chairman:
Acts as Chief Executive and Administrative Officer of the
Commission: administers policies and ensures the efficient
discharge of the agency;
Testifies before the U.S. Senate and U.S. House of
Representatives on yearly FMC budget, other appropriations,
ocean transportation policies and at either body's request on
FMC issues of concern to Congress;
Negotiates with international counterparts on ocean
transportation policies and facilitates with various foreign
government officials the protection and promotion of U.S.
ocean-going interests inforeign commerce;
Addresses audiences across the U.S. and the world as
necessary to advance Administration polices and, in particular,
receive input from all FMC stakeholders; and;
Provides specific management direction with respect to all
matters concerning FMC workflow, (2) resource a/location (staff
and budgetary], (3) work priorities, and 4) managerial matters.
My Personal Goals as FMC Chairman include:
(1) To be a hands-on chairman overseeing the superb staff workings
of this agency;
(2) Work closely with fellow commissioners regardless of party to
(a) to protect the public from unfair and deceptive practices
and (b) ensure competitive and efficient ocean transportation
services for the shipping public is maintained;
(3) To promote, advance, encourage, facilitate American commerce and
shipping interests to all the world's hemispheres in a fair,
transparent manner; and
(4) To move the industry to conduct itself in the most
environmentally progressive ways possible
Congressional Testimony. Acts & Stakeholder Engagements (partial list)
Testimony before Congress on the FMC budget--March 26, 2014,
Testimony before Congress on FMC reauthorization
legislation--October 29, 2013
Testimony before Congress regarding Regulatory Review--
September 10, 2013
Testimony before Congress Regarding FY 2013 FMC budget--
April 16, 2013
Guest Speaker (partial list)
2014 Port Productivity Conference--February 14, 2014
Sixth SeaCargo Americas Conference--Emphasized cooperation i
n trade, investment and infrastructure development in the
western hemisphere. November 6, 2013
Inaugural Conference on Creating an Environmentally
Sustainable Maritime Industry--October 17, 2013
California Association of Port Authorities Annual Meeting--
October 11, 2013
International Association of Ports & Harbors (IAPH) 28th
World Ports Conference--May 07, 2013
Organization of American States on sustainable port
management--November 13, 2012
Addendum Two
Commissioner, Board of Harbor Commissioners
Port of Long Beach, Long Beach, CA
America's Second Largest Port
The Environment
Spearheaded the innovative, environmentally unprecedented Green
Port Policy at the Port of Long Beach. Through voluntary and mandated
efforts, it revolutionized environmental clean-up ports through the
Clean Trucks Program, Vessel Low-Sulfur Fuel Program, Technology
Advancement Program and others. In conjunction with the Port of Los
Angeles, Green Port Policy is today an international model for striking
balance among industry, labor, shippers and the health and safety of
the people who live and work in and around the ports.
Promoted and expanded Port Community Outreach Initiative including
the new, Pulse of the Port, award winning cable TV program.
International Environmental Cooperation
Served as Executive Board member on the American Association of
Port Authorities' Latin American delegation. Instrumental in
development of policy urging greater cooperation between North American
and Latin American ports.
Guest Speaker (partial list)
Application of new Environmental Port technologies, Brazil
2009
First Environmental Latin American Hemispheric Conference,
Panama 2008
Port of Rotterdam symposium (Europe's largest port) to speak
on POLB's Green Port Program. 2007
Organized First Annual Conference between Mexican Ports of
the Pacific and Ports of Long Beach and Los Angeles. 2007
Appointments
Elected Harbor Board Commission, President, July 2007-2008;
Vice President, July 2006 to July 2007 and July 2009 thru July
2010.
President of the Association of Pacific Ports, Sept 2010-
2011, Vice President, 2009-2010.
First appointed to Board Commission in 2003 by then Mayor
Beverly O'Neill. Reappointed in July 2009 by Mayor Bob Foster.
Both times the City Council unanimously approved these six year
term appointments.
The Chairman. Thank you, Mr. Cordero.
We'll start with some questions and I will direct this one
to Mr. Elliott, and it has to do with adjudication in rate
cases. The STB's Fiscal Year 2016 budget request states that
the Board participates in roughly 1,300 decisions in court-
related matters each year and a significant portion of the
STB's resources are consumed by complex rate cases. This
workload is expected to increase. Your colleague, Vice Chairman
Ann Begeman, dissented on the proposed Fiscal Year 2016 budget
request on the grounds that she believes the budget fails to
dedicate enough attention and resources to improve its
adjudication process, as well as simultaneously doubling its
travel budget.
So Mr. Elliott, could you share your views on the Vice
Chairman's criticism of the 2016 budget proposal?
Mr. Elliott. Sure.
As far as dedicating money to the process itself, the Board
has taken some of the money. I've commissioned a study on the
rate case process. What has occurred since I've come to the
Board is the cases have gone from coal cases with one or two
routes to cases which are incredibly more complex with hundreds
of routes. So what I have done is dedicated money, number one,
to look at studies of alternative ways to bring rate cases in a
simpler fashion. So I've committed money to an external
consultant to take a look at that because I thought the Board
needed new ways to make the Board more accessible.
Second, I've also commissioned an internal study about
faster ways to bring rate cases through the board and more
efficiently and more quickly.
As far as the travel budget itself, I don't believe that
our budget is large in comparison to most agencies but we do
travel very conservatively over the last several years. So I'm
not sure exactly if that--it's not a big number. So I have
committed and I've committed as an attorney that practiced
before the board every possible human resource in the board to
look at ways to improve the way we process cases.
The Chairman. Thank you.
I think I mentioned, and you mentioned as well, I have a
keen interest in agriculture, as you know----
Mr. Elliott. Yes.
The Chairman.--and rail transportation. I had an Ag
roundtable back in South Dakota recently. And one of the
recurring themes that came out of that was the high shipping
cost and its effect on farmers across South Dakota who rely on
rail transportation to get their harvest to the market. In your
response to the Committee's questionnaire, you mentioned that
under your direction the Board has been proactive, I should
say, in addressing rail service issues by closely monitoring
rail service metrics, issuing targeted service orders that
improve service levels and increase accountability, gain
stakeholder input, and making more staff available to resolve
immediate service crises. That's from your statement.
So I question: Do you characterize your efforts as having
been successful and what steps would the STB take to prevent
future rail service delays?
Mr. Elliott. As far as future rail delays, what we have
done is, on December 31, we did issue a decision, a proposed
rulemaking, that asked for more information from the railroads
so that we can better understand the service issues and the
metrics involved in the rail industry. That has never been done
before, despite all of the service issues. So we are going to
have a more careful examination of what is going on with
respect to the rail industry.
In addition, since the rail crisis that occurred, in 2014
occurred, we have been in close contact with the railroads and
their shippers to make sure that we understand their issues and
we also want to make sure that the railroads are coordinating
amongst themselves to make sure that these issues don't arise
again, especially in Chicago.
The Chairman. Chairman Cordero, the continuing formation of
carrier alliances to consolidate their routes and services, I
believe there are roughly now four major alliances, has given
rise to reports that the operations of these alliances may be a
contributing factor to the chronic congestion at West Coast
ports and perhaps at other U.S. ports. There's an article, it
appeared earlier this week in the Wall Street Journal, that
noted that the sharp growth in container ship sizes is also a
contributing factor to overwhelming ports at key periods and
costing millions to importers and exporters who can't access
their cargo on time.
What can you tell us about the impact these alliances and
the sharp growth in container ship capacity are having on the
shipping community? And will you, as shippers, benefit from
this consolidation due to a greater choice of services and
lower freight rates in the short and in the long term?
Mr. Cordero. Thank you for your question, Chairman.
First of all, the assessment is correct in terms of the
impact or the potential impact that these alliances may be
having, not only on the domestic front, but in the
international community. I think it's fair to say that at this
point the FMC is monitoring what those impacts are. We are
taking this responsibility very seriously, and I can represent
to the Committee that the monitoring that we are addressing at
this point is addressing that issue. In other words, what are
these impacts and to what extent are they impacting the
American shipper?
I'll state two points further to that. One is the,
preliminarily, as we saw in the West Coast experience, the
impact is logistics in nature for sure and I'm referencing the
Marine Terminal Operators who, in my view, were not prepared
for the unloading and loading of thousands of containers these
large vessels bring in. Number two, the impact on the American
shipper. And I, and our staff here, have been very adamant with
regard to protecting the interests of the American shipper. One
issue with regard to that is the cost of it being incurred,
and, as a result of congestion, some of the cost in reference
to demurrage and detention, are of serious concern.
The Chairman. I'm going to, just for purposes of the record
too, ask unanimous consent to include those two Wall Street
Journal articles, one dated May 4, 2015, the other April 28,
2015, into the record.
So without objection, we'll include those as part of your
response to that particular question.
[Below are both the web addresses and the articles
themselves:]
``Growing Shipping Alliances Ares Straining Major U.S. Gateway
Ports'' by Costas Paris, May 4, 2015 5:58 a.m. ET, Wall Street Journal
http://www.wsj.com/articles/growing-shipping-alliances-are-straining-
major-u-s-gateway-ports-1430733531?mod=e2tw
``U.S. Ports See Costly Delays as Cargo Ships, Volumes Grow'' by
Adrian Campo-Flore and Cameron McWhirter, April 29, 2015, 4:41 p.m. ET
http://www.wsj.com/articles/u-s-ports-see-costly-delays-as-cargo-ships-
volumes-grow-1430340113
______
The Wall Street Journal
Growing Shipping Alliances Are Straining Major U.S. Gateway Ports
Ocean carriers are cooperating on capacity on their new, larger ships,
adding to handling problems
By Costas Paris
A sharp growth in container ship sizes and alliances among the
world's biggest shipping operators is overwhelming U.S. major gateway
ports during peak periods, costing millions to importers and exporters
who can't access their cargo on time and prompting the country's marine
watchdog to warn of legal action if the parties don't deal with the
mess.
Container shipping, which moves over 95 percent of the world's
manufactured goods, is largely controlled by around 15 mostly European
and Asian operators, which recently have accelerated the pooling of
operations within giant alliances to cut costs. Long a feature of
maritime shipping, the alliances have grown in recent years as carriers
have introduced bigger vessels that are least twice the size of those
calling on U.S. ports for years.
The economic imperatives of carriers trying to get the most out of
the new ships meet the cargo-handling limitations at ports such as
those the largest U.S. gateways at Los Angeles and Long Beach. Upon
arrival, containers often are randomly unloaded, which swamps terminal
operators as they try to organize the metal boxes in stacks and move
them to specific destinations by truck or rail.
``Existing terminals were designed two decades ago to handle ships
half the size of today's vessels, and with the alliances, six ships
belonging to the same alliance can show up at five different terminals
in Los Angeles and Long Beach.'' said Gene Seroka, executive director
at the Port of Los Angeles. ``This disperses cargo over a wider array
of facilities making it challenging for truckers to pick the containers
as well for western railways to amass the cargo and move it to specific
destinations.
``We have 13 different terminals in Southern California. So there
is a lot of confusion in picking up cargo,'' said Mr. Seroka.
For years, the workhorse vessel that moved goods across the Pacific
had a capacity to carry between 5,000 and 7,000 containers and it would
take up to 10 hours to move a container from the port. But over the
past couple of years, ships calling at West Coast ports have doubled in
size. At the height of the peak period late last year the congestion
was so severe that it would take up to eight days to move a container
out of port and on to major importers of Asian goods such as Wal-Mart
Inc., Home Depot Inc. and others.
Mr. Seroka said that on average terminal operators had to pay $3
million in added spending a week to deal with the congestion.
California ports handle the largest share of cargo moved from and
to Asia, everything from clothing and home appliances to toys, luxury
goods and electronics coming in and packaged food, fresh produce and
scrap metal going out. Peak periods include September and October when
retailers prepare for the Christmas holidays and the first-quarter
period before the Lunar New Year, when U.S. importers typically stock
up for spring before Chinese factories shut down for up to two weeks.
Jon Slangerup, chief executive at the Port of Long Beach, says that
as ships get bigger, they call to more ports in Asia where containers
are loaded randomly, with little attention to the ownership of the
containers or their final destination. When docking at multiple
terminals at the West Coast, unloading the ships is also done randomly,
straining port operators and truckers as they try to figure out which
box goes where.
Historically, a single ship had its containers stocked in blocks,
with each block destined for a particular location by a particular mode
of transport. The process known as block stowage was for decades the
preferred method for port operators and it worked well.
``In the past, we handled a container one to three times before it
left port, Mr. Slangerup said. ``Now, at peak times, it is five to
eight times, and when it happened last year nobody really understood
the magnitude of the problem. It wasn't expected or planned for and so
the physical gridlock that ensued was very serious.''
Jonathan Gold, vice president of National Retail Federation which
represents 18,000 U.S. retailers, says members also have been levied by
shipping companies with congestion charges to compensate for the for
the extra time a vessel stays at port while cargo is being shorted out.
``It's a very large issue that adds major costs to cargo owners,''
he said. ``We want to see better port operations overall that moves
cargo quickly. We need a wider conversation with everyone involved in
the supply chain, but it will take years to deal with the problem.''
The impact of the alliances isn't limited to the United States.
European and Asian ports have moved faster to adopt the infrastructure
needed to handle the megaships. Those ports still face congestion and
the alliances exacerbate the problem, but the loading of containers
bound for Europe is less of an issue in part because of different port
handling procedures.
Last month, the Federal Maritime Commission, the U.S. marine
watchdog, voted to call in all parties involved to discuss the issue
and come up with proposals to address the problem. It said that in many
cases, congestion charges are deemed unfair since importers, exporters
and truckers aren't responsible for the delays, and the regulator
warned it could penalize unfair practices by shipping companies and
terminal operators.
``The message from cargo owners, importers and exports is loud and
clear,'' said FMC FMC 0.30 percent Commissioner Richard Lidinsky.
``These alliances and their big ships are causing major problems at
U.S. ports and by our vote all parties involved will have to sit down
over the next 90 days identify what went wrong and come up with
solutions. After that, the FMC will have a clear picture and if needed
get involved in specific cases with investigations, subpoenas and
fines.''
``We had shippers telling us they are being regularly charged for
the congestion by shipping companies. The operators cause the
congestion and they want to profit on top of it. This is
unacceptable,'' Mr. Lidinsky said.
Maersk Line, the world's biggest container operator with 15 percent
of global capacity, according to the Singapore-based maritime research
group Alphaliner, says the larger vessels actually improve efficiency
as the cost savings are largely passed on to customers.
The FMC and the marine regulators from the European Union and China
is set to meet in Brussels in May to discuss whether the alliances are
in line with international competition practices and their role in
congestion at U.S. ports.
The big players in the business have said that pooling their
resources and deploying bigger ships--such as the Triple-E class, which
can carry in excess of 18,000 containers--cuts their costs and provides
better service to cargo owners.
The world's two biggest alliances in capacity terms are the 2M and
Ocean Three.
The 2M consists of A.P. Møller-Mærsk A/S's Maersk Line
of Denmark and Swiss-based Mediterranean Shipping Co., the world's top
2 container lines, with a combined 28.2 percent of all capacity,
according to Alphaliner. The 2M moves around 35 percent of all goods
between Asia and Europe and controls a market share of 15 percent and
37 percent of goods moved on the trans-Pacific and trans-Atlantic
routes, respectively.
Ocean Three, consisting France's CMA CGM, China Shipping Container
Lines Co. and Middle East shipping major United Arab Shipping Co.,
controls a 20 percent slice of all cargo between Asia and Europe and 13
percent and 7 percent across the Pacific and Atlantic oceans,
respectively.
______
The Wall Street Journal
U.S. Ports See Costly Delays as Cargo Ships, Volumes Grow
Problem shows how global trade logistics are falling out of sync
By Arian Campo-Flores and Cameron McWhirter
PORTSMOUTH, Va.--The Port of Virginia, one of the Nation's largest,
was built to handle high volumes of cargo traffic entering and exiting
the U.S.
But on his way recently to pick up a load of bedding, Albert
Newcomb was stalled for two hours before his rig could make it through
a mile-long line to one of the port's terminals. Once inside, the 43-
year-old independent truck driver hit a traffic jam 13 lanes wide and
10 trucks deep. By the time he left with his load, he had waited for a
total of eight hours. ``It's ridiculous,'' he said, as he sat in his
truck idling outside the gates. ``It's almost to the point where you
want to quit.''
A key reason for the holdup: a surge of containers from three large
ships at dock was straining the port's capacity and tying up
dockworkers and cranes.
Such congestion is becoming increasingly common at major U.S.
ports--a problem that could have profound implications for the $900
billion worth of goods transported to and from the U.S. each year by
container ships.
The slow movement of imports and exports illustrates how the
logistics of global trade have fallen terribly out of sync. Ocean
carriers are deploying progressively bigger vessels. Some would be
taller than the Empire State Building if stood on end. They can carry
more than twice as much cargo as their predecessors, and are more fuel-
efficient than smaller vessels. To ensure they travel as full as
possible, shipping lines have formed alliances to combine their loads.
But the floating behemoths are overwhelming many U.S. ports that
weren't built to handle such supersize ships. Of the 10 busiest U.S.
ports by container volume, as calculated by the American Association of
Port Authorities, at least seven are grappling regularly with
congestion.
In Newark, N.J., a shortage of chassis--the undercarriages used to
haul containers off the port by truck--is contributing to miles-long
lines. In Los Angeles and Long Beach, the arrival of giant vessels and
the growth of shipping alliances has caused terminal gridlock for
months, leaving ships stuck offshore waiting to unload. That situation
was exacerbated by a labor dispute at West Coast ports that was
resolved in February.
The big ships ``have stressed the infrastructure to the breaking
point,'' says Jock O'Connell, an international trade adviser at Beacon
Economics LLC in Sacramento, Calif. There needs to be ``a concerted
effort to rethink and redesign the ports to accommodate these larger
vessels and the additional cargo they're generating,'' he says.
It is only likely to get worse. Container volume at U.S. ports has
increased steadily since the recession, hitting all-time highs in 2014
at many East Coast terminals. Between 2010 and 2040, the volume of the
U.S.'s container trade with Northeast Asia--which accounts for the
majority of the U.S.'s overall container trade--is projected to more
than triple, according to a 2013 Department of Transportation study.
West Coast ports already receive megaships bearing as many as
14,000 containers traveling from Asia across the Pacific Ocean, while
East Coast ones are receiving 10,000-container vessels from Asia
through the Suez Canal. That volume will only grow when expansion of
the Panama Canal is completed next year. The widened, deeper canal will
allow ships carrying as many as 13,000 containers to travel en route to
the East Coast, compared with ships hauling 5,000 containers today.
The cost of port congestion to retailers, meanwhile, is expected to
climb--and ultimately be passed along to consumers.
Frank Layo, retail strategist at consulting firm Kurt Salmon,
forecasts that the cumulative costs of shipping delays could reach $7
billion this year and climb as high as $37 billion in 2016. He expects
some retailers to divert shipments from Asia to more-expensive routes
to avoid congested West Coast ports. Consumers could ``feel it in the
form of mass out-of-stocks and price increases,'' Mr. Layo says.
Lower fuel costs could help offset congestion costs, but whether
carriers will pass along such reductions to customers is unclear,
analysts say.
Audax Transportation hauls goods ranging from car engines for Ford
Motor Co. to frozen chicken parts for Perdue Farms. Bottlenecks at the
Port of Virginia have reduced the amount of goods its truck drivers can
move in a day by 50 percent in the past year, says Ed O'Callaghan, the
firm's president and an agent of trucking company Century Express in
Norfolk, Va. To make up for lost revenue, his company has raised prices
for customers by about 35 percent.
``It is not enjoyable to approach shippers who have supported you
over the years with such increases,'' Mr. O'Callaghan says. Because
congestion has limited the number of containers the company can move,
Mr. O'Callaghan has had to drop some 20 clients in the past year,
including a tobacco exporter and furniture importers.
Port congestion has also made it difficult for home-goods importer
Hooker Furniture to gauge the staff it needs to handle the dressers,
dining tables and sofas it imports from Asia, says logistics
coordinator Kimberly Clark. ``One day, we could be planning for 15
containers, and we may only get six'' because of shipping delays, she
says. Another day, a flood of containers could arrive, forcing the
Martinsville, Va., company to pay workers overtime or bring in temps.
The backups have ``put a lot of pressure on everybody,'' says Port
of Virginia spokesman Joe Harris. ``We definitely regret'' such
situations, he adds. To alleviate congestion, the port in recent weeks
has extended operating hours and added chassis and container-handling
equipment.
The problem didn't happen overnight. Investment by federal, state
and local governments in U.S. ports and surrounding infrastructure--
such as roads and rail lines--mostly dried up during the recession. And
declining cargo volumes squeezed ports' finances, limiting their
ability to make significant investments in bigger cranes and other
improvements, says John Martin, a maritime economist at Martin
Associates in Lancaster, Pa.
Around the time the economy began to recover, shipping lines
started deploying more megaships to U.S. ports--years earlier than most
port officials anticipated, Mr. Martin says. Yet government funding has
been slow to return amid budget constraints. The result was a ``perfect
storm,'' says Mr. Martin, as surging cargo volumes slam ports ill-
prepared to handle them.
Now, ports are scrambling to catch up. They lag some foreign
counterparts, which rely on unmanned cargo-handling machines to
efficiently move, stack and retrieve containers, Mr. Martin says.
Journal of Commerce data on port productivity in the first half of
2014 showed that the world's most efficient port was Jebel Ali in the
United Arab Emirates. It managed to perform an average of 138 container
moves--loading, unloading or repositioning--per ship per hour. The Port
of Los Angeles--the U.S.'s most efficient port at the time--had only 80
container moves per ship. One difference between the two: Jebel Ali has
invested heavily in automation and technology to serve megaships,
including $850 million in a new container terminal unveiled last year.
The White House has provided special infrastructure grants worth
$479 million for 38 port-related projects in recent years. President
Barack Obama has visited Miami, Wilmington, Del., and other cities to
promote more investment in the Nation's ports. The Federal Maritime
Commission has made resolving port congestion one of the agency's top
priorities. But it lacks budgetary authority, which rests with
Congress.
In the U.S., a ``long-term lack of investment and lack of focus''
has inhibited modernization, says Curtis Foltz, executive director of
the Georgia Ports Authority. ``We are woefully positioned to deal with
continued growth in the 21st century.''
Some ports have modernized. The Georgia Ports Authority, which owns
and operates the Port of Savannah, is spending about $1.5 billion over
the next decade to improve crane operations, storage facilities and
other port infrastructure. The state of Georgia is spending another
$120 million on road improvements near the port, to be completed in
2016. As a result, shippers say the port, the second-busiest by
container volume on the East Coast last year, operates smoothly for the
most part, regularly handling big vessels stacked with cargo for
companies such as IKEA and Target Corp. TGT 2.05 percent
Unlike port authorities in cities such as Los Angeles and New York
that are landlords and lease their multiple terminals to private
companies, the Georgia Ports Authority owns and operates the sole
terminal at the Savannah port. That gives it control over capital
expenditures and growth plans.
To prepare for larger ships, the Savannah port says it started
investing a decade ago in upgrades. Recent improvements include the
tallest available cranes and a state-of-the-art computer system that
tracks in real time the location of containers, speeding their
retrieval for trucks. In 2007, it helped launch the South Atlantic
Chassis Pool, a collection of about 50,000 chassis shared by various
Southeastern ports and rail lines. Savannah is now building out
undeveloped property inland to store empty containers, freeing up more
space for cargo near the dock.
Others are following Savannah's lead. Chassis companies are trying
to relieve congestion in New York and Los Angeles by creating pools
similar to the one used in Savannah, says Keith Lovetro, president of
chassis-leasing company TRAC Intermodal.
The challenges in the U.S. are on display at the Port of Virginia,
which has two main container terminals, in Portsmouth and Norfolk,
bustling with activity as towering cranes unload ships and enormous
vehicles pile containers in stacks. Infrastructure investment at the
port suffered during the recession as well as a two-year period of
uncertainty, ending in 2013, when the state weighed privatizing it. But
the bigger ships began arriving in 2011--years earlier than expected,
says Mr. Harris, the spokesman.
Rising container volume along with backups caused by a spate of
winter storms pushed the Portsmouth terminal, called Virginia
International Gateway, beyond capacity for weeks in March, Mr. Harris
says. Crews repeatedly worked late into the night to clear backlogs,
only to have them ``gobbled up by a single ship,'' he adds.
Nearby Norfolk International Terminal, also part of the Port of
Virginia, is dealing with congestion problems as well, compounded by
much older equipment prone to breakdowns. One yard at the terminal is
packed with straddle carriers--large vehicles used to move containers--
undergoing maintenance.
``If you had more of those strads working, you would have lower
turn times'' for trucks, says Bill Jackson, chairman of RJR Elite
Trucking in Norfolk.
The terminal also gets so crammed with containers that dockworkers
need to move them around frequently to retrieve the right ones, leading
some to be misplaced, he says. ``We've had drivers sitting in line five
to six hours waiting for them to find the container they want,'' Mr.
Jackson says.
Every month, he says, he loses several drivers fed up with the
congestion--a common occurrence at ports across the country. Many
truckers are independent operators, meaning they only make money when
they complete a delivery. These days, they're lucky to make two hauls a
day, compared with four or five several years ago. The resulting
shortage is contributing to increased freight costs.
John Reinhart, chief executive of the Virginia Port Authority,
which operates the Port of Virginia terminals, says truckers'
complaints are justified. But ``we have limited resources,'' says Mr.
Reinhart, who took the helm last year amid pressure from the state to
make the port profitable.
He says upgrades, including a new computer-operating system and
additional cargo-handling vehicles, have improved productivity. And a
coming GPS-like system to track individual containers will make
retrieving them easier.
To tackle congestion issues in New York and New Jersey, a port
authority task force recommended several measures, such as more
flexible hours for gate operations and building more warehouse space to
store imports away from docks. Port operators and others are now trying
to implement those ideas. In the last decade, the port authority has
spent $2.7 billion in upgrades at the port. Another $1.3 billion is
being used to raise the Bayonne Bridge so that megaships can pass
underneath.
Congestion relief can't come soon enough for Jonathan Gold, vice
president of supply chain and customs policy at the National Retail
Federation, which represents some of the Nation's largest retailers.
``We can't have U.S. ports acting as a barrier to trade,'' he says.
``We're shooting ourselves in the foot.''
The Chairman. Senator Nelson?
Senator Nelson. Let me inquire of Senator Manchin, if
you've got a time crunch, would you like to go first?
As a follow-up to the Chairman's question, the congestion
at our ports, what about the role that our freight program
funds projects both inside and outside the ports to reduce
congestion?
Mr. Cordero. Thank you for your question, Senator.
Clearly that's a very important role. As you may know, the
Federal Maritime Commission last summer, the summer of 2014, we
undertook this endeavor to address the cost and the causes and
effect of congestion. One of them clearly is the issue of
infrastructure.
And if I may add to that response, one of the trade
journals recently quoted a very respected economist, Walt
Kemmsies of Moffatt & Nichol, who referenced the fact that in
his opinion the greatest danger to international global trade
is not so much issues like terrorism but the issue of the lack
of infrastructure. So I think that question is very much on
point to one of the major factors that we need to address in
this nation, this country.
Senator Nelson. You're from Long Beach?
Mr. Cordero. That's correct.
Senator Nelson. What's going to be the effect on the West
Coast ports when the big ships don't have to unload on the West
Coast and some of them will be going through the Panama Canal
to the East Coast?
Mr. Cordero. Well, Senator, I think it's clear that there
will be some impact. The question is to what extent? You
mentioned in your opening statement the question of the Panama
Canal, the Third Lock Project. That project is going to make it
more beneficial to American shippers to have choices and the
choice of direct water from Asia, direct water cargo
transportation to the East Coast and the Gulf. So in summation,
we don't know exactly what that impact will be but, most
definitively, it seems that the American shipper is looking to
some real options and choices.
Senator Nelson. Does the Port of Long Beach think that
there are going to be less containers coming?
Mr. Cordero. Well, Senator, number one, there are going to
be more containers coming and I think the question is what
percentage of those containers are going to go, diverted to
other gateways. I will represent that I believe despite what
has occurred in the West Coast, I think they're going to be
prepared to deal with the logistics going forward in
entertaining the future cargo that's going to come. I think one
example of that is the development of the Middle Harbor project
at Long Beach Container Terminal. That will be the state-of-
the-art marine terminal operator in this country. Having said
all that, I think there is going to be diversion and, again, as
to what extent but most definitively it is important to have
our deepwater ports in the East Coast or in the Gulf or in the
West Coast to be ready for the oncoming cargo that's coming as
a result of the increasing global commerce.
Senator Nelson. Mr. Elliott, the railroads have obviously
got to expand. They need private investment. What can you do to
make sure that the STB's policies do everything to make this
private investment possible?
Mr. Elliott. We know that the railroad's ability to invest
in its infrastructure is extremely important. Going back to the
origination of the Staggers Act, which deregulated, for the
most part, the railroad system. We know that that has been
successful in bringing the railroads back, to what I mentioned
in my comments, to a rail renaissance. So my job is to serve as
a regulatory backstop in the situations where the market is not
necessarily working but, at the same time, allowing giving the
railroads the ability to make adequate revenues.
Senator Nelson. Is the STB coordinating with the Maritime
Commission on integrating in order to get cargo off ships and
onto rail?
Mr. Elliott. We don't necessarily have a lot of
coordination, but we do have discussions. A lot of our
coordination has been recently with the FERC and the Department
of Agriculture because of some of the service issues, but we do
monitor what's going on at the ports and its effects on the
railroads.
Senator Nelson. Well, I'm certainly just a little country
boy and don't understand a lot of this stuff, but I think
common sense would say that the efficiency of big container
ships is to get those containers off fast so the ship can get
underway again to go do whatever it's doing, whether it's
taking a load back or go back. The efficiency of the port in
order to unload those containers and get them either on rail or
truck, and I assume that most of them would be carried by rail
unless it's the immediate metropolitan area where it's being
delivered at the port, seems like to me that your two agencies
ought to be coordinating in order to get the efficiency of the
ports and the rail up.
Mr. Cordero?
Mr. Cordero. I absolutely agree with you, Senator.
Let me just add to that response that Mr. Elliott
referenced.
The FMC, in the last couple years, has reached out to other
agencies in order to partner and coordinate on various fronts.
One of them, as you mentioned, Senator, very important, is the
rail industry. We have had some discussions with STB in terms
of our mutual responsibilities. I will tell you that some of
the stakeholders from the West Coast who have come to my
office, I have referred them to the STB to have these type of
discussions because, at the end of the day, what's a very
extremely important whether it's in relation from the port or
from the rail perspective are intermodal facilities. Now, I
talked about congestion at the port. We have had congestion at
intermodal facilities.
And last, if I could say on that topic, the concept of an
inland port whether it's in the West Coast or in the East
Coast, and in Florida, Port Everglades is studying those
concepts, is extremely important. Going back to the issue of
infrastructure, how important it is to invest in
infrastructure. I think experts in industry will tell you that
the greatest investment is in the first mile of the movement of
that cargo.
And it goes to your point, Senator, getting that container
in the terminal and getting it out of there as soon as
possible. And that's why some of these ports, like in the West
Coast, have invested a lot of money on on-dock rail and on-dock
rail is a concept to get that container on a rail and out the
terminal.
Senator Nelson. I think, for the benefit of the Committee,
it would be very good and helpful to us in our oversight
capacity if both of you all would take as a homework assignment
to think about the intermodal efficient transfer from ship to
rail and from rail to ship and, at your convenience then send
that back to the Committee.
Senator Nelson [presiding]. Senator Manchin?
STATEMENT OF HON. JOE MANCHIN,
U.S. SENATOR FROM WEST VIRGINIA
Senator Manchin. Thank you, Mr. Chairman.
And thank you all for serving and continuing to have the
desire to serve. And I'm sure you'll be successful.
Mr. Elliott, if I can, we've come a long way from the 1970s
when railroads were governed by strict Federal regulations and
struggling to stay solvent. Today, freight rail is big business
and supports seven Class I railroads. They generate almost $70
billion in 2012 alone, from the figures we have.
An efficient and effective freight rail system is also
critical to the success of our Nation's energy and agriculture
industries who depend on timely and affordable access to
markets both here in the U.S. and abroad. If confirmed, you
will again have the inimitable job of mediating and
adjudicating rate disputes between railroads and the shippers
that depend on them.
I remain concerned that the rate challenges processed at
the STB is prohibitively expensive and time-consuming. So do
you believe that the current process is fair, transparent, and
efficient? And if confirmed, when confirmed, what do you plan
on doing to improve your--what would you make it recommendation
to do better?
Mr. Elliott. In answer to your first question, whether I
think the process itself is fair, the answer is no. It's very
expensive. It's very time-consuming. And I think it's a
deterrent to some shippers to bring cases to the Board.
As far as what I've been doing and what I plan to do, as I
mentioned earlier to Chairman Thune, I've already commissioned
a study by an outside consulting firm to take a careful look at
all the different ways rate cases are handled in other agencies
and around the world for some different ideas and different
perspectives to handle cases, and this is especially relevant
today. As I mentioned before, most of the cases have been
strictly coal cases with one or two routes. Now the cases have
become much more complex recently and are hundreds of routes.
And it just seems like it's so complex that it's very
difficult.
Senator Manchin. In my little state of West Virginia, as
you know, we depend an awful lot on rail to move a lot of our
coal and our product and our heavy manufacturing. With that
being said, we're pretty much captive on certain lines. There's
not much competition, as you know; the two rail lines we have
serving West Virginia. And the rate difference doesn't make
sense to me. I would think a rail mile is a rail mile; a rail
mile be based on maintenance and upkeep and all the things that
goes toward that. Why is there such a disparity in, I mean, the
pricing? Do you have a range that they're allowed to charge in
depending on if they can justify their cost to you?
Mr. Elliott. I'm sorry if I----
Senator Manchin. Go ahead. No, no.
Mr. Elliott. The range, I mean there is a standard set
forth in the Act, which is a reasonable rate. And in order to
meet that reasonable rate you have to withstand the test that's
set forth by the Board which requires these very complex cases.
The network itself, some shippers do pay more than others
and that's because of some of the market power and the ability
that, as I mentioned earlier----
Senator Manchin. But since we are held captive in certain
parts of our state, it's unfair for our Northern coal fields to
pay a higher price than our Southern coal fields or vice versa
if we're both going to the same port in Norfolk or wherever.
That's all I'm saying. It makes it very, very hard for us to
compete on a global market with the shipping. So anything you
can do to improve that process and to make sure there's more of
a competitive pricing to it than just justification of cost
would be very helpful to us.
Mr. Elliott. I appreciate that. We are also looking at
competition issues, which I started this year including
competitive access. So that is another thing that as one of the
top things on my list to do as soon as I hopefully get
confirmed.
Senator Manchin. Sure.
Mr. Elliott. Thank you.
Senator Manchin. Mr. Cordero, if I could ask you one
question please, sir. Through your role as chair of the Federal
Maritime Commission, you play a critical role in supporting our
Nation's ports and the International Commerce that they
maintain, which is so important for us. The world's container
port volume is twice as large today as it was 10 years ago and
it is projected to continue to grow after the Panama Canal
expansion is completed next year.
I agree that we need to invest more in our nation's
infrastructure, but we also need to be more proactive about
improving labor relations. What lessons did we learn, did you
learn, did all of us learn through the West Coast port shutdown
earlier this year? And, also in the same, what do you intend to
do, or what can we do, or what would you recommend that we do
to improve labor relations going forward knowing that it's
going to be of more demand?
Mr. Cordero. Well, thank you for your question, Senator.
I think the lessons learned with regard to those issues
are, number one, it's extremely important to have these
stakeholders come to the table early and be part of the ongoing
dialogue and discussion with related to port operations. More
specific----
Senator Manchin. Did that not happen in the West Coast?
Mr. Cordero. It has happened but, however, I think clearly
the message now it has to happen at a higher level, most
definitively. And I think with the FMC, I'm glad to report to
this Committee, the FMC's encouragement in facilitating
discussions like those two agreements we recently have looked
at now that have come into place.
Number one, the agreement between the Port of Long Beach
and in Los Angeles to meet with stakeholders and have
discussions on those issues. And second, the Pacific Port
Infrastructure Operational Agreement that is now in place that
gives the marine terminal operators and carriers the
opportunity to discuss, again, issues like operations and
infrastructure.
Last, I will say that I think, as regarding labor
negotiations, I think everybody from this experience realizes
that, going forward, it is very important to have labor
commence these discussions early, be part of the table, and
also for other stakeholders to come together and realize that,
again, at the end of the day they have to act in the best
interest not only of the region, of the state, but of the
country.
Senator Manchin. Do you have the power to bring them?
Mr. Cordero. Well, I think what we have done at the FMC,
when we commenced one of four congestion forums as I indicated,
last summer the FMC moved forward to have these forums in four
different regions of the country. All stakeholders were present
at those forums, including labor. So we've had this dialogue
and discussion with them and we're assessing right now,
considering the input from these stakeholders, the causes and
effects of congestions, which I'm very optimistic when we work
together we're certain we can mitigate that.
Senator Manchin. Thank you very much.
Thank both of you all.
Senator Nelson. Senator Manchin, do you have any ports in
West Virginia?
Senator Manchin. I'm working on them, sir.
[Laughter.]
Senator Manchin. We have inland ports. I was very much
interested in your intermodal.
Mr. Elliott. Yes.
Senator Manchin. But we have our inland ports off the Ohio
and Kanawha Rivers.
Senator Nelson. Absolutely.
Senator Manchin. So very important to us and the trade that
we have in the trains is unbelievable. But if you can't get the
goods to the country and we ain't getting the goods out, we're
in trouble anyways. So we want to make sure that you're
successful in your efforts too, sir.
Mr. Cordero. Thank you, Senator.
Senator Manchin. Thank you.
Senator Nelson. Senator Klobuchar?
STATEMENT OF HON. AMY KLOBUCHAR,
U.S. SENATOR FROM MINNESOTA
Senator Klobuchar. Well, thank you very much, Mr. Chairman.
Thank you to both of you.
We do have a port. The Port of Duluth, which is quite busy
in Minnesota. And I want to thank you and Senator Thune for
convening this hearing, and thank both of you.
Freight rail is really important in Minnesota. It's
everything from iron ore going to the Port of Duluth, iron ore
pellets to all of the agriculture goods that we ship out all
the time. And I think you know my view that the STB has to have
all three board members serving as soon as possible to ensure
that progress is made on key proceedings that are significant
concern to the shippers.
Last year, the Surface Transportation Board directed some
railroads to provide weekly status reports on the movement of
commodities on their networks. The STB's directive increased
the transparency of data and was meant to improve the
congestion and delay on the rails.
Mr. Elliott, how was reporting helpful to improve rail
service? I have to tell you I'm still hearing a lot of its
costs, from some of our commodities, provided for the called
``captive shippers.'' Some of it has been delayed, that we've
seen some improvements with this but it's--a lot of it is cost.
So how has the reporting been helpful?
Mr. Elliott. Well, we've had a certain amount of reporting
throughout the service crisis in 2014. So, for us, it has been
helpful especially in the Ag industry and the coal industry to
monitor exactly how the traffic is moving, how quickly it is
moving. With respect to the Ag industry, we issued an order
back in 2014 with respect to grain car backlogs, which gave us
full information on how much the grain cars were backlogged.
And we watched those numbers come down significantly to the
point, now, where I think most of those grain car backlogs are
gone.
At the same time, we are reusing the information to watch
the coal traffic because some of the utilities were having low
stockpiles and we wanted to make sure that the resources were
given where necessary because we obviously didn't want any
utilities to shut down. So it has been a very helpful tool for
us and which is why we put out a proposed rulemaking to make
this tool more permanent.
Senator Klobuchar. OK.
One of the things, as I mentioned, I continue to hear is
about the how long with rate issues when----
Mr. Elliott. Yes.
Senator Klobuchar.--shippers are raising rate issues, how
long it takes for the STB to decide a case and the significant
cost required to bring a case before the board. It is so
complicated, cumbersome, and expensive that, few captive rail
customers, even seek relief, too often the cases drag on for
years. Are you satisfied with the process and do you think it
offers a fair recourse for shippers? What improvements can be
made? What can we do accelerate the timetable?
Mr. Elliott. Yes, I do think the process itself is
cumbersome. It has become even more cumbersome with the more
complex cases that have been coming to the board. That is why,
as I earlier mentioned, have commissioned a study, an external
study, to look at other ways to bring cases. I also have
started an internal study about complex cases inside the board.
I've tried to figure out faster ways to handle these cases.
In addition, I raised the caps on some of the simplified
cases right now to make them more attractive to stakeholders to
use, to take and be used more quickly because the timelines in
those are much shorter and the cases themselves are much
simpler. So it is definitely one of my goals to make the rate
case process itself more efficient and more effective.
Senator Klobuchar. OK.
And are there ways we can measure that? It would be, you
know, using a benchmark and how we can make these cases go
faster?
Mr. Elliott. Yes. That is one of the things that we are
doing right now. We have been looking at the benchmarks with
respect to the complex cases and to make sure that our office
moves as quickly as possible. But I think the best solution
could be some alternative ways of doing things. The SAC case
itself is so complicated because it requires the complainant to
build a hypothetical railroad, which you can imagine is
incredibly complex. And so, in itself it just takes so much
time. So we need to look at alternative ways.
Senator Klobuchar. OK.
And then, I'm going to put this one on the record, but the
examples of rulemakings that have languished for more than 3
years, of course, that's a different subject than the rate
cases but that also has been taking too long.
And so, I think I'll just do that on the record because
Senator Blumenthal has been waiting for a while. So I don't
have delays in question like the rulemaking delays. And I would
really urge you to try to speed those up as well because it is
just getting more and more expensive for our shippers.
Mr. Elliott. That is another goal.
Senator Klobuchar. OK, very good.
And then, Mr. Cordero, we do invite you to the Port of
Duluth. We are having a big celebration there in the next few
months over, we got a TIGER grant and some upgrades were made.
So we hope you come and visit.
Mr. Cordero. I accept your invitation, Senator, and I look
forward to that.
Senator Klobuchar. OK, very good.
Thank you.
The Chairman [presiding]. And I would think you would want
to go to the Port of Duluth sometime in the summer months.
[Laughter.]
Senator Klobuchar. That was an unnecessary statement from
the Senator from South Dakota where it can get really cold and
windy across those plains.
[Laughter.]
The Chairman. I would encourage the same thing in my state.
Thank you, Senator Klobuchar.
Senator Blumenthal?
STATEMENT OF HON. RICHARD BLUMENTHAL,
U.S. SENATOR FROM CONNECTICUT
Senator Blumenthal. Thank you, Mr. Chairman.
Mr. Cordero, I was very interested in your testimony about
the threat of concentration among some of the liners as a
result of this situation that you characterized in your
testimony as ``chaotic,'' your word, in the wake of some of the
recent economic developments and your highlighting the
challenges of ``congestion'', again your word, in various ports
around the United States. And I assume from your testimony that
the danger of concentration from alliances and other
combinations continues to exist?
Mr. Cordero. Well, Senator, my response is twofold. Number
one, the sharing of vessel agreements in the alliances came
about among the major carriers for reasons of the economies of
scale. So the $64,000 question that's out there, if they're
going to save cost, is this going to trickle down to the
American consumer, the American shipper? And that's exactly
what we are monitoring. I believe that it should.
Senator Blumenthal. It should, but is it?
Mr. Cordero. Well, the jury is still out. I mean, you know,
there's a light----
Senator Blumenthal. The jury is still out and what can you
do to make it happen?
Mr. Cordero. Well, what we are doing now is, as I've noted,
we are monitoring those agreements and, in fact, we are meeting
with our global regulators, as I expressed, a second meeting
here coming in the summer to address some of these issues. What
we are doing now is, in relation to making sure that we discuss
and make clear to these carriers, the expectations.
Now, as it relates to congestion, one of the unintended
consequences that has occurred was, because of these big
carriers coming together with these alliances, you have
thousands of containers arriving at some of our deepwater
ports. I will represent to this Committee that when, in
reference to the word chaotic, I believe the marine terminal
operators were not prepared with the adequate logistics to
address that kind of cargo or that amount of cargo. Having said
that, I'm very optimistic that I think the industry now is
aggressively looking to address and mitigate those issues so
that, going forward, I think you will see that some of these
issues like equipment, availability, and chassis, will not be
an issue going forward.
Senator Blumenthal. To what extent can that congestion be
relieved by directing some of those cargo to other ports? I'm
thinking just to give an example, New London, New Haven, ports
in parts of the country where right now they might not be
categorized as deepwater but could be adapted. Is that a
possibility?
Mr. Cordero. Absolutely, that's a possibility. I think the
experts in industry are now saying the possibility of, what we
call, transshipment, so to speak, that some of these cargo are
arriving at some of these ports and then being shipped to the
smaller ports for distribution. So that is something that I
believe may be occurring and we will see in the coming years in
terms of how this exactly plays out.
Senator Blumenthal. And is there a role for your agency in
encouraging the use of those ports like New London and New
Haven?
Mr. Cordero. Absolutely.
From the agency's perspective, our role is to foster fair,
efficient, and reliable international ocean transportation
system. Using that objective in our goal, that would include
that the cargo that's coming to this country, in both imports
and exports, is distribute it in a way that relieves congestion
at our major gateways and takes advantage of some of the other
inland gateways that we have; and in particular the smaller
ports up and down the coast.
So I do see that coming in the future years.
Senator Blumenthal. And what can you do to encourage the
investment that is necessary? I'm assuming some investment
would be necessary and also changes in practices. What
specifically could your agency do?
Mr. Cordero. Well, let me give you one example of that,
Senator. Within our regulatory purview, what we are advocating
are agreements; such as I mentioned the ones that occurred
between Long Beach and Los Angeles. Another one that has
occurred in the Northwest between Seattle and Tacoma. For these
ports to come together and think about what is in the best
interest of their region, in terms of some of these port
operations, I think in those discussions, I think what we have
done is basically tell the--or indicate to the port industry
the need to have this dialogue so that we act in the best
interest of the particular regions in country but obviously in
the best interest of moving cargo and in an efficient manner
throughout the country.
Senator Blumenthal. I'd like to pursue that issue with you.
Mr. Cordero. Absolutely.
Senator Blumenthal. My staff, if we can contact you, to try
to expand on the very helpful testimony that you've given this
morning.
And Mr. Elliott, let me just ask you briefly, what can your
agency do to encourage the kind of investment in infrastructure
that, I think we all agree, has been lacking; particularly in
rail? And what priorities would you determine?
Mr. Elliott. Excuse me.
As I mentioned earlier, our role is to regulate the
industry we serve as a backstop in the event the market is not
working but, at the same time, we're here to ensure that we
have a healthy rail industry. And in doing so, we try to
attempt not to over-regulate which occurred in the past and
permit the railroads to earn their cost to capital as they go
forward.
Senator Blumenthal. But regulation doesn't translate into
investment.
Mr. Elliott. Well, my point, I guess, is that we have to do
a balancing act between allowing the shippers to have
reasonable rates and service versus the railroads ability to
earn enough money to invest in their infrastructure. So by
doing that balancing act appropriately, which I believe that we
have done in the past, the private money that comes out of the
railroads, has been used to invest considerably in the industry
as much as, I believe, $25 billion anticipated for this year.
So it is our goal to not regulate so much that we cut their
money down that they can't invest properly and have a solid
railroad industry that we need for our country.
Senator Blumenthal. Maybe I might just suggest, because my
time has expired, that there is a great deal of feeling that
the Federal Government needs to invest more, needs to be a more
active partner, and much more aggressive investor itself, and
that the regulation that is your responsibility should result
in greater investment as well on the private side. And maybe
there's a role for a partnership in a national infrastructure
bank or public financing authority. But at the same time, there
is more proactive and aggressive role for the Surface
Transportation Board to take.
So I appreciate both of your service and look forward to
working with you.
Thank you.
Mr. Elliott. Thank you.
The Chairman. Thank you, Senator Blumenthal.
I want to ask a question to this and get both of you to
respond. The Office of Personnel Management conducts an annual
Federal employee viewpoint survey, which gathers information
about workplace culture and employee satisfaction. STB has
consistently been ranked among the top Federal work places and
the top small agencies in the rankings. FMC has, let's say,
more work to do.
I'd like to hear from both of you about your goals for
maintaining and improving workplace efficiencies in morale. I
understand both agencies are working on or have recently
completed management studies. So could you talk maybe about
what lessons you have learned there that you can share?
Mr. Cordero. I go first?
Mr. Elliott. You go first.
Mr. Cordero. Thank you for your question, Senator.
With due respect to Mr. Elliott, my goal is to have the FMC
replace the STB as the best place to work in small agencies and
I stated so.
But on a more serious note to your question, Senator, let
me represent to the Committee here with me this morning is the
SES, senior executive staff, and they know the direct orders in
terms of what we need to do proactively on this question of the
workplace. I will represent that, since I've become Chair in
April 2013, there are three very important documents that have
been put in place: Our statement of principles; our plan to
improve the workplace and employee morale; and last, our
strategic plan. The combinations of those documents give us a
definitive plan of action in terms of what we need to do; much
of this is employee engagement and make sure that we address
the concerns that have been raised by that service.
So, in summation, I'm taking this mandate very seriously
and I think my SES staff at the FMC and my fellow
commissioners, who are supporting this, they know that those
directives are very serious, and we're moving forward. And I'd
like to say, in the last couple of years, there has been
improvement.
The Chairman. OK. All right.
Go ahead.
Mr. Elliott. As you mentioned, the STB for the last five
years has won the award for the best place to work, small
agency, pursuant to the partnership survey. Also, the last 3
years, has won the most innovative agency. In fact, this year I
believe that, as far as the scores were concerned for best
agency to work for, we had the highest score of any agency in
the government.
So my goal is to continue to keep the morale at a high
level but, at the same time, work to make the agency more
effective as far as its casework flow, while at the same time
keeping people content with their positions. I find that if
people become dissatisfied with their work, they become
ineffective. So I think morale is just as important but, in
addition, we have to address new processes to make ourselves
even more effective.
The Chairman. In this sort of same vein, Chairman Cordero,
a couple of months ago the FMC IG released a report on
workplace evaluation and examined why the agency is ranked in
the bottom 25 percent since 2011. In terms of employee
satisfaction commitment in the report states: ``Challenges with
previous leaders remain top-of-mind at the agency and continue
to impact morale and the leadership legacy issues remain top-
of-mind at FMC.''
So you mentioned a little bit and maybe if you could just
drill down a little bit more on that and what you've been doing
to try and deal with some of these concerns. And it goes on to
recommend that you select an executive champion to lead
improvement efforts and calls on the FMC management team to
write up a corrective action plan within 30 calendar days. And
I'm wondering maybe if you have done anything with those
recommendations yet?
Mr. Cordero. No, absolutely.
I mentioned the three documents in reference to what we've
done as a plan of action. The corrective action has been
responded to as part of a living document of our workplace
evaluation and there have been amendments to that.
And as I indicated, I think one of the things that I have
done specifically as Chairman, I have worked lockstep with the
senior executive management at the Commission to pursue this
endeavor. So I believe that most definitively what the two
things that I have done is: number one, improve transparency
and that, with regard to the management model; and second, move
forward with ideas and plans of action of employee engagement.
I will add to that that I think, as Chairman, I will say
that I've continued the practice of meeting with all the
employees in the Commission, having casual conversations in
order to give them opportunity to have input, and I have a
number of all hands meetings that have occurred in the last two
years, which I will continue to do. So suffice it to say that
this is a challenge that is welcomed, so to speak, and that I
believe that we'll be, going forward, continuing to increase
the numbers and the percentile that we've seen in the last
couple years at the agency.
The Chairman. OK.
All right. Well, I guess that's it.
Do we have--OK.
Do you want to ask questions?
No, I'm kidding.
[Laughter.]
The Chairman. OK.
Do you want us to or not?
No?
OK. All right.
Well, we will keep the hearing record open for two weeks.
During which time, Senators are asked to submit any questions
for the record. Upon receipt, the witnesses are requested to
submit those written answers to the Committee as soon as
possible.
Again, we thank you for being here, for your willingness to
serve----
She's here. OK, all right.
[Laughter.]
The Chairman. Well, I got that part in.
Senator Cantwell has arrived. All right.
STATEMENT OF HON. MARIA CANTWELL,
U.S. SENATOR FROM WASHINGTON
Senator Cantwell. So sorry, Mr. Chairman.
The Chairman. I was going to have to tell jokes here for a
minute.
Senator Cantwell. I so appreciate it.
The Chairman. It's a good thing I'm here.
Senator Cantwell recognized for questions.
Senator Cantwell. Thank you.
I want to say, Mr. Chairman, I don't know if you have heard
but we've had another rail explosion this morning and certainly
want to encourage our Committee to look at legislation in this
matter. It's something I think is critically important for us
to do.
So I wanted to ask Mr. Elliott about surface transportation
and safety in general, and in moving freight. And there are
many troubling things about, you know, where we are in
improving movement of goods and services but, at the same time,
getting the safety right.
And so, I don't know if you have comments on that.
Mr. Elliott. As far as the safety aspects, it's not in our
jurisdiction necessarily. The FRA and PHMSA handle most of
those issues. Although, we do take a look at safety issues in
construction matters, mergers and acquisitions, and
abandonments. So when the issue of safety, like you mentioned
an explosion, is raised in those proceedings, we do take a
careful look at how that impacts a community. It is very
important to us. We do a full environmental evaluation which
includes a full safety evaluation in those situations.
Senator Cantwell. OK.
And Mr. Cordero, in your time at the Maritime Commission,
what have you learned about the Federal Government, you know,
to take action to make our ports competitive?
Mr. Cordero. Well, from the FMC perspective, Senator, I
earlier testified that--give you an example of the action we
have taken. Last summer, we identified congestion as a major
issue for us to address in the interest of fostering fair and
efficient ocean transportation systems and thus we conducted
four forums in four different regions of the country. I think,
as I've indicated, congestion in my mind is of a serious issue
that needs to be addressed, factors related to infrastructure
and funding.
So I think the lessons learned, and added to the fact that
I was a port commissioner for 8 years at the Port of Long
Beach, it is the importance of having our ports to be well-
funded with infrastructure, which includes issues related to
dredging, and infrastructure related to the first mile of
operation of the movement of that cargo.
Senator Cantwell. Do you think implementing the new freight
recommendations by the Freight Advisory Board will help on that
competitiveness?
Mr. Cordero. Absolutely, Senator.
And, as you know, the FMC back in 2012 released a report on
the Diversion of Cargo; specifically in relation to how the
Northwest was being impacted. But one of the lessons learned
about that particular study that when you look to our
competitors to the North, Canada, and to the South, Mexico,
both those countries have a common denominator that they have a
national freight policy. So I'm glad to see that both Congress
and the Administration and DOT and MARAD are very active on
this and hopefully we will reach that point. Because I think
it's tremendously important for us to, in order to be
competitive and as our nation's ports, to have a national
freight policy that moves forward to identify the funding
that's so necessary for our gateways.
Senator Cantwell. Well, thank you.
And I think this is also, Mr. Chairman, so important. You
and I have had a chance to talk about this in general but this
is, you mentioned the Northwest, but this is really about
getting products to their destination; a lot of it through the
Northwest. So the Midwest is impacted, everybody is impacted.
And so, we have to do a better job of both improving our
infrastructure to moving goods and services. And then on the
other side, make sure we have safe transportation for these
products.
So the accident that happened today is the fifth in recent
months of an oil train explosion. We have a new rule that came
out that I think is insufficient. In fact, it has a new
disclosure requirement that rolls back, I think, where I think
many of my colleagues want to go in making sure that state's
emergency managers know what is happening. So we'll be sending
a letter to Secretary Foxx later today urging him to
immediately correct that on emergency orders so that first
responders and communities can be well-prepared too; like the
incident that happened today.
So I know it is complex and I know we are going to be
discussing TPA on the floor soon. And so, to me, this is all
about getting our economic future right. We got to make sure
that we have good transportation quarters that can maximize
capacity but we also have to have safe rules for the transport
of product, and we have to make sure that products can get on
the rails and are not crowded out particularly by this kind of
product that is, in my opinion, too volatile.
So anyway, I look forward to working with both of you. And
thank you, Mr. Chairman, for the indulgence in getting my
questions in at this hearing.
The Chairman. Thank you, Senator Cantwell.
Senator Cantwell, of course, representing a state in the
Northwest that relies heavily not only on the ports but on
railroads. And of course, we rely heavily on railroads to get
our products to your ports so they can hit the export market
that the supply chain is critically important to our economy
and to the jobs that go with it. And so, you know, the people I
represent, about one out of every three rows of soy beans that
is planted gets exported.
So it's a big deal in all of our states, and we want to
make sure that we get these issues right. So you and your
organizations and agencies are critical to that and we will
look forward to working with you. And obviously, we will have
along the way, I'm sure, questions and suggestions and thoughts
for you, but we appreciate your attendance here today and,
again, your willingness to serve.
And we will keep the record open, as I mentioned earlier,
for a couple of weeks for Senators who have additional
questions. And we would ask that you get those responses back
as quickly as possibly so that we can process things and keep
your nominations moving forward.
With that, this hearing is adjourned. Thanks.
[Whereupon, at 11:12 a.m., the hearing was adjourned.]
A P P E N D I X
The Fertilizer Institute
Washington, DC, May 6, 2015
Hon. John Thune,
Chairman,
Committee on Commerce, Science, and Transportation,
Washington, DC.
Hon. Deb Fischer,
Chair,
Subcommittee on Surface Transportation,
Washington, DC.
Hon. Bill Nelson,
Ranking Member,
Committee on Commerce, Science, and Transportation,
Washington, DC.
Hon. Cory Booker,
Ranking Member,
Subcommittee on Surface Transportation,
Washington, DC.
Dear Chairman Thune, Ranking Member Nelson, Subcommittee Chair Fischer,
and Ranking Member Booker:
Thank you for holding today's ``Nominations Hearing'' at which the
pending nominations of The Honorable Daniel Elliott and The Honorable
Mario Cordero will be considered. On behalf of The Fertilizer Institute
(TFI), I wish to share the views of America's fertilizer industry,
specifically as it relates to former Surface Transportation Board (STB)
Chairman Elliott. TFI supports former STB Chairman Elliott's
reappointment, and encourages Committee members to vote in favor of it.
TFI represents a variety of agricultural organizations,
particularly as it relates to crop nutrients, which are essential to
U.S. food production. Research confirms that 40-60 percent of crop
yields are attributable to the nutrient inputs of fertilizers. This
also means that substantially less land is needed tofeed the world's
7.2 billion--and growing--people.
Fertilizer production facilities operate every day of the year,
and, in terms of distribution, the industry depends year round on safe,
reliable, and cost-effective rail transportation. The application of
fertilizer by the farmer is typically a narrow window of opportunity.
An effective rail transportation system is critical each and every day
to ensure farmers have what they need when they need it.
Given the reliance of TFI members on rail transportation and a
recent history of significant service issues, TFI fully supports
policies that will promote greater competition between railroads and
improve the efficiency and effectiveness of the STB. Likewise, the rail
transportation marketplace, which has changed dramatically over the
past 30 years, requires strong leadership at the STB to promote safety,
reliability, and fairness. The fertilizer industry believes that former
Chairman Elliott's experience and the attention, particularly by this
Committee, to modernizing the STB will reenergize efforts to improve
the rail transportation marketplace for both shippers and railroads.
TFI is also hopeful that former Chairman Elliott will expand the
STB's proposed rulemaking--Docket No. EP 724 (Sub-No. 4)--related to
service reporting requirements for certain commodities to include
fertilizer. The proposal requires reports on certain commodities, but
excludes fertilizer, which is vital to all crops. The exclusion of
fertilizer may have the unintended consequence of incentivizing rail
carriers to prioritize other commodities over fertilizer shipments. As
a recent U.S. Department of Agriculture report states, fertilizer
``must be moved year round in order to work within the capacity
constraints ofthe transportation network.'' As farmers at the April 10,
2014, STB hearing on rail service testified, timely fertilizer
shipments are
a very serious concern. TFI has asked the STB to include fertilizer
among the reportable commodities in Docket No. EP 724 (Sub-No. 4).
Thank you again for holding today's hearing.
Sincerely,
Chris Jahn,
President,
The Fertilizer Institute.
Cc: Members of the Committee on Commerce, Science, and Transportation
______
Response to Written Questions Submitted by Hon, John Thune to
Mario Cordero
Dear Senator Thune and Committee Members:
Thank you for the opportunity to appear before you on May 6, 2015,
and for this opportunity to address the Committee's questions on the
FMC's regulations and the impact of service contracts on the ocean
transportation community. I recognize the importance of these questions
to the Committee, and to the public. These questions address issues
currently being reviewed by the FMC staff. The results of that staff
effort will be delivered to the Commission, and my fellow Commissioners
and I will thoroughly review the regulations and consider potential
changes and reforms to the existing regulations. The Commission's
deliberative process with respect to the service contracts and non-
vessel-operating common carrier service arrangements (NSAs) is likely
to begin by the end of the summer, and should be concluded this
calendar year. To better address your specific questions, I will
respond to each question in turn.
Question 1. Chairman Cordero, do you believe that the FMC's
regulations surrounding service contract filings are in keeping with
the flexibility envisioned by the Ocean Shipping Reform Act of 1998
(OSRA). Some have expressed concern that the requirements are more
burdensome and extensive than necessary, and have hampered the ability
of shippers and carriers to react to the market as quickly as possible.
Specifically, 1) the regulations surrounding contract filings make
agreed-upon contracts and amendments effective only upon their date of
filing with FMC, not upon the date on which the agreement is reached
between the parties, and 2) regulations mandate that cargo cannot be
moved under a contract or amendment until the contract or amendment is
filed with the FMC. Both of these regulations appear to erect
unnecessary roadblocks to carriers' ability to react quickly to market
changes, and consequently, are often costly barriers to successful
commerce. What in fact does the FMC do with these extensive filings,
and what actions do you think the agency should take to improve and
facilitate the filing process in order to avoid undue delays?
Answer. The Ocean Shipping Reform Act of 1998 expanded individual
pricing options for shippers and common carriers by, in part, allowing
for electronic filing of service contracts, and providing for
confidentiality for contractual arrangements filed with the FMC--all in
lieu of tariff pricing. Current statutory law provides that an ocean
common carrier must provide all of its rates and charges either in a
published tariff or in a confidentially filed service contract, with
the publication of certain essential terms. 46 U.S.C. Sec. Sec. 40501-
40502. The FMC's regulations enable the Commission to accomplish its
Congressional mandate for receipt of service contracts to ensure
compliance with the Shipping Act, while allowing the industry to make
the business arrangements and transactions that best respond to the
needs of the shipping public. Regulations, however, can and should be
reviewed to ensure that they accomplish their purposes without unduly
hampering those regulated. I fully support the FMC's review of its
regulations on service contract filing and plan on carefully
considering recommendations made as a result of that review.
The FMC receives filed service contracts and amendments as part of
its critical mission to protect the U.S. shipping public. The FMC uses
filed service contracts and amendments to: (1) provide assistance when
appropriate should disputes arise between a shipper and carrier; (2)
monitor activities of carriers by reviewing General Rate Increases
(GRIs), Peak Season Surcharges and other surcharges or assessorial
charges that are filed in vessel-operating common carriers' (VOCCs)
tariffs and determining whether or not such charges are implemented
through service contracts; (3) determine if the industry is dealing
with rate volatility by agreeing to index-linked contracts (ILCs); (4)
monitor contracts to determine how bunker costs, one of the carriers'
highest, are being recovered; (5) follow contracting practices between
VOCCs and beneficial cargo owners (BCOs) that have a long standing
relationships; (6) review for compliance regarding such items as the
essential terms contained in contracts and the effective date in the
actual contract or amendment; (7) review the activities of BCOs and
non-vessel-operating common carriers (NVOCCs), including oversight of
their Minimum Quantity Commitments; (8) follow certain export rates,
such as, for agricultural goods; (9) address inquiries from BCOs and
NVOCCs on questions they have pertaining to their contracts; (10)
follow up with VOCCs on questionable shipper status in service
contracts; and (11) assist in the FMC's mandated enforcement of the
Shipping Act. In addition to FMC review, other Federal agencies access
and utilize the FMC's service contracts and amendment filings. 46 CFR
Sec. 530.4. Currently, the U.S. Agency for International Development
(USAID), the Department of Agriculture, and the U.S. Transportation
Command (TRANSCOM) access SERVCON to accomplish their missions.
Carriers have indicated that the requirement to file service
contracts and amendments prior to moving the cargo may limit their
flexibility in reacting to market factors. Through electronic filing of
service contracts and amendments, the Commission has made efforts to
reduce the filing burden. Through its web services program, the FMC is
already taking steps to improve the filing process. Ocean carriers'
process thousands of shipments through ``auto-rating systems'' tied
into their contract managements systems. Carriers can minimize their
burden by filing amendments directly from their contract management
systems through the FMC's automated web services into the Commission's
service contract system (SERVCON) without requiring any manual input. A
number of carriers are already using this option and have reported that
web services have reduced their burden and reduced manual input errors
significantly, thereby cutting costs.
Further improvements, such as revising FMC regulations, are done
through rulemaking at the Commission level. I am committed to examining
at the existing regulations and participating with the full Commission
in the deliberation process to fully accomplish the purposes of the
Shipping Act and OSRA.
Question 2. In what way, if any, do you believe the efforts of the
FMC would be hampered if contracts and amendments became effective when
the agreement is reached between the parties, and if carriers were
allowed to file these contracts and amendments within some reasonable
time after an agreement is reached?
Answer. The Shipping Act requires the publication of certain
service contract terms. 46 U.S.C. Sec. 40502. The FMC's current
regulations require that the terms included in a service contract must
not be uncertain, vague, or ambiguous. 46 CFR Sec. 530.8(c). In my
opinion, certainty of terms is crucial to a valid, enforceable
contract. It is not clear whether a delay in filing service contracts
and amendments with the FMC will increase misunderstandings or create a
lack of certainty as to what a shipper's total charges and terms would
be as its cargo is transported. As identified above, other Federal
agencies and parties in labor disputes accessing the FMC's service
contract information may also have questions as to whether a service
contract or amendment exists, and its applicable terms. It is my hope
that the public will file comments during the rulemaking process that
will fully address the issue of certainty of terms. Accordingly, I
would consider public comments and staff recommendations on this matter
in determining whether to adopt any changes to the current regulations
in this area.
Question 3. In 2011 the FMC set a schedule for reviewing its
regulations. However, perhaps in recognition of the shipping industry's
growing concern with the burden imposed by excessive service contract
filing regulations, in early 2013 and under your leadership the FMC
prioritized the review of service contract regulations, putting them
under immediate review, and asked for the shipping industry's input on
the reform process?
What is the status of the review of service contract filing
regulations? If you are reconfirmed, can we expect definitive
regulatory reform with respect to carriers filing service contracts? If
so, when?
Answer. The Commission is currently reviewing its major regulations
pursuant to Executive Orders 13563 (applicable to executive agencies)
and 13579 (issued to encourage independent regulatory agencies to
pursue the goals stated in Executive Order 13563). The Working Group
for the Retrospective Review of Service Contracts and NSAs (Service
Contract/NSA Working Group) convened in the fall of 2013 to begin a
comprehensive review of FMC regulations in 46 CFR Part 530, Service
Contracts, and Part 531, NVOCC Service Arrangements. These two Parts
are being reviewed together because Service Contracts and NSAs share
many of the same contracting attributes, and both must be filed into
the Commission's SERVCON system by the VOCCs and NVOCCs. In addition,
VOCCs and NVOCCs are also required to publish the essential terms for
each of their contracts in a tariff format.
The Commission prioritized the retrospective review with regard for
the concerns of the industry and the importance service contracts to
oceanborne commerce. In 2014, not long after the immediate review of
service contracts and NSAs was announced, the FMC completed its 2014-
2018 Information Resources Management Strategic Plan. A major component
of that plan will significantly upgrade our internal IT systems to
improve data support for all Commission programs and research projects,
as well as providing the technical foundation to simplify stakeholder
filing processes.
The Service Contract/NSA Working Group has not submitted its
recommendations to the Commission. I have been advised that the group
met with numerous stakeholders to receive their views on changes to the
Commission's regulations. In the course of those meetings, the Service
Contract/NSA Working Group received numerous suggestions, for example,
one suggestion is delayed batch filings as to contract amendments
albeit on a monthly, rather than a quarterly basis. The Service
Contract/NSA Working Group is reviewing the feasibility of such a
change from the standpoint of our information technology infrastructure
and from a staff resources standpoint. The Service Contract/NSA Working
Group has also received, and is assessing, suggestions from some
stakeholders that the contract correction process be modified,
including the question of changes related to the supporting affidavit
required for each service contract or NSA correction.
I have been informed that the staff recommendations of the Service
Contract/NSA Working Group will be finalized in the coming months. The
staff review will be transmitted to the Commission for potential action
through rulemaking. If reconfirmed, I resolve to carefully weigh the
input from the Service Contract/NSA Working Group, the industry, and
the public, and consider all potential reforms to service contract
filing in conjunction with my fellow Commissioners. I remain committed
to lessening unnecessary regulatory burdens on regulated entities while
allowing the Commission to fulfill its oversight role effectively under
the Shipping Act. The Commission will likely issue either an Advanced
Notice of Proposed Rulemaking or a Notice of Proposed Rulemaking in
order to obtain comments from all interested stakeholders that would be
affected by recommended rules changes. The notice seeking comments
should be issued this year.
Question 4. Please provide an update on the status of your review
of congestion in U.S. ports, and any planned future action relating to
your report on this issue.
Answer. Modern ports that move the Nation's goods are vital to
economic growth, increasing jobs, and enhancing the country's ability
to compete globally. At the same time, U.S. ports have faced increased
congestion and delays that deeply impact both the import and export
markets in the United States. The FMC undertook a number of regional
Port Forums in 2014 to provide an opportunity for public comment and
industry stakeholders to share their views on the causes and challenges
surrounding port congestion. After the Forums, the FMC resolved to take
the shared information and provide a detailed, organized overview of
the comments made at the Port Forums, and ultimately synthesize the
main issues, ideas, and potential lessons learned and provide it to the
public with a goal to shed light on those root causes that can be
identified, and potential solutions.
The FMC also determined that detention and demurrage issues
surrounding port congestion should be separately reviewed. Staff
completed a report on entitled Report: Rules, Rates, and Practices
Relating to Detention, Demurrage, and Free Time for Containerized
Imports and Exports Moving through Selected United States Ports, which
was issued by the Commission and is available on the FMC's website,
www.fmc.gov. Later this summer a further report aimed at promoting
further dialogue on and discussion of unsettled port congestion issues
will be completed. This will be an issues-based, in-depth synopsis of
the comments and arguments provided at the Port Forums. Lastly, there
will be a research synthesis of U.S. port congestion causes,
consequences, and challenges that will be released prior to the end of
the Fiscal Year. There has been no decision on a set course for
Commission action at this time--all options remain on the table.
Thank you again for the opportunity to address your questions and
provide the Committee with information relating to the FMC's treatment
of these matters.
______
Response to Written Questions Submitted by Hon. John Thune to
Daniel R. Elliott III
Question 1. Mr. Elliot, the STB Reauthorization Act of 2015, a
bipartisan bill that I have worked on with Ranking Member Nelson, and
which passed out of this Committee in March, includes a provision that
would allow Board members to speak to one another as well as increase
the size of the Surface Transportation Board from three to five
members, primarily to address inefficient quorum requirements. What are
your thoughts on both of these provisions?
Answer. I support the goal of increasing communication among Board
Members. I understand that appointees to other multi-member agencies
with more than 3 members may engage in one-on-one discussions and
remain in compliance with Government in the Sunshine Act. If confirmed,
I stand ready to ensure that the Board takes advantage of any new
procedures that increase the opportunity for more efficient
communication.
Question 2. Mr. Elliot, the Surface Transportation Board
Reauthorization Act of 2015 also includes a provision addressing the
current inability of the STB to initiate investigations on matters
other than rate cases. How would expanding the investigative
responsibility of the STB enhance your ability to carry out the mission
of the STB? What past experience would you draw on to implement the
potentially expanded investigative responsibility of the STB?
Answer. I believe that the investigatory authority provided in
S.808 will give the Board an effective tool to respond quickly and
nimbly to issues that arise. For example, during last year's rail
service crisis, the Board relied on its general powers provisions in 49
U.S.C. 721 to request reporting from the railroads regarding service
performance. The ability to rely on a more specific investigatory
provision would give the Board greater flexibility to address
significant issues in the industry.
Question 3. Mr. Elliot, you commissioned a Price Waterhouse Coopers
management study during your previous tenure as Chairman. What were you
hoping to learn from the study? What did it show? Will you provide a
copy of the study to the Committee?
Answer. I approved a contract solicitation in 2014 for a study of
the Board's internal processing of rate cases and how we might improve
from an organizational management perspective. While the Board staff is
comprised of subject matter experts in fields related to economic
regulation, the agency does not possess an in-house team/process
expert. As cases get more complex and rate case teams necessarily grow
in size and tasks, we need to look for ways to improve how the agency
structures its internal process, which already includes multiple Board
offices, dozens of agency employees and multiple levels of review.
After completing a process pursuant to federal acquisition
requirements, the agency engaged Price Waterhouse Coopers to complete
this process study.
I understand that the study is not yet complete. Should I be
confirmed, I look forward to reviewing its recommendations and
receiving input from my Board colleagues as well as senior management
regarding its recommendations. If confirmed, I will provide a copy of
the study to the Committee.
Question 4. Mr. Elliot, you have stated that your top two goals as
Chairman of the STB was to increase the transparency of the agency and
create better harmony between shippers and railroads throughout the
United States. What improvements were made under your leadership to
increase the transparency of the STB and to create better harmony
between shippers and railroads?
Answer. I pursued several initiatives at the Board that increased
transparency and improved the communication between shippers and
carriers. First, it was my practice to hold oral arguments and hearings
in proceedings where the Board and our stakeholders would benefit from
an open dialogue. During my tenure, the full Board held 28 hearings/
arguments and the agency also held numerous public meetings conducted
by Board staff throughout the country. Second, I worked to strengthen
the Board's alternative dispute resolution program so that carriers and
shippers could avail themselves of techniques like mediation, and I
grew the Board's Rail Customer and Public Assistance Program (RCPA) by
increasing its profile and adding experienced staff to the office.
Indeed, in 2014, RCPA handled over 1,300 inquiries, approximately 160
of which were informal complaints between shippers and railroads. Many
of these informal complaints were successfully resolved, obviating the
need for a formal proceeding. Third, I traveled to visit the Board's
stakeholders at their facilities and plants--a key component to
understanding both the rail industry and the customers it serves.
Question 5. Mr. Elliot, as Chairman, I understand that one of the
areas you focused on was technology improvement. Can you speak to the
need for improved technology at the STB as well as what initiatives you
advanced in the past or would advance in the future?
Answer. The Board has taken a number of steps in the last several
years to improve its information technology capabilities. However, the
infrastructure that would support the systems for an improved agency
website or more automated reporting tools is badly in need of updating.
The challenge for an agency the size of the Board is to find sufficient
resources to completely overhaul its infrastructure, without
sacrificing mission-critical functions. In 2014, for example, the Board
solicited bids to move to a cloud computing solution. The bid came in
well above the Board's available funds for such a project. When I
departed the agency in December 2014, Board staff was developing
options for breaking the IT modernization project into smaller phases
that the Board could accomplish over a number of years with smaller
budget outlays. It is my expectation that work on that project has
continued since my departure.
Question 6. Mr. Elliot, I am regularly hearing from constituents
about the length of time it takes the STB to finalize rules and have
been given numerous examples of rules that have languished for years.
What steps would you take to improve the Surface Transportation Board's
rulemakings process?
Answer. The Board completed several important rulemaking
proceedings in the last few years involving matters such as: mediation
and arbitration; procedures for assessing demurrage charges; increased
damage award caps for smaller rate cases; and increased disclosure of
information whenever a rail line is sold or leased subject to a ``paper
barrier.''
But the Board has not yet completed certain proceedings related to
competition issues, including competitive access, revenue adequacy, and
grain rates. These proceedings, which raise issues at the core of the
Board's regulatory policy, have been a source of significant contention
among agency stakeholders for many years. If confirmed, I intend to
resolve all of these open rulemaking proceedings within a year. My goal
will be to address these interrelated issues consistently in a way that
reasonably balances the goals of competition for shippers, adequate
revenues for rail carriers, and a safe and efficient rail network. The
Board hearings scheduled for June and July, which I will attend
regardless of whether the confirmation process is completed, will
facilitate resolution of these matters.
Question 7. Mr. Elliot, in your responses to the Committee
Questionnaire, you mention that you are leading the Board's efforts to
implement the Passenger Rail Investment and Improvement Act of 2008, a
law designed to improve Amtrak's on-time performance. What steps have
you taken in order to improve performance, and what steps would you
take as Chairman to ensure this goal is accomplished?
Answer. The Board's PRIIA implementation has been a multi-pronged
approach. First, the agency has set up a passenger task force that
focuses on PRIIA issues, which includes staff from the Office of Public
Assistance, Government Affairs and Compliance; the Office of
Proceedings; and the Office of Economics. Second, in 2014, the agency
entered into an agreement with DOT's Volpe Center for on-time
performance data analysis. The Volpe arrangement will assist the Board
in the development and analysis of large amounts of data that will be
useful in passenger-freight rail oversight matters pursuant to the
Board's responsibilities under PRIIA. Third, the Board sponsored
mediation between Amtrak and those states with state-supported routes
in an effort to resolve areas of concern.
Outside of these initiatives, the Board was active in ensuring that
the railroads pushed to improve Amtrak's service during the service
issues in 2013-2014. I met with the leadership of multiple railroads
regarding Amtrak OTP issues and directed Board staff to monitor Amtrak
issues during their regular conference calls with railroad operations
personnel. I sought and received information from railroads regarding
anticipated Amtrak performance issues in the annual ``Fall Peak''
submissions. In addition, the Board is adjudicating several PRIIA-based
complaints that have been filed by Amtrak against individual railroads.
______
Response to Written Questions Submitted by Hon. Deb Fischer to
Daniel R. Elliott III
Question 1. During your confirmation hearing, you answered a
question regarding differences in rates between northern West Virginia
and southern West Virginia as follows:
Answer. We are also looking at competition issues, which I started
this year, including competitive access. So that is another thing, one
of the top things, on my list to do as soon as, if I hopefully get
confirmed.
Question 2. One could read a number of things into your answer,
specifically that you have already made a decision on this proceeding.
Would you please clarify whether or not you have already pre-determined
the outcome of this proceeding and support competitive access?
Answer. My answer to Senator Manchin's question was intended to
convey that my one of my top priorities, should I be confirmed, will be
to resolve the competitive access proceeding. I believe that our
stakeholders are entitled to certainty on the direction that the Board
will take with regard to competitive access, revenue adequacy and other
significant issues that the Board is considering. The fact that the
Board is examining these issues does not mean that there is any pre-
determined outcome. Rather, in light of a changing rail industry, we
must ensure that the policies we have today are as effective as they
can be.
______
Response to Written Question Submitted by Hon. Jerry Moran to
Daniel R. Elliott III
Question. Mr. Elliott, my understanding is there is a current
proceeding before the STB, Ex Parte 724, to require Class I railroads
to submit weekly service metrics reports, but only for certain
commodities, such as grain and ethanol. Why is fertilizer not included
as a reported commodity?
While fertilizer distribution may be primarily an issue during the
Spring and Fall, the peak seasons for its use, logistically fertilizer
must still move year round to ensure its timely availability during
periods of peak usage. For environmental and practical purposes, the
window for fertilizer application is often narrow, requiring all pieces
to be in place for the final distributions to farms. This issue is
examined in far greater detail in a January 2015 report by the U.S.
Department of Agriculture, entitled ``Rail Service Challenges in the
Upper Midwest,'' which states:
``Although current rail metrics are showing improvement,
concerns of timely fertilizer deliveries can arise in advance
of 2015 spring planting. Roughly 60 percent of fertilizer is
applied in the spring, and 40 percent is applied in the fall.
Even though the demand for fertilizer is seasonal, it must be
moved year round in order to work within the capacity
constraints of the transportation network''(page 25).
I would be happy to provide the full text of this report if
necessary. Thank you in advance for your attention to this matter, any
insight you have would be greatly appreciated.
Answer. As your question indicates, the Board has proposed a rule
that would require the railroads, on a permanent basis, to report
service performance data on a variety of commodities, including grain,
coal, automotive, crude oil and ethanol. While the initial list of
specific commodities did not include fertilizer, The Fertilizer
Institute has submitted comments requesting that the Board add
fertilizer to the reporting requirements. Because the rulemaking
proceeding is currently pending before the Board and, should I be
confirmed, I would be voting on this very issue, I must refrain from
directly commenting on that request at this time. As a general matter,
however, I certainly agree that the timely distribution of fertilizer
is absolutely critical to the Nation's agricultural sector. For that
reason, fertilizer movements were the subject of the Board's very first
reporting order in the recent service crisis.
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