[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]




 
   STAKEHOLDER VIEWS ON SURFACE TRANSPORTATION BOARD REAUTHORIZATION

=======================================================================

                                (117-42)

                             REMOTE HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON RAILROADS, PIPELINES,
                        AND HAZARDOUS MATERIALS

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 8, 2022

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure
             
             
             
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]              
             


     Available online at: https://www.govinfo.gov/committee/house-
     transportation?path=/browsecommittee/chamber/house/committee/
                             transportation
                             
                             
                             
                           ______                       


             U.S. GOVERNMENT PUBLISHING OFFICE 
47-959PDF           WASHINGTON : 2022 
                             
                             
                             
                    
             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

  PETER A. DeFAZIO, Oregon, Chair
SAM GRAVES, Missouri                 ELEANOR HOLMES NORTON,
DON YOUNG, Alaska                      District of Columbia
ERIC A. ``RICK'' CRAWFORD, Arkansas  EDDIE BERNICE JOHNSON, Texas
BOB GIBBS, Ohio                      RICK LARSEN, Washington
DANIEL WEBSTER, Florida              GRACE F. NAPOLITANO, California
THOMAS MASSIE, Kentucky              STEVE COHEN, Tennessee
SCOTT PERRY, Pennsylvania            ALBIO SIRES, New Jersey
RODNEY DAVIS, Illinois               JOHN GARAMENDI, California
JOHN KATKO, New York                 HENRY C. ``HANK'' JOHNSON, Jr., 
BRIAN BABIN, Texas                   Georgia
GARRET GRAVES, Louisiana             ANDRE CARSON, Indiana
DAVID ROUZER, North Carolina         DINA TITUS, Nevada
MIKE BOST, Illinois                  SEAN PATRICK MALONEY, New York
RANDY K. WEBER, Sr., Texas           JARED HUFFMAN, California
DOUG LaMALFA, California             JULIA BROWNLEY, California
BRUCE WESTERMAN, Arkansas            FREDERICA S. WILSON, Florida
BRIAN J. MAST, Florida               DONALD M. PAYNE, Jr., New Jersey
MIKE GALLAGHER, Wisconsin            ALAN S. LOWENTHAL, California
BRIAN K. FITZPATRICK, Pennsylvania   MARK DeSAULNIER, California
JENNIFFER GONZALEZ-COLON,            STEPHEN F. LYNCH, Massachusetts
  Puerto Rico                        SALUD O. CARBAJAL, California
TROY BALDERSON, Ohio                 ANTHONY G. BROWN, Maryland
PETE STAUBER, Minnesota              TOM MALINOWSKI, New Jersey
TIM BURCHETT, Tennessee              GREG STANTON, Arizona
DUSTY JOHNSON, South Dakota          COLIN Z. ALLRED, Texas
JEFFERSON VAN DREW, New Jersey       SHARICE DAVIDS, Kansas, Vice Chair
MICHAEL GUEST, Mississippi           JESUS G. ``CHUY'' GARCIA, Illinois
TROY E. NEHLS, Texas                 ANTONIO DELGADO, New York
NANCY MACE, South Carolina           CHRIS PAPPAS, New Hampshire
NICOLE MALLIOTAKIS, New York         CONOR LAMB, Pennsylvania
BETH VAN DUYNE, Texas                SETH MOULTON, Massachusetts
CARLOS A. GIMENEZ, Florida           JAKE AUCHINCLOSS, Massachusetts
MICHELLE STEEL, California           CAROLYN BOURDEAUX, Georgia
                                     KAIALI`I KAHELE, Hawaii
                                     MARILYN STRICKLAND, Washington
                                     NIKEMA WILLIAMS, Georgia
                                     MARIE NEWMAN, Illinois
                                     TROY A. CARTER, Louisiana

     Subcommittee on Railroads, Pipelines, and Hazardous Materials

DONALD M. PAYNE, Jr., New Jersey, 
               Chair
ERIC A. ``RICK'' CRAWFORD, Arkansas  TOM MALINOWSKI, New Jersey
SCOTT PERRY, Pennsylvania            SETH MOULTON, Massachusetts
RODNEY DAVIS, Illinois               MARIE NEWMAN, Illinois
MIKE BOST, Illinois                  STEVE COHEN, Tennessee
RANDY K. WEBER, Sr., Texas           ALBIO SIRES, New Jersey
DOUG LaMALFA, California             ANDRE CARSON, Indiana
BRUCE WESTERMAN, Arkansas            FREDERICA S. WILSON, Florida
BRIAN K. FITZPATRICK, Pennsylvania   JESUS G. ``CHUY'' GARCIA, Illinois
TROY BALDERSON, Ohio                 MARILYN STRICKLAND, Washington,
PETE STAUBER, Minnesota                Vice Chair
TIM BURCHETT, Tennessee              GRACE F. NAPOLITANO, California
DUSTY JOHNSON, South Dakota          HENRY C. ``HANK'' JOHNSON, Jr., 
TROY E. NEHLS, Texas                 Georgia
MICHELLE STEEL, California           DINA TITUS, Nevada
SAM GRAVES, Missouri (Ex Officio)    JARED HUFFMAN, California
                                     STEPHEN F. LYNCH, Massachusetts
                                     JAKE AUCHINCLOSS, Massachusetts
                                     TROY A. CARTER, Louisiana
                                     PETER A. DeFAZIO, Oregon (Ex 
                                     Officio)
                                     

                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................   vii

                 STATEMENTS OF MEMBERS OF THE COMMITTEE

Hon. Peter A. DeFazio, a Representative in Congress from the 
  State of Oregon, and Chair, Committee on Transportation and 
  Infrastructure, opening statement..............................     1
    Prepared statement...........................................     3
Hon. Eric A. ``Rick'' Crawford, a Representative in Congress from 
  the State of Arkansas, and Ranking Member, Subcommittee on 
  Railroads, Pipelines, and Hazardous Materials, opening 
  statement......................................................     4
    Prepared statement...........................................     4
Hon. Donald M. Payne, Jr., a Representative in Congress from the 
  State of New Jersey, and Chair, Subcommittee on Railroads, 
  Pipelines, and Hazardous Materials, prepared statement.........    75
Hon. Sam Graves, a Representative in Congress from the State of 
  Missouri, and Ranking Member, Committee on Transportation and 
  Infrastructure, prepared statement.............................    76

                               WITNESSES

Chris Jahn, President and Chief Executive Officer, American 
  Chemistry Council, oral statement..............................     5
    Prepared statement...........................................     7
Dennis Newman, Executive Vice President of Strategy, Planning, 
  and Accessibility, National Railroad Passenger Corporation 
  (Amtrak), oral statement.......................................     9
    Prepared statement...........................................    11
Ian Jefferies, President and Chief Executive Officer, Association 
  of American Railroads, oral statement..........................    16
    Prepared statement...........................................    17
Dennis R. Pierce, National President, Brotherhood of Locomotive 
  Engineers and Trainmen, oral statement.........................    28
    Prepared statement...........................................    30
Brad Hildebrand, Member, National Industrial Transportation 
  League, and Former Vice President, Cargill--Global Rail and 
  Barge Lead, oral statement.....................................    33
    Prepared statement...........................................    35
Herman Haksteen, President, Private Railcar Food and Beverage 
  Association, oral statement....................................    38
    Prepared statement...........................................    40

                       SUBMISSIONS FOR THE RECORD

Submissions for the Record by Hon. Donald M. Payne, Jr.:
    Statement of the Brotherhood of Maintenance of Way Employes 
      Division/IBT; Brotherhood of Railroad Signalmen; 
      International Association of Sheet Metal, Air, Rail and 
      Transportation Workers Mechanical Division; and National 
      Conference of Firemen and Oilers, 32BJ/SEIU................    76
    Letter of March 4, 2022, from Sean O'Neill, Senior Vice 
      President of Government Affairs, Portland Cement 
      Association................................................    81
    Statement of Emily Regis, Vice President, Freight Rail 
      Customer Alliance..........................................    83
    Letter of March 8, 2022, from Corey Rosenbusch, The 
      Fertilizer Institute.......................................    91
    Post-Hearing Comments From Witness Brad Hildebrand...........    94
    Letter of March 7, 2022, from Michael Johnson, President and 
      Chief Executive Officer, National Stone, Sand, and Gravel 
      Association................................................    96
Letter of March 8, 2022, from Chet M. Thompson, President and 
  Chief Executive Officer, American Fuel and Petrochemical 
  Manufacturers, Submitted for the Record by Hon. Randy K. Weber, 
  Sr.............................................................    97

                                APPENDIX

Questions to Dennis Newman, Executive Vice President of Strategy, 
  Planning, and Accessibility, National Railroad Passenger 
  Corporation (Amtrak), from:
    Hon. Donald M. Payne, Jr.....................................   101
    Hon. Eric A. ``Rick'' Crawford...............................   101
    Hon. Jesus G. ``Chuy'' Garcia................................   104
Questions to Dennis R. Pierce, National President, Brotherhood of 
  Locomotive Engineers and Trainmen, from:
    Hon. Jesus G. ``Chuy'' Garcia................................   104
    Hon. Eric A. ``Rick'' Crawford...............................   105
Question from Hon. Eric A. ``Rick'' Crawford to Brad Hildebrand, 
  Member, National Industrial Transportation League, and Former 
  Vice President, Cargill--Global Rail and Barge Lead............   106
Questions from Hon. Eric A. ``Rick'' Crawford to Herman Haksteen, 
  President, Private Railcar Food and Beverage Association.......   107
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                             March 2, 2022

    SUMMARY OF SUBJECT MATTER

    TO:       Members, Subcommittee on Railroads, Pipelines, 
and Hazardous Materials
    FROM:   Staff, Subcommittee on Railroads, Pipelines, and 
Hazardous Materials
    RE:       Stakeholder Views on Surface Transportation Board 
Reauthorization



                                PURPOSE

    The Subcommittee on Railroads, Pipelines, and Hazardous 
Materials will meet on Tuesday, March 8, 2022, at 10:00 a.m. in 
2167 Rayburn House Office Building and via Zoom to hold a 
hearing titled ``Stakeholder Views on Surface Transportation 
Board Reauthorization.'' The purpose of this hearing is to 
learn from railroad stakeholders about the Surface 
Transportation Board's role in regulating the freight railroad 
industry. Participants in the hearing include the American 
Chemistry Council, Amtrak, the Association of American 
Railroads, the Brotherhood of Locomotive Engineers and 
Trainmen, the National Industrial Transportation League, and 
the Private Railcar Food and Beverage Association.

                               BACKGROUND

I. THE SURFACE TRANSPORTATION BOARD

    The Surface Transportation Board (STB or Board) is the 
economic regulator of freight railroads \1\, which carry one 
third of the nation's freight.\2\ The STB is a five-member 
independent agency whose members are appointed by the President 
with the advice and consent of the Senate, serving staggered 
five-year terms. Currently, all five members are installed 
(three Democrats and two Republicans). The STB's predecessor, 
the Interstate Commerce Commission (ICC), was created in 1887 
by the Interstate Commerce Act.\3\ The STB was created by the 
ICC Termination Act of 1995 (ICCTA) to maintain federal 
economic oversight of rail carriers.\4\ Congress last 
reauthorized the STB in the Surface Transportation Board 
Reauthorization Act of 2015 through Fiscal Year 2020.\5\
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    \1\ Congressional Research Service, ``The Surface Transportation 
Board (STB): Background and Current Issues.'' January 19, 2022 
(R47013).
    \2\ U.S. Department of Transportation, Pocket Guide to 
Transportation 2019, Page 3.
    \3\ P.L. 49-41.
    \4\ P.L. 104-88.
    \5\ P.L. 114-110.
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    The STB's jurisdiction includes overseeing and monitoring 
railroad commercial practices nationally; enforcing the 
railroads' common carrier obligations; evaluating challenges to 
the reasonableness of rail rates; reviewing proposed railroad 
mergers; ensuring rail carriers provide fair employee 
protective arrangements in certain transactions; monitoring 
rail carriers to ensure they are able to earn revenues that are 
adequate for the infrastructure and investment needed to meet 
the present and future demand for rail services; investigating 
rail service matters of regional and national significance; 
authorizing construction, operation, discontinuance, and 
abandonment of rail lines and service; and more recently, 
passenger rail regulation.\6\
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    \6\ STB also has jurisdiction over certain trucking company, moving 
van, and noncontiguous ocean shipping company rate matters; certain 
intercity passenger bus company structure, financial, and operational 
matters; and rates and services of certain pipelines not regulated by 
the Federal Energy Regulatory Commission. https://www.stb.gov/about-
stb/.
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    In 2005, Congress asked the National Academy of Sciences to 
conduct a comprehensive study of the nation's railroad 
transportation system since the enactment of the Staggers Rail 
Act of 1980. The study [was to] address and make 
recommendations on--

          ``(1) the performance of the Nation's major railroads 
        regarding service levels, service quality, and rates;
          (2) the projected demand for freight transportation over the 
        next two decades and the constraints limiting the railroads' 
        ability to meet that demand;
          (3) the effectiveness of public policy in balancing the need 
        for railroads to earn adequate returns with those of shippers 
        for reasonable rates and adequate service; and
          (4) the future role of the Surface Transportation Board in 
        regulating railroad rates, service levels, and the railroads' 
        common carrier obligations, particularly as railroads may 
        become revenue adequate.'' \7\
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    \7\ P.L. 109-59. Sec. 9007.

    These core considerations remain relevant to the 
reauthorization of the STB.

II. RAILROAD SHIPPERS

    Railroad shippers range from large, multi-national 
corporations to small operations. They also vary in the 
commodities they ship, such as corn, wheat, and soybeans; 
fertilizers, and various chemicals; cement, sand, and crushed 
stone; lumber, pulp, and paper products; various food products; 
crude oil, coal, and other petroleum and energy products; and 
scrap recycling products, among others.
    Rail carriers have a common carrier obligation to quote 
rates and provide service to shippers upon reasonable 
request.\8\ Carriers also must maintain reasonable connections 
with adjacent rail carriers' networks to allow for the free 
flow of rail traffic. When a route involves more than one 
carrier, the carriers may participate in a joint rate to 
collect a single combined price from the shipper for the 
transportation being provided.\9\
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    \8\ 49 U.S.C. 11101.
    \9\ 49 USC 10705.
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    Numerous commodities are exempt from STB's regulations 
governing the provision of common carrier service, maintenance 
of reasonable practices and rates, and provision of adequate 
service. Exempt commodities include a range of agricultural 
products, such as fresh fish and meat, cheese and special dairy 
products, as well as other commodities, including lumber or 
wood products, chemical waste, and coke produced from coal, 
among others.\10\ The Board is permitted to exempt commodities 
when there is sufficient transportation competition to protect 
shippers from market manipulation, and it may also revoke 
exemptions when it finds that regulation is necessary to carry 
out the Rail Transportation Policy.\11\
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    \10\ 49 CFR part 1039.
    \11\ 49 USC 10502.
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    According to some shippers, an estimated 78 percent of 
freight rail customers are ``captive'' to or dependent on a 
single major railroad (i.e., that there is no intramodal 
competition).\12\ While only served by a single major railroad 
and depending on the movement, some shippers can use other 
modes, such as truck or barge, to transport their products 
(intermodal competition). A shipper may not challenge a rail 
rate unless it is without feasible transportation alternatives. 
Whether a shipper has feasible transportation alternatives, in 
the form of intramodal or intermodal competition, is a 
qualitative analysis undertaken by the STB in a particular 
case.\13\
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    \12\ Freight Rail Customer Alliance, https://railvoices.org/the-
issue/rail-dependent-shipper/.
    \13\ Surface Transportation Board, prepared by InterVISTAS 
Consulting, Inc. ``An Examination of the STB's Approach to Freight Rail 
Rate Regulation and Options for Simplification,'' September 2016. 
https://www.stb.gov/wp-content/uploads/STB-Rate-Regulation-Final-
Report.pdf
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    Numerous shippers have purchased or lease their own rail 
equipment since Staggers.\14\ According to The Official Railway 
Equipment Register and as outlined in the chart below, in 2019 
nearly 70% of railcars were privately owned by rail customers, 
rather than the railroads.\15\
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    \14\ PSR and the rail car: Commentary by Richard Kloster. 
Progressive Railroading. February 2019.
    \15\ The Official Rail Car Register, April 2019. https://
www.progressiverailroading.com/resources/editorial/2019/PR0819-
CarOwners.jpg
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            Breakdown of Rail Car Ownership in North America
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

              A. SHIPPING RATES

    Since the Staggers Rail Act of 1980 (Staggers), the STB is 
authorized to set a ``reasonable'' maximum price for common 
carriage, but only in response to customer complaints and only 
in cases where the railroad company is ``market dominant''--
that is, where no other economically viable transportation 
option exists.\16\ The STB adjudicates rate reasonableness only 
for rates that exceed a minimum jurisdictional threshold 
established in statute of 180 percent of revenue to variable 
cost.\17\ In acting as adjudicator, the STB seeks to determine 
the fair rate based on balancing the goal of protecting 
shippers from unreasonably high rates with the goal of 
railroads having as much pricing flexibility as possible to 
earn adequate revenues to attract private capital and reinvest 
in their networks.\18\
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    \16\ Congressional Research Service, ``The Surface Transportation 
Board (STB): Background and Current Issues.'' January 19, 2022 
(R47013).
    \17\ 49 U.S.C. Sec.  10707(d)(2): ``A finding by the Board that a 
rate charged by a rail carrier results in a revenue-variable cost 
percentage for the transportation to which the rate applies that is 
equal to or greater than 180 percent does not establish a presumption 
that (A) such rail carrier has or does not have market dominance over 
such transportation; or (B) the proposed rate exceeds or does not 
exceed a reasonable maximum.
    \18\ Congressional Research Service, ``The Surface Transportation 
Board (STB): Background and Current Issues.'' January 19, 2022 
(R47013).
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    A shipper seeking to challenge a rate must file an 
administrative complaint with the STB. In January 2018, the STB 
established the Rate Reform Task Force to recommend 
improvements to the existing rate review processes for both 
small and large cases, and to propose new rate review 
methodologies to reflect the current state of the industry.\19\ 
In its April 2019 report to the STB, the Task Force wrote that 
many small shippers find rate cases too complex and/or too 
costly to pursue.\20\ This finding echoed the same finding from 
a 2015 Transportation Research Board panel.\21\ In November 
2021, while not yet final, the STB advanced two rulemakings to 
establish rate reasonableness processes for small rate 
disputes: a voluntary arbitration program for small rate 
disputes, and a final offer rate review procedure.\22\
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    \19\ Surface Transportation Board, ``Surface Transportation Board 
Releases Report from the Rate Reform Task Force,'' April 2019. https://
www.stb.gov/news-communications/latest-news/pr-19-06/
    \20\ Rate Reform Task Force, Report to the Surface Transportation 
Board, April 25, 2019, page 9.
    \21\ Transportation Research Board Special Report 318: Modernizing 
Freight Rail Regulation, June 2015, https://onlinepubs.trb.org/
onlinepubs/sr/sr318highlights.pdf
    \22\ Surface Transportation Board, https://www.stb.gov/news-
communications/latest-news/pr-21-47/
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    From 1996 to the present, 51 rate cases were brought before 
the STB. Of those cases, 27 settled; 11 were found to have 
unreasonable rates; 11 were found to have reasonable rates; and 
2 were withdrawn.\23\ No rate cases have been filed for the 
last three years.\24\ At the same time, a commensurate number 
of informal complaints have been filed.\25\
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    \23\ Surface Transportation Board, Quarterly Status of Rate 
Complaint Cases Before the STB, Report-on-Rate-Case-Review-Metrics-
Fourth-Quarter-December-31-2021.pdf (stb.gov), page 2.
    \24\ Id.
    \25\ Surface Transportation Board, Quarterly Report on Formal and 
Informal Service Complaints, https://www.stb.gov/wp-content/uploads/
Report-on-Formal-and-Informal-Service-Complaints-4Q-December-31-
2021.pdf
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    Since the enactment of Staggers, railroads have been 
allowed to enter voluntary rate contracts with shippers to 
provide service on specific terms and conditions.\26\ With very 
limited exceptions, contract rates are not subject to STB 
jurisdiction and do not require equal treatment of similarly 
situated shippers as common carrier rates do.\27\
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    \26\ P.L. 96-448.
    \27\ Id.
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B. RECIPROCAL SWITCHING

    Under reciprocal switching, an incumbent rail carrier 
transports a shipper's traffic to an interchange point where 
the cars are switched to a competing carrier. The competing 
carrier pays the incumbent carrier a switching fee for bringing 
(or taking) the cars from the shipper's facility to the 
interchange point (or vice versa). That fee is incorporated 
into the competing carrier's total rate to the shipper.\28\ In 
doing so, a competing carrier can offer a single-line rate even 
if its lines do not physically reach a shipper's facility, 
thereby establishing a competing rate.\29\ Reciprocal switching 
may also be called ``competitive switching'' by shippers or 
``forced access.'' Reciprocal switching is known as 
``interswitching'' in Canada.\30\
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    \28\ Surface Transportation Board Federal Register Notice, 
Reciprocal Switching, 87 Fed. Reg. 62 (January 2, 2022) https://
www.federalregister.gov/documents/2022/01/03/2021-28396/reciprocal-
switching.
    \29\ Surface Transportation Board, Petition For Rulemaking To Adopt 
Revised Competitive Switching Rules, Decision, Docket No. EP 711 (Sub-
No. 1) Reciprocal Switching, Service Date July 27, 2016, Page 2.
    \30\ Marsh, Joanna. ``The Itch to Switch: Railroad Swapping in 
Canada vs. the U.S.'' FreightWaves, August 24, 2021. https://
www.freightwaves.com/news/the-itch-to-switch-railroad-swapping-in-
canada-vs-the-us
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    Staggers authorized the STB to require rail carriers to 
enter reciprocal switching agreements under certain 
circumstances.\31\ In 1985, the ICC adopted regulations 
specifying that reciprocal switching would only be prescribed 
if the agency determines it is necessary to remedy or prevent 
an act that is contrary to the competition policies of 49 
U.S.C. Sec.  10101 or is otherwise anticompetitive, and 
otherwise satisfies the criteria of 49 U.S.C. Sec.  
11102(c).\32\
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    \31\ 49 U.S.C. Sec.  11102(c).
    \32\ Surface Transportation Board, Notice of Proposed Rulemaking, 
Petition for Rulemaking To Adopt Revised Competitive Switching Rules; 
Reciprocal Switching, Docket No. EP 711, Vol 81, No. 149, August 3, 
2016, page 51150.
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    In July 2016, the STB issued a notice of proposed 
rulemaking on reciprocal switching.\33\ The proposal included a 
two-pronged approach, pursuant to which the Board would have 
the ability to order reciprocal switching either when (1) it is 
practicable and in the public interest, or (2) when it is 
necessary to provide competitive rail service.\34\ Under the 
proposal, reciprocal switching arrangements would not be 
permitted if either rail carrier involved in the arrangement 
showed the switching arrangement is not feasible or is unsafe, 
or that the presence of switching would unduly hamper the 
ability of that carrier to serve its shippers.\35\ The STB 
received public comment on the proposal and has not issued a 
final rule. The STB will hold a public hearing on the issue on 
March 15, 2022.\36\
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    \33\ Surface Transportation Board, Notice of Proposed Rulemaking, 
Petition for Rulemaking To Adopt Revised Competitive Switching Rules; 
Reciprocal Switching, Docket No. EP 711, Vol 81, No. 149, August 3, 
2016.
    \34\ Id. at 51156, 49 CFR Section 1145.2.
    \35\ Id. at 51165, 49 CFR Section 1145.2.
    \36\ Surface Transportation Board, Press Release, ``STB Chairman 
Announces Three Upcoming Public Hearings.'' https://www.stb.gov/news-
communications/latest-news/pr-21-46/, November 12, 2021.
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C. DEMURRAGE AND ACCESSORIAL CHARGES

    Railroads may charge shippers fees called ``demurrage 
charges'' when the shipper detains rail cars beyond the time 
permitted for loading or unloading rail cars (``free 
time'').\37\ Demurrage is subject to Board regulation under 49 
U.S.C. Sec.  10702, which requires railroads to establish 
reasonable rates and transportation-related rules and 
practices, and under 49 U.S.C. Sec.  10746, which requires 
railroads to compute demurrage charges, and establish rules 
related to those charges, in a way that will fulfill national 
needs related to freight car use and distribution and 
maintenance of an adequate car supply. Demurrage charges have 
both compensatory and punitive aspects and are intended to 
promote efficient use of rail resources.\38\ Shippers and 
railroads may enter into contracts pertaining to demurrage, or, 
in the absence of such contracts, demurrage is governed 
according to the railroad's demurrage tariff.\39\
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    \37\ 49 USC 10746.
    \38\ Demurrage Liability, EP 707, slip op. at 2 (STB served April 
11, 2014); 49 C.F.R. Sec.  1333.1.
    \39\ 49 CFR 1333.
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    Railroads also may assess ``accessorial charges.'' Not 
defined in statute or regulation, accessorial charges are 
generally understood to include charges other than line-haul 
and demurrage charges, according to the STB.\40\ Accessorial 
charges include those assessed for diverting a shipment in 
transit, ordering a railcar but releasing it empty, weighing a 
railcar, tendering one railroad's car to another railroad 
without a line-haul move, special train or additional switching 
services, or releasing a railcar with incomplete or incorrect 
shipping instructions, among other causes.\41\
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    \40\ Surface Transportation Board, Oversight Hearing on Demurrage 
and Accessorial Charges, Notice of Public Hearing, Docket No. EP 754, 
Federal Register Vol. 84, No. 73, April 16, 2019, page 15662.
    \41\ Id.
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    In July 2021, STB Chairman Martin Oberman sent a letter to 
all Class I freight railroads requesting that they report 
storage (demurrage) charges at their ten largest intermodal 
facilities, to better understand the revenues these charges 
generate for the railroads.\42\ The Class I freight railroads 
answers varied. Below is a table showing the demurrage and 
accessorial charges collected by the Class I railroads in 2021:
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    \42\ Surface Transportation Board, Press Release, ``STB Chairman 
Expresses Concern Over Intermodal Supply Chain Issues; Requests 
Information From Class I Railroads.'' https://www.stb.gov/news-
communications/latest-news/pr-21-30/, July 22, 2021. In addition, prior 
Surface Transportation Chairman Ann Begeman sent similar correspondence 
dated December 17, 2018. https://www.stb.gov/stb/elibrary/
NDP_Correspondence.html

                                                      2021 Demurrage and Accessorial Revenues \43\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Canadian      Canadian                   Kansas City     Norfolk        Union
                                                            BNSF        National       Pacific         CSX        Southern      Southern       Pacific
--------------------------------------------------------------------------------------------------------------------------------------------------------
Demurrage Revenue.....................................  $207,476,000   $61,299,000   $77,563,000  $442,600,000   $38,143,000  $520,608,000  $340,147,000
Accessorial Revenue...................................  $308,002,000  $309,415,000   $11,383,000  $144,300,000   $16,536,000   $83,423,000   $88,575,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

D. FIRST MILE / LAST MILE\\
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    \43\ Surface Transportation Board, https://www.stb.gov/reports-
data/demurrage-accessorial-charges/reports
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    In response to a congressionally mandated study, experts 
recommended in 2015 that the STB regularly collect usable data 
demonstrating the quality of service rail carriers provide as a 
means to monitor their response to common carrier service 
requests.\44\ In September 2021, and after hearing concerns 
raised by shippers and requests for transparency of first-mile 
and last-mile data, the STB sought input from rail stakeholders 
to determine whether collecting first-mile and last-mile data 
is feasible and whether the benefits to rail customers and 
oversight of the national rail system fluidity is balanced by 
the increased reporting burden to the Class I freight rail 
carriers.\45\ According to the STB, they have received numerous 
letters about the need for first-mile and last-mile data over 
the last year, though the Association of American Railroads 
indicated this information would not be practical to collect or 
meaningful to analyze service issues.\46\ First-mile and last-
mile refers to the movement of railcars between a local 
railroad serving yard and a shipper or receiver facility.
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    \44\ Transportation Research Board Special Report 318: Modernizing 
Freight Rail Regulation, June 2015, https://onlinepubs.trb.org/
onlinepubs/sr/sr318highlights.pdf
    \45\ Surface Transportation Board Press Release, ``Surface 
Transportation Board Seeks Comment on First-Mile / Last-Mile Service 
Issues'' https://www.stb.gov/news-communications/latest-news/pr-21-38/
    \46\ Id.
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III. RAIL LABOR

    With the Class I railroads' adoption of precision scheduled 
railroading, the railroads have reduced their workforce. In 
2015, the Class I workforce averaged 169,478 workers.\47\ By 
2019 and pre-COVID, some 29,000 jobs were eliminated, a 17 
percent decrease.\48\ By the end of 2021, the Class I workforce 
averaged 114,701 workers, or approximately one-third fewer than 
2015.\49\ Concurrently, the U.S. Class I railroads moved 
roughly the same volume of traffic during that period. In 2015, 
total rail traffic volume in the U.S. was 27.9 million carloads 
and intermodal units, peaking in 2018 at 28.1 carloads and 
intermodal units, and totaling 26.2 total carloads and 
intermodal units in 2021.\50\
---------------------------------------------------------------------------
    \47\ Surface Transportation Board, Economic Data, Employment Data, 
https://www.stb.gov/reports-data/economic-data/employment-data/
    \48\ Id.
    \49\ Id.
    \50\ Association of American Railroads, Weekly Rail Traffic Data: 
https://www.aar.org/aar_news/weekly-rail-traffic-data/
---------------------------------------------------------------------------
    Rail shippers voiced concern over the workforce cuts and 
their subsequent impact on service reliability, raising 
questions about whether the railroads are able to meet common 
carrier obligations.\51\ STB Chairman Oberman sent letters to 
the Class I railroads asking whether shipper service complaints 
may be related to or exacerbated by the trend of reduced 
railroad personnel.\52\ During the COVID-19 recovery, railroads 
have attempted to re-hire some furloughed workers and train new 
employees, though according to shippers and the STB, they have 
been unsuccessful at hiring or retaining an adequate workforce 
following the reduction in forces described above.\53\
---------------------------------------------------------------------------
    \51\ U.S. House of Representatives, Committee on Transportation and 
Infrastructure, Railroad Shippers Roundtable, July 2019. https://
transportation.house.gov/committee-activity/hearings/roundtable-titled-
railroad-shippers-roundtable
    \52\ See ``Chairman Oberman Rail Service Letter'' to the seven 
Class I railroads dated May 27, 2021: https://www.stb.gov/news-
communications/non-docketed-public-correspondence/
    \53\ Paul Ziobro, The Wall Street Journal. ``Shortage of Railroad 
Workers Threatens Recovery.'' July 22, 2021. https://www.wsj.com/
articles/shortage-of-railroad-workers-threatens-recovery-11626953584
---------------------------------------------------------------------------

IV. AMTRAK

    Since Amtrak's creation in 1970, Congress has continually 
refined the Surface Transportation Board's role in Amtrak 
matters. When Congress created Amtrak to relieve the freight 
railroads of their intercity passenger rail common carrier 
obligation in 1970, Congress granted Amtrak certain rights 
including access to freight railroads, preference, and 
additional trains.\54\ In 2008, Congress expanded the STB's 
passenger rail responsibilities to mediate cost allocation 
methodologies between Amtrak and the states and to enforce 
Amtrak on-time performance.\55\ In 2021, the Infrastructure 
Investment and Jobs Act explicitly authorized the STB to create 
a 10-person passenger rail office to carry out the Board's 
passenger rail responsibilities.\56\ The STB is currently 
considering an Amtrak application to restore Gulf Coast 
intercity passenger rail service between New Orleans, Louisiana 
and Mobile, Alabama.\57\
---------------------------------------------------------------------------
    \54\ Federal Railroad Administration, ``Shared-Use of Railroad 
Rights of Way,'' https://railroads.dot.gov/sites/fra.dot.gov/files/
fra_net/18863/Report%20to%20Congress%20Shared-Use%20
of%20Railroad%20Rights-of-Way%20July%202019.pdf, July 2019, page 3 and 
49 USC 24308.
    \55\ The Passenger Rail Investment and Improvement Act, P.L. 110-
432, Sections 209, 212 and 213, respectively.
    \56\ P.L. 117-58, Section 22309.
    \57\ Surface Transportation Board, FD 36496, Application of the 
National Railroad Passenger Corporation Under 49 U.S.C. 24308(e)--CSX 
Transportation, Inc. and Norfolk Southern Railway Company. https://
www.stb.gov/proceedings-actions/filings/
---------------------------------------------------------------------------

V. PENDING MERGERS & ACQUISITIONS

    Railroad transactions can have broad implications for the 
shape of the nation's transportation system going forward. 
Since enactment of Staggers, the freight rail industry has 
consolidated from 33 Class I railroads in 1980 to the seven 
Class I freight railroads that operate in the U.S. today.\58\ 
The STB is currently considering two significant railroad 
transactions--the merger of Canadian Pacific Railway (CP) and 
Kansas City Southern Railway Company (KCS) and CSX's 
acquisition of Class II Pan Am Railways in New England. The STB 
has exclusive authority to review these proposed transactions 
and to determine whether to issue approvals.\59\ Public 
comments on the CP-KCS merger were due to the Surface 
Transportation Board by February 28, 2022. If it goes forward, 
the merger would reduce the number of Class I railroads 
operating in the United States from seven to six and would 
create the first North American railroad that operates in all 
three countries--Canada, Mexico and the United States.\60\ On 
the CSX-Pan Am acquisition, the STB held a two-day public 
hearing on January 13 and 14, 2022.\61\ The docket for public 
comments on this transaction has closed.\62\
---------------------------------------------------------------------------
    \58\ United States Department of Agriculture, ``Railroad 
Concentration, Market Shares, and Rates,'' February 2014. https://
www.ams.usda.gov/sites/default/files/media/
Railroad%20Concentration%2C%20Market%20Shares%2C%20and%20Rates.pdf
    \59\ 49 USC 11324.
    \60\ Surface Transportation Board, ``STB Accepts CP/KCS Merger 
Application for Consideration,'' November 23, 2021. https://
www.stb.gov/news-communications/latest-news/pr-21-48/
    \61\ Surface Transportation Board, ``STB Chairman Announces Three 
Upcoming Public Hearings,'' November 12, 2021. https://www.stb.gov/
news-communications/latest-news/pr-21-46/
    \62\ Surface Transportation Board, ``Surface Transportation Board 
Issues Decisions in CSX/Pan Am Merger Application Review,'' December 
10, 2021. https://www.stb.gov/news-communications/latest-news/pr-21-50/
---------------------------------------------------------------------------

                              WITNESS LIST

     LChris Jahn, President and CEO, American Chemistry 
Council
     LDennis Newman, Executive Vice President of 
Planning, Strategy and Accessibility, Amtrak
     LIan Jefferies, President and CEO, Association of 
American Railroads
     LDennis Pierce, President, Brotherhood of 
Locomotive Engineers and Trainmen
     LBrad Hildebrand, Member, National Industrial 
Transportation League and former Vice President of Cargill--
Rail and Barge Lead
     LHerman Haksteen, President, Private Railcar Food 
and Beverage Association


   STAKEHOLDER VIEWS ON SURFACE TRANSPORTATION BOARD REAUTHORIZATION

                              ----------                              


                         TUESDAY, MARCH 8, 2022

                  House of Representatives,
Subcommittee on Railroads, Pipelines, and Hazardous 
                                         Materials,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:04 a.m. in 
room 2167 Rayburn House Office Building and via Zoom, Hon. 
Donald M. Payne, Jr. (Chair of the subcommittee) presiding.
    Members present: Mr. Payne, Mr. DeFazio, Mr. Malinowski, 
Mr. Moulton, Ms. Newman, Mrs. Napolitano, Ms. Titus, Mr. Lynch, 
Mr. Auchincloss, Mr. Carter of Louisiana, Mr. Crawford, Mr. 
Perry, Mr. Rodney Davis of Illinois, Mr. Weber of Texas, Mr. 
Balderson, Mr. Stauber, Mr. Burchett, Mr. Johnson of South 
Dakota, Mr. Nehls, and Mrs. Steel.
    Mr. DeFazio [presiding]. The subcommittee will come to 
order.
    I ask unanimous consent the chair be authorized to declare 
a recess at any time during today's hearing.
    Without objection, so ordered.
    I also ask unanimous consent that Members not on the 
subcommittee be permitted to sit with the subcommittee at 
today's hearing and ask questions.
    Without objection, so ordered.
    As a reminder, please keep your microphone muted unless 
speaking. If you make noise, I will yell at you.
    To insert a document into the record, please have your 
staff email it to [email protected].
    All right. We don't go through as many formalities at the 
beginning as we used to, which is good.
    Well, Chairman Payne is delayed, so, I will be chairing 
here today.
    So, I want to thank all of our witnesses for being here. It 
is kind of an unusual thing, having been on the committee a 
long time and observed these hearings, but I haven't seen too 
many times when rail labor, railroad shippers, and Amtrak are 
all raising similar concerns about the way the freight rail 
industry is operating. And to say that I am concerned and share 
their concerns is an understatement.
    The STB, Surface Transportation Board, is heavily focused 
on ensuring the economic vitality of the railroads, when it 
should be supporting a balanced national freight rail system 
that serves its customers well. Forty-two years after 
Staggers--at that point, the freight industry was in very dire 
straits--and 27 years after Congress replaced the ICC, 
Interstate Commerce Commission, with the Surface Transportation 
Board, the balance of power has swung too far.
    Wall Street is destroying the freight rail industry, as 
they are many other industries in the United States of America, 
as they did when they put pressure on Boeing, and we ended up 
with horrible tragedies.
    I used to say, well, we have the greatest freight network 
in the world, and it cannot be incompatible with a decent 
passenger rail network. Unfortunately, the state of the freight 
rail industry is deteriorating, all after the model of the not-
mourned Hunter Harrison, who came up with the idea of Precision 
Scheduled Railroading--i.e., just look at the bottom line, not 
the efficiency for shippers, not the safety of your railroad. 
And it has spread like a disease through the industry since he 
corrupted CSX. And it is just very sad.
    I mean, you can't just infinitely increase your quarterly 
profits with ever-decreasing operating ratios. So far, freight 
rail has laid off nearly one-third of their workforce since 
2015. They have parked locomotives and closed rail yards, 
causing a number of shippers to temporarily close plants and 
facilities due to erratic rail service. The rail workforce 
strains under pressures to do more with less, the shrunken 
employee count contributes to unreliable shipper service, 
worker fatigue, and low morale.
    At the same time, the investors on Wall Street have 
demanded stock buybacks and nonstop returns on investment. The 
pandemic has exacerbated the effects of pressure that began 
years ago to cut, cut, cut. Now, after years of shrinking 
footprints and workforce, Class I's find they have cut too far. 
They are reopening facilities they closed to save costs and 
desperately trying to rehire workers who have seen the industry 
change before their eyes.
    The Class I's left themselves so little cushion, and have 
been unable to adjust for winter in Chicago, flooding in the 
Midwest and Southeast, and wildfires in the West. Weather 
events like these happen every year. They are getting worse, 
due to climate change, and yet they are consistently used as an 
excuse for degraded or degrading service.
    Our national policy to reduce the transport sector's carbon 
emissions cannot be achieved if the freight railroads are 
cutting service to less lucrative shippers. We need the freight 
railroads to be serving more customers at a time when the 
overall volume of goods transport in the country is 
skyrocketing.
    Railroads consistently tell us how, if 25 percent of the 
truck traffic moving at least 750 miles went by rail instead, 
greenhouse gas emissions would fall. I agree with that goal. We 
have all seen the ads on television. They are more efficient, 
but you can't be part of the solution if you are following just 
the stock ticker price and the pressures of Wall Street.
    According to the Surface Transportation Board, outside of 
coal the railroads have lost market share to trucks for the 
past 15 years. They are cherry-picking only the most profitable 
routes, working to make the less-profitable routes as 
unappealing as possible, and forcing that freight to trucks. I 
have spent my career raising concerns about Wall Street and its 
attack on American industry and American workers. And, 
unfortunately, now it has come to freight rail.
    I want to have a healthy and the best, most robust freight 
rail market in the world, keeping trucks off the road. And I do 
want to have a viable passenger rail network. These two things 
do not need to be incompatible, and I believe the Surface 
Transportation Board is going to play a very key role in moving 
us in that direction.
    [Mr. DeFazio's prepared statement follows:]

                                 
   Prepared Statement of Hon. Peter A. DeFazio, a Representative in 
      Congress from the State of Oregon, and Chair, Committee on 
                   Transportation and Infrastructure
    Thank you to all of our witnesses for being here today. Something 
must really be wrong when rail labor, railroad shippers, and Amtrak 
have similar concerns about the way the freight rail industry is 
operating. To say I am concerned is an understatement.
    The Surface Transportation Board is heavily focused on ensuring 
economic vitality of the railroads when it should be supporting a 
balanced national freight rail system that serves its customers well. 
Forty-two years after the Staggers Act, and 27 years after Congress 
replaced the Interstate Commerce Commission with the STB, the balance 
of power has swung too far. Wall Street is extracting wealth from the 
deregulated railroads at the expense of poor service to railroad 
customers and on the backs of railroad workers.
    This change has been driven by activist investors on Wall Street 
who demand ever-increasing quarterly profits through ever-decreasing 
operating ratios. The railroads have been forced to lay off nearly one 
third of their workforce since 2015. Railroads have also parked 
locomotives and closed rail yards causing a number of shippers to 
temporarily close plants and facilities due to erratic rail service. 
Meanwhile, as the rail workforce strains under pressures to do more 
with less, the shrunken employee count contributes to unreliable 
shipper service, worker fatigue, and low morale.
    All the while, the same investors on Wall Street have demanded 
stock buybacks and nonstop returns on investment. The pandemic 
exacerbated the effects of pressure that began years ago to cut, cut, 
cut. Now, after years of shrinking footprints and workforces, the Class 
I railroads find they've cut too far. They are reopening facilities 
they previously closed to save costs and desperately trying to rehire 
workers who have seen the industry change before their eyes. The Class 
I railroads have left themselves so little cushion that they have been 
unable to adjust for winter in Chicago, flooding in the Midwest and 
Southeast, and wildfires in the West. Weather events like these occur 
every year--and are getting worse due to climate change--and yet they 
are consistently used as an excuse for degrading service.
    Our national policy goal to reduce the transport sector's carbon 
emissions cannot be achieved if the freight railroads are cutting 
service to less lucrative shippers. We need the freight railroads to be 
serving more customers at a time when the overall volume of goods 
transported across the country is skyrocketing.
    Railroads consistently tell us how, if 25 percent of the truck 
traffic moving at least 750 miles went by rail instead, annual 
greenhouse gas emissions would fall by approximately 13.1 million tons. 
I agree with their stated goal: to encourage modal shift so that 
freight railroads can truly be part of our climate solution. They talk 
a good game. They consistently highlight what we want to hear: rail is 
three to four times more energy efficient than truck. But they can't 
really be a part of the solution if Wall Street is pushing the Class I 
railroads to consistently focus on increasing short-term profits 
instead of expanding long-term service.
    According to the Surface Transportation Board, outside of coal, the 
railroads have lost market share to trucks for the past 15 years. They 
are instead cherry picking only the most profitable routes and working 
to make the less profitable routes as unappealing as possible, thus 
shifting that freight to trucks.
    I've spent my career raising concerns about the greed on Wall 
Street and its detrimental impacts to Main Street. The challenges in 
the freight rail industry remind me of what happened at Boeing with the 
737 MAX where a storied company, with a proud workforce, changed 
direction to focus more on the bottom line than on safety, and warnings 
from employees were ignored. This committee is sounding the alarm 
today. Activist investors out to make short-term profits with the 
railroads have gotten nearly $200 billion in stock buybacks since 2010, 
and I am concerned about the long-term viability of America's freight 
railroads.
    My goal is to foster a healthy freight rail market that boosts the 
overall economy and reduces carbon emissions. Wall Street's goal is to 
get wealthier--no matter the impact on our economy, environment, 
transportation system, or workforce.
    The pendulum has swung too far. I hope we can course correct before 
it is too late. I look forward to hearing the testimony of our 
witnesses today.

    Mr. DeFazio. With that, I yield back the balance of my 
time, and I would now recognize Ranking Member Crawford's 
opening statement.
    Mr. Crawford. Thank you, Mr. Chairman. I appreciate you 
covering for your colleague, Mr. Payne. I thank him for holding 
this hearing, and thank you to our witnesses for participating 
today.
    Today's hearing will examine stakeholder perspectives on 
the Surface Transportation Board's role in regulating the 
freight railroad industry, and thoughts on the STB's 
reauthorization.
    The STB is an independent agency that generally ensures 
that freight railroads operate in an efficient and economically 
competitive manner that serves the interests of freight 
carriers, shippers, and other interested parties. This year, 
the STB is busier than ever as it reviews an important 
reciprocal switching rule, a merger between two Class I freight 
railroads, and potential expansion of Amtrak service.
    The STB must always weigh any consideration of further 
industry regulations with the deregulatory spirit of the 
Staggers Act, which opened the freight industry to increased 
competition, lower rates, and efficiencies that benefit all 
interested parties.
    The STB was last authorized in 2015 through fiscal year 
2020. It has subsequently received funding through continuing 
resolutions.
    I commend the chair for holding this hearing today and look 
forward to hearing from our witnesses.
    [Mr. Crawford's prepared statement follows:]

                                 
Prepared Statement of Hon. Eric A. ``Rick'' Crawford, a Representative 
      in Congress from the State of Arkansas, and Ranking Member, 
     Subcommittee on Railroads, Pipelines, and Hazardous Materials
    Thank you, Chair Payne, for holding this hearing, and thank you to 
our witnesses for participating.
    Today's hearing will examine stakeholder perspectives on the 
Surface Transportation Board's role in regulating the freight railroad 
industry, and thoughts on the STB's reauthorization.
    The STB is an independent agency that generally ensures that 
freight railroads operate in an efficient and economically competitive 
manner that serves the interests of freight carriers, shippers and 
other interested parties.
    This year, the STB is busier than ever as it reviews an important 
reciprocal switching rule, a merger between two Class One freight 
railroads, and potential expansion of Amtrak service.
    The STB must always weigh any consideration of further industry 
regulations with the deregulatory spirit of the Staggers Act, which 
opened the freight industry to increased competition, lower rates, and 
efficiencies that benefit all interested parties.
    The STB was last authorized in 2015 through fiscal year 2020. It 
has subsequently received funding through continuing resolutions.
    I commend the Chair for holding this hearing today and look forward 
to hearing from our witnesses.

    Mr. Crawford. And with that, Mr. Chairman, I yield the 
balance of my time.
    Mr. DeFazio. OK, I thank the gentleman for his brevity, and 
since we have no ranking member, I guess we will now proceed to 
witnesses.
    The first witness will be Chris Jahn, the president and CEO 
of the American Chemistry Council.
    Mr. Jahn, you are recognized for 5 minutes.

TESTIMONY OF CHRIS JAHN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, 
   AMERICAN CHEMISTRY COUNCIL; DENNIS NEWMAN, EXECUTIVE VICE 
 PRESIDENT OF STRATEGY, PLANNING, AND ACCESSIBILITY, NATIONAL 
    RAILROAD PASSENGER CORPORATION (AMTRAK); IAN JEFFERIES, 
PRESIDENT AND CHIEF EXECUTIVE OFFICER, ASSOCIATION OF AMERICAN 
RAILROADS; DENNIS R. PIERCE, NATIONAL PRESIDENT, BROTHERHOOD OF 
  LOCOMOTIVE ENGINEERS AND TRAINMEN; BRAD HILDEBRAND, MEMBER, 
  NATIONAL INDUSTRIAL TRANSPORTATION LEAGUE, AND FORMER VICE 
  PRESIDENT, CARGILL--GLOBAL RAIL AND BARGE LEAD; AND HERMAN 
    HAKSTEEN, PRESIDENT, PRIVATE RAILCAR FOOD AND BEVERAGE 
                          ASSOCIATION

    Mr. Jahn. Thank you, Mr. Chairman, and good morning to 
everyone, Ranking Member Crawford, and other members of the 
subcommittee. I appreciate the opportunity to talk to you today 
about the Surface Transportation Board.
    Freight rail is critical to supporting the everyday 
operations of ACC member companies. Our industry is one of the 
largest customers of freight rail, both by volume and revenue, 
and we are on track to be an even bigger customer in the 
future.
    Now, during his State of the Union Address last week, the 
President talked about a number of new factories being built 
across the country, and the growth of manufacturing jobs here 
in the United States. [Inaudible] industry is playing a major 
role in the revitalization of American manufacturing by making 
historic levels of investment.
    Our industry has announced expenditures of more than $200 
billion, and over 350 chemical manufacturing projects here in 
the United States. And as a result of this growth, we will need 
to transport 200,000 additional railcar shipments per year by 
2030. These shipments are important to every segment of the 
economy and the supply chain.
    Now, the Staggers Act set a course that helped put the rail 
industry on the road to recovery and thrive. And that is 
certainly a good thing. Our members need railroads to be safe, 
innovative, and successful, and this should give the Board the 
confidence to move ahead on other equally important objectives 
also mandated by the Staggers Act: number one, to ensure 
effective competition among railroads; number two, maintain 
reasonable rates in the absence of competition.
    Fulfilling this mission is vitally important. The 
railroads, again, need to be financially strong to serve their 
customers and invest for future growth. At the same time, rail 
customers need reliable service and reasonable rates. 
Competition and market forces provide the best means to balance 
these goals.
    Policies that promote greater competition within the 
railroad industry help make it a more attractive and viable 
option to move freight. However, most ACC members and other 
rail customers do not have competitive options, leaving them 
without market remedies and solely dependent on the STB when 
faced with unreasonable rates or service failures.
    The railroad industry of today looks very different than it 
did in the 1980s, when STB policies were first adopted. And as 
we go forward, we need to make changes and modernize these 
rules to adapt along with the rail industry. So, let me give 
you a couple of examples.
    Consolidation has significantly reduced the number of Class 
I railroads. This, in turn, has greatly limited access to 
competitive rail service and led to sharp increases in prices 
for shipping goods by rail. As one expert recently pointed out, 
competitive pricing is no longer the norm, and rail customers 
have to pay a substantial price for the consolidation of 
railroads' market power. And in fact, the STB's most recent 
analysis shows that, since 2004, rates have increased by 30 
percent more than inflation. Rail rates also outpace increases 
in long-haul trucking rates over that same time period.
    In addition to consolidation of mergers, railroads have 
dramatically changed their operations under the adoption of 
Precision Scheduled Railroading. These changes have negatively 
impacted service, and harmed many shippers and their customers 
through additional costs and service failures. Given the impact 
of these changes, the Board must adopt changes that are better 
equipped to address current challenges and current problems.
    We commend STB Chairman Oberman and the other members of 
the Board for working with all stakeholders to develop sensible 
policy changes. There are several helpful reforms currently 
underway at the STB, but there is one that I would specifically 
like to mention today.
    ACC supports the Board's proposal to update its rules on 
reciprocal switching. This long-overdue change would help 
fulfill one of the primary goals of the Staggers Act by 
providing greater access to competitive rail service. Canada 
has demonstrated that a similar approach can promote 
competition without harming the financial health of the rail 
companies or the resiliency of the network. We hope that this 
committee also values the importance of the STB. The new 
approaches being considered by the Board can help support 
American manufacturing and successful railroads.
    We would like to work with you to help ensure the Board has 
the resources it needs to help fulfill its congressional 
mandate. As the committee moves forward with legislation to 
reauthorize the STB, ACC urges you to consider the following 
recommendations.
    Number one, ensure the Board has adequate staff and funding 
to keep pace with changes to the rail network.
    Number two, create a better process for collecting data on 
rail rates.
    And number three, provide meaningful remedies for rail 
service failures.
    We appreciate your leadership on freight rail issues, and 
we want to work with you in any way we can to help serve 
shippers and railroads. Thank you.
    [Mr. Jahn's prepared statement follows:]

                                 
    Prepared Statement of Chris Jahn, President and Chief Executive 
                  Officer, American Chemistry Council
    Chairman Payne, Ranking Member Crawford and Members of the 
Subcommittee, my name is Chris Jahn. I am the President and Chief 
Executive Officer of the American Chemistry Council (ACC). I appreciate 
the opportunity to discuss the importance of the Surface Transportation 
Board (STB) and reforms that will provide greater access to economical 
and reliable freight rail service.
                               About ACC
    The American Chemistry Council is an industry trade association 
that represents more than 190 of America's leading chemical companies. 
Our members produce and manufacture a wide variety of chemicals, 
polymers, and related products that make our lives and our world 
healthier, safer, more sustainable, and more productive. The business 
of chemistry supports over 25% of the U.S. gross domestic product and 
directly touches nearly all manufactured goods. In addition to 
supporting a vast supply chain, our members help create more than half 
a million skilled, good-paying American jobs.
    Freight rail is critical to ACC's members and chemical 
manufacturing. Our industry is one of the largest freight rail 
customers, shipping 2.1 million carloads in 2020. And the expansion of 
U.S. chemical manufacturing means our transportation needs are growing. 
With announced investments of more than $200 billion and over 350 
chemical manufacturing projects, we expect to add 200,000 railcar 
shipments per year by 2030.
    We also rely on the Surface Transportation Board to help maintain a 
reliable, resilient and efficient rail network that is responsive to 
shipper needs. We are committed to working with Congress to pass 
legislation that will reauthorize the STB and ensure that the Board has 
the resources and tools needed to fulfill its vital mission.
                        Rail Customer Coalition
    Because of the importance of freight rail issues to chemical 
manufacturing, ACC is a member of the Rail Customer Coalition (RCC). 
Members of the coalition include trade groups representing automobile 
manufacturers, farmers, steel manufacturers, investor-owned electric 
companies, and rural electric cooperatives, among others. Collectively, 
the coalition members represent industries that provide more than 7 
million jobs and contribute $4.8 trillion in economic output.
    The members of RCC are major transportation stakeholders and the 
largest users of freight rail. They account for more than half of the 
total volume of cargo shipped by rail and generate more than three 
quarters of the revenues collected by the railroads. The RCC is 
committed to modernizing the Surface Transportation Board (STB) so that 
it works better for both the railroads and the large and small American 
businesses that rely on them.
    The STB Plays a Crucial Role for ACC Members and Other Shippers
    When Congress passed the Staggers Rail Act of 1980, it created the 
STB to help foster a healthy and competitive freight rail system, and 
it gave the Board sole authority to resolve commercial issues between 
railroads and shippers. The Staggers Rail Act set a course for the STB 
that has helped the rail industry recover and thrive, which is a good 
thing. This success story should give the Board the confidence to 
follow through on the other important objectives mandated by Staggers--
ensure effective competition among rail carriers and maintain 
reasonable rates in the absence of competition.
    Fulfilling this mission requires a balanced approach. Railroads 
need to be financially strong to serve their current customers and 
invest for future growth. At the same time, rail customers need 
reliable service and reasonable rates. Competition and market forces 
provide the best means to balance these goals. Policies that promote 
greater competition within the rail industry help make it an attractive 
and viable option to move freight.
    However, many ACC members and other rail customers do not have 
competitive transportation options and, therefore, no market remedies 
when faced with unreasonable rates or service failures. For them, the 
STB is the only recourse to address freight rail issues. Too often, 
however, the Board's policies and procedures are too complex, costly, 
and burdensome to provide timely and meaningful solutions.
         The Rail Industry Has Changed and STB Must Change Too
    The railroad industry of today looks very different than it did in 
the 1980s when many key STB rules and policies were adopted. Forty 
years later, consolidation has reduced the number of Class I railroads, 
which has greatly limited access to competitive rail service leaving 
many shippers captive to a single railroad. Following this 
consolidation, the cost to ship goods by rail has increased 
significantly.
    As one expert on freight rail rate trends recently pointed out, 
``Non-competitive pricing has become the norm, not the exception. Rail 
customers continue to pay a substantial price for the consolidation of 
the railroad's market power.'' \1\ In fact, the STB's most recent 
analysis shows that since 2004, real rail rates (adjusted for 
inflation) have increased by 30%.
---------------------------------------------------------------------------
    \1\ Escalation Consultants analysis: Rail Rates Climb Higher as 
Competition Gets More Scarce
---------------------------------------------------------------------------
    In addition, railroads have dramatically changed their operations 
and the level of service they provide to shippers following the 
implementation of Precision Scheduled Railroading (PSR). These changes 
have harmed many companies through additional costs and service issues.
    Given the massive changes within the freight rail industry and 
their ramifications for the economy, the STB can't stand still. The 
Board must follow suit and adopt new approaches that are better 
equipped to address the current environment.
    In its report, the National Academy of Sciences' Transportation 
Research Board concluded, ``while the U.S. freight railroad industry 
has become modernized and financially stable since the Staggers Rail 
Act of 1980, some of the industry's remaining economic regulations have 
not kept pace and should be replaced with practices better suited for 
today's modern freight rail system.'' \2\
---------------------------------------------------------------------------
    \2\ TRB report: Modernizing Freight Rail Regulation
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                     Smart Reforms Must be Adopted
    We're encouraged that the STB has recognized that its current 
polices need to be reexamined. It has taken several important steps to 
gain a better understanding of the problems and potential solutions, 
including convening its Rate Reform Task Force, holding numerous 
hearings, and collecting public comments. Now it must act on that 
information and move forward on the reforms the Board has carefully 
crafted with input from many stakeholders.
    Specifically, ACC supports the STB's proposal to change its 
restrictive rules on reciprocal switching. This key reform, which has 
been pending since 2016, would finally provide greater access to 
competitive rail service as envisioned by Congress more than 40 years 
ago. Reciprocal switching will unlock market forces to help provide 
competitive transportation rates, open up more service options, and 
ease congested routes.
    We also support the Board's efforts to streamline its procedures by 
adopting a policy known as Final Offer Rate Review. This new policy 
would provide a more useful alternative to the Board's outdated and 
burdensome rate review standards that have proven to be unworkable for 
most shippers.
    In addition, we support the Board's efforts to collect and report 
more meaningful data on service performance to rail customers known as 
``first mile/last mile service.'' Collecting this critical data would 
provide the STB and rail customers with better insight into some of the 
most disruptive service problems so they can be effectively addressed.
    We commend STB Chairman Oberman and the other Board members for 
focusing on these priorities and encourage them to finalize these 
needed reforms. We hope that this Committee also recognizes the 
importance of these reforms and how they can help support American 
manufacturing.
       Congress Must Build on the STB Reauthorization Act of 2015
    When Congress reauthorized the STB in 2015 with bipartisan support, 
it provided the Board with additional tools and resources so it could 
act quicker and be more proactive in addressing freight rail issues. 
The law expanded membership from three to five members and allowed 
Board members more flexibility to discuss pending matters. It gave the 
STB the authority to initiate its own investigations on rail service 
and other significant issues. And it required the Board to study more 
efficient and simplified rate review methodologies.
    These changes have produced results. For example, the STB was 
better positioned to tackle the service and demurrage issues that 
resulted from operational changes adopted under Precision Scheduled 
Railroading. It has also allowed the Board to develop some of the 
reforms currently under consideration, including Final Offer Rate 
Review.
    Just like the STB, Congress should not stand still on freight rail 
reform. As the Committee moves forward with legislation to reauthorize 
the STB, ACC urges you to consider the following recommendations:
      Ensure the Board has adequate funding and staff. The STB 
must fulfill a broad range of responsibilities, including new oversight 
of Amtrak service. Congress must provide the Board with the necessary 
resources to meet its ongoing obligations and to keep pace with changes 
to the rail network.
      Improve data on rail rates. To help the STB meet its 
mandate to maintain reasonable rates in the absence of effective 
competition, Congress should commission the Transportation Research 
Board to develop a new economic model that uses real world data to 
compare the rates paid by captive shippers to the rates paid for 
similar shipments in competitive markets. Currently, the Board has no 
way to measure how much extra a rail shipper pays solely because it 
lacks competitive transportation options. Creating a new model could 
serve as a more accurate and realistic starting point for evaluating 
whether a rate is ``reasonable.''
      Provide remedies for rail service failures. The Board 
currently lacks authority to provide meaningful remedies for customers 
facing railroad service failures. Congress should provide the Board 
with authority to require and enforce a service recovery plan if a 
railroad fails to provide adequate service. In addition, Congress 
should authorize relief and damages where a carrier has failed to 
provide adequate service.
                               Conclusion
    A robust and responsive freight rail network is important to the 
continued growth of U.S. chemical manufacturing. We appreciate the 
strong interest this Committee has shown on this important issue, and 
we look forward to working with you on legislation that reauthorizes 
the STB so that it serves both shippers and railroads.

    Mr. DeFazio. Exactly 5 minutes. The gentleman is to be 
congratulated, and thank you for that substantive testimony.
    Now we will hear from Dennis Newman, executive vice 
president of strategy, planning, and accessibility for Amtrak.
    Mr. Newman, you are recognized for 5 minutes.
    Mr. Newman. Good morning, Chairman DeFazio, Ranking Member 
Crawford, and members of this subcommittee. My name is Dennis 
Newman, and I am Amtrak's executive vice president for 
strategy, planning, and accessibility. On behalf of Amtrak's 
over 17,000 hard-working and dedicated employees, thank you for 
allowing me to testify before this subcommittee and share with 
you Amtrak's views on the reauthorization of the Surface 
Transportation Board.
    When Congress created the STB in 1995, passenger rail was 
simply not top of mind. However, many things have changed since 
then.
    First, Congress has made several important updates to the 
law, providing the STB with new responsibilities regarding 
Amtrak.
    Second, the on-time performance of Amtrak trains has 
deteriorated due to some host railroads ignoring Amtrak's 
statutory preference rights over freight trains.
    And third, some railroad mergers have had lasting service 
impacts on Amtrak train performance, and have even jeopardized 
the continued operation of certain Amtrak routes.
    Therefore, given what has happened over the past 26 years, 
and how your constituents are often delayed or ignored by some 
freight railroads, it is critical that the STB be equipped with 
the tools and the resources necessary to help ensure a modern, 
well-functioning passenger rail network in America.
    While my written testimony includes a number of STB-related 
reauthorization proposals, I would like to highlight three 
particular items for this subcommittee to consider.
    First, the STB passenger rail program. In the IIJA, 
Congress explicitly said that the STB shall establish a 
passenger rail program, and hire up to 10 additional employees 
to assist the Board in doing this important work. Now that the 
IIJA is law, we need Congress to provide the STB with the 
Federal funds necessary to hire the staff to focus on its 
responsibilities with respect to passenger rail, such as 
conducting investigations into substandard performance.
    That brings me to the second priority I would like to 
highlight. It is important to clarify that when a complaint is 
brought to the Board to look into substandard on-time 
performance, the Board will not just treat it as another 
adversarial proceeding, but rather actively investigate the 
causes and remedies for that poor performance. This will 
strengthen an enforcement tool that already exists, and clarify 
the key role that the Board can and should play in remedying 
chronic on-time performance issues.
    And finally, to complement the authority the STB has to 
investigate substandard performance, the U.S. Attorney General 
has the authority to bring a case to enforce provisions of the 
Rail Passenger Service Act, including the preference law. 
However, as you may expect, the Department of Justice is very 
busy with a number of other pressing matters. And 
unfortunately, DOJ has brought only one preference case in 49 
years. Therefore, in order to ensure freight railroads are not 
ignoring the law and delaying your constituents, Amtrak is 
requesting that we be provided with the ability to also bring a 
case to district court when our rights are being violated by a 
host railroad.
    I want to thank Chairman DeFazio for his hard work on this 
issue, and for including preference enforcement in the Moving 
Forward Act. As we know, this important provision was 
ultimately not included in the IIJA. But we cannot give up this 
fight.
    I also want to thank Chairman Payne for introducing a 
stand-alone bill, H.R. 2937, the Rail Passenger Fairness Act. 
And I ask members of this subcommittee to support this critical 
piece of legislation if they are tired of their constituents 
being delayed by certain freight railroads.
    With these additional tools and resources, Amtrak believes 
our passengers and your constituents could finally have the 
service that they deserve.
    Now, before I end, I want to stress one really important 
point. There is absolutely no reason why this Nation cannot 
have both a world-class freight rail network and a modern, 
expanded intercity passenger rail service. Amtrak wants both to 
succeed. There are many examples of Amtrak and our State 
partners working cooperatively with host railroads to deliver 
performance improvements and network expansion with publicly 
funded investments that benefit all rail users. We have 
supported rail mergers that will benefit Amtrak performance and 
facilitate service expansion, like the proposed CP/KCS merger. 
With this subcommittee's help, we believe that building a 
system that works for both freight and passenger rail is 
possible.
    Thank you for all your support thus far, and for your time 
this morning. I look forward to your questions.
    [Mr. Newman's prepared statement follows:]

                                 
   Prepared Statement of Dennis Newman, Executive Vice President of 
  Strategy, Planning, and Accessibility, National Railroad Passenger 
                          Corporation (Amtrak)
    Good morning, Chairman Payne, Ranking Member Crawford, and Members 
of this Subcommittee. Thank you for inviting me to testify on behalf of 
Amtrak about the reauthorization of the Surface Transportation Board 
(STB). My name is Dennis Newman, and I am Amtrak's Executive Vice 
President, Strategy, Planning, and Accessibility.
                    The Need for STB Reauthorization
    When Congress was drafting the ICC Termination Act of 1995 (ICCTA) 
that created the STB, passenger rail issues were not top of mind. The 
ICCTA made no mention of Amtrak. The 15-part Rail Transportation Policy 
the ICCTA directed the STB to follow in exercising its regulatory 
powers did not say anything about passenger rail.
    Perhaps that is not surprising. At the time the STB was created, 
its recurring role with regard to passenger rail was limited to 
resolving, under 49 U.S.C. 24308(a), the relatively infrequent disputes 
between Amtrak and its host railroads over terms and conditions for 
Amtrak's access to their lines and issuing orders to allow Amtrak 
trains to operate in an emergency under 49 U.S.C. 24308(b). Railroad 
mergers were viewed as necessities to rid the industry of excess 
capacity and combine financially precarious railroads with stronger 
ones that did not affect passenger rail.
    Many things have changed in the ensuing 26 years. First, several 
statutory changes have given the STB important new responsibilities 
regarding Amtrak:
      Section 213 of the Passenger Rail Investment and 
Improvement Act of 2008 (PRIIA) gave the STB power to investigate poor 
on-time performance of Amtrak trains and enforce Amtrak's longstanding 
right to preference over freight trains.
      PRIIA also shifted from the U.S. Department of 
Transportation to the STB the responsibility for resolving disputes 
between Amtrak and its host railroads over the operation of Amtrak 
trains at accelerated speeds under 49 U.S.C. 24308(d), and over 
Amtrak's operation of additional trains under 49 U.S.C. 24308(e).
      Section 11204(a) of the Fixing America's Surface 
Transportation (FAST) Act of 2015 gave the STB ongoing responsibility 
for adjudicating disputes regarding application of the cost allocation 
methodology for state-supported trains developed pursuant to Section 
209 of PRIIA.

    Second, the on-time performance of Amtrak trains operating over our 
host freight railroads has deteriorated, driven by the fact that some 
host railroads are ignoring Amtrak's statutory preference over freight 
trains. During Amtrak's Fiscal Year 2021, only 52% of passengers on our 
long-distance routes arrived at their destinations on time, seven 
percentage points worse than the year before. Only one of our 15 long-
distance routes, and just 12 of 26 state-supported routes, met the 
standard of 80% customer on-time performance established by the FRA's 
metrics and standards during 2021.
    And third, while railroad mergers and line sales have helped large 
U.S. freight railroads achieve record profits, implementation of many 
mergers has triggered rail service meltdowns with lasting adverse 
impacts on Amtrak train performance and in some cases has jeopardized 
the continued operation of Amtrak routes.
    The Surface Transportation Board (STB) plays an essential role both 
in meeting national transportation needs and in Amtrak's fulfillment of 
its statutory goals and directives. Approximately 97% of Amtrak's 
22,300 route-mile network is on rail lines owned by freight railroads 
and regional transportation authorities. Over 70% of Amtrak's train-
miles in pre-pandemic 2019 operated over the lines of these host 
railroads.
    Absent agreements between Amtrak and its host railroads, it is the 
STB that determines whether and on what terms Amtrak may operate its 
National Network of state-supported and long-distance routes over host 
railroad lines, and the compensation Amtrak must pay for those 
operations. While nearly all such operations are conducted pursuant to 
negotiated agreements, it is Amtrak's ability to obtain STB 
adjudication of disputes that ensures such agreements are reasonable, 
and that existing and additional Amtrak services can operate. The 
statutory and other changes since enactment of the ICCTA that I have 
described have greatly increased the STB's importance to passenger 
rail. Few things are more important to the continued operation, 
performance, and expansion of Amtrak's National Network than a well-
functioning and adequately funded STB.
                                The IIJA
    For Amtrak and passenger rail, the reauthorization of the STB could 
not come at a more opportune time. The Infrastructure Investment and 
Jobs Act (IIJA) enacted in November will transform intercity passenger 
rail service to a much greater extent than any previous legislation 
since Amtrak's creation more than 50 years ago. The IIJA provides the 
significant, multiyear federal funding requested by the Administration 
and long supported by many members of this Subcommittee: $58 billion in 
advance appropriations over the next five years for investment in 
Amtrak and intercity passenger rail. That funding will allow us to 
begin the modernization of Amtrak's assets and initiate significant 
expansion of Amtrak's route network.
    The IIJA directs the Federal Railroad Administration (FRA), in 
consultation with Amtrak and other stakeholders, to establish a 
Corridor Identification and Development Program to identify specific 
corridors for improvement and expansion of intercity passenger rail 
service. It also tasks FRA with leading a two-year study of long-
distance service expansion.
    Amtrak's participation in the corridor development effort will be 
informed by Amtrak Connects US, a vision for developing and expanding 
corridor services throughout the United States over the next 15 years 
that Amtrak released last April. Amtrak Connects US identified 39 new 
corridors with high demand and potential for intercity passenger rail 
service, and an additional 25 existing corridors that are prime 
candidates for service expansion. Many of these corridors are in fast 
growing states and regions that Amtrak's current route network does not 
serve well, or in many cases at all, today. Amtrak's current network is 
about the same size as it was in 1971, even though the U.S. population 
has increased by roughly 120 million since that time.
    The enactment of the IIJA will greatly increase the importance of 
the role the STB plays with respect to Amtrak and its existing and 
future operations over host railroad lines. Access to all host railroad 
lines on reasonable terms, without lengthy delays or exorbitant and 
unjustified demands for capital investments when Amtrak seeks to 
operate additional trains, is an essential prerequisite to using the 
funding provided by the IIJA to grow our network.
                       Reauthorization Proposals
    I would like to focus my testimony on several issues affecting 
Amtrak that we believe should be addressed as the Committee develops 
its STB reauthorization bill. Thanks to the Committee's work, 
provisions addressing some of these matters were included in the Moving 
Forward Act, the infrastructure bill adopted by the House last year, 
but unfortunately were not part of the IIJA that ultimately became law.
Enforcement of Amtrak's Preference Rights
    A high level of on-time performance on trains operating over 
Amtrak's host railroads is crucial to attracting customers and 
realizing the benefits of public investments in rail. Although Amtrak's 
statutory preference over freight trains has been the law since 1973, 
it has increasingly been ignored by host freight railroads because 
there has been no means to enforce it. Only the U.S. Attorney General 
is empowered to bring a case to enforce provisions of the Rail 
Passenger Service Act, including the preference law provision. In the 
49 years since enactment of the preference provision, the U.S. 
Department of Justice has brought only one case to enforce Amtrak's 
preference rights.
    Section 213 of the Passenger Rail Investment and Improvement Act of 
2008 (PRIIA), codified at 49 U.S.C. 24308(f), gave the STB authority to 
conduct investigations of Amtrak routes with poor on-time performance; 
to determine whether the cause was the host railroads' failure to give 
preference to Amtrak trains; and to award damages and other relief to 
Amtrak where that was the case. By giving the STB authority to enforce 
preference, Congress intended to remedy the lack of enforcement 
problem. Unfortunately, that did not happen for two reasons.
    First, the Association of American Railroads (AAR), acting on 
behalf of its freight railroad members, launched what became a decade-
long legal challenge to the constitutionality of Section 213's grant of 
preference enforcement power to the STB. While that challenge 
ultimately failed, it effectively prevented the STB from exercising its 
investigatory and enforcement powers during the more than 13 years 
since PRIIA's enactment.
    Second, the STB was never given the resources necessary to 
investigate and take action against preference violations. Funding was 
never appropriated for the additional STB staff positions that Section 
24308(f) authorized. As a result, when Amtrak did bring complaints of 
preference violations to the STB, which were ultimately withdrawn due 
to the AAR's legal challenge, the STB was forced to treat them as 
adversarial adjudicatory proceedings rather than investigations by STB 
staff as Section 213 contemplated. The protracted litigation resulting 
from this approach benefits poor performing railroads that seek to drag 
out legal proceedings while Amtrak passengers continue to experience 
delays and makes preference violation complaints extremely expensive to 
pursue.
    Amtrak is gratified that the STB is finally empowered to begin 
exercising the authority it was given by PRIIA Section 213 to 
investigate substandard Amtrak on-time performance and to take action 
if poor performance is a result of preference violations. However, when 
that happens, there is nothing to prevent freight railroads from 
launching yet another legal challenge to the STB's authority. In the 
meantime, Amtrak passengers will continue to suffer unnecessary and 
protracted delays when freight railroads violate the law and give 
preference to their freight trains over Amtrak trains. In the interest 
of providing effective relief to Amtrak and its passengers as soon as 
possible, Amtrak recommends that the STB reauthorization bill:
      Ensures that the STB's Passenger Rail Program, created by 
Section 22309 of the IIJA and authorized for ten full-time staff 
positions, is adequately funded, preferably by specifying that at least 
five percent of the total funding appropriated for the STB in each year 
the bill authorizes is to be made available to fund salaries, 
investigations, and other activities of that program;
      Authorizes Amtrak to seek enforcement of its preference 
rights in federal court, as did the Moving Forward Act and the Rail 
Passenger Fairness Act sponsored by Rail Subcommittee Chairman Payne, 
which we deeply appreciate;
      Specifically directs the STB to conduct investigations 
rather than initiate adversarial proceedings when Amtrak or another 
authorized party files a complaint alleging a preference violation with 
the STB;
      Specifies that, at any time during a preference 
investigation, the STB may utilize its authority under 49 USC 
1321(b)(4) to issue injunctive orders where the facts warrant and as 
necessary to avoid irreparable harm to Amtrak passengers from 
continuing preference violations; and
      Specifically provides that, under the broad power Section 
213 confers upon the STB to award relief for preference violations, the 
STB may require that rail lines on which continuing preference 
violations are found be dispatched jointly by the railroad and Amtrak 
or by an independent third party.
Operation of Long Freight Trains
    The implementation of so-called ``Precision Scheduled Railroading'' 
by many Class I railroads has, among other things, led to the operation 
of very long freight trains, some more than three miles in length. In 
many cases, these trains are too long to fit in most passing sidings on 
the single-track rail lines that are predominant on the national rail 
network. Amtrak trains are often required to follow long freight trains 
at slow speeds for considerable distances, sometimes a hundred miles or 
more, before these behemoths reach a siding long enough to accommodate 
them. When two very long freight trains are operating in opposite 
directions, they can effectively shut down a rail line. The operation 
of such trains also produces lengthy grade crossing blockages, and 
concerns have been expressed that they can create safety risks.
    To address these problems, Amtrak believes that the STB 
reauthorization bill should require that railroads that operate very 
long freight trains develop Long Train Operating and Safety Plans and 
submit them to the STB and FRA for review and approval following public 
comment. These plans would be similar to the plans for implementation 
of positive train control that railroads are required to submit to FRA, 
and the approach followed in regulating heavy trucks that are allowed 
to operate on designated highways after obtaining special permits. The 
plans would detail how the railroad would ensure safe operation of long 
trains, and the operational practices and/or infrastructure investments 
railroads would implement so that the operation of these trains would 
not negatively impact passenger rail service or communities.
Consistent Application of Federal Railroad Laws
    Passenger and freight railroads over which the STB has regulatory 
jurisdiction are subject to a number of important federal laws 
governing railroads, including the Railway Labor Act and the Railroad 
Retirement Tax Act. Although Amtrak is exempt from most STB regulation, 
Congress specified in the Rail Passenger Service Act that Amtrak is 
also subject to these federal railroad laws.\1\
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    \1\ 49 U.S.C. 24301(c)
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    However, as a result of a 2012 STB decision determined by a single 
vote,\2\ intercity passenger railroads that operate within a single 
state are deemed not to be part of the interstate rail network--even 
though they operate over the interstate rail network on tracks shared 
with and owned by STB-regulated railroads--as long as they do not 
connect with Amtrak. It makes no difference whether, like the applicant 
in the 2012 case, these railroads connect directly with interstate and 
international airlines and cruise lines, or benefit from federal 
railroad loans and federal railroad grant programs. As a result, these 
railroads are not subject to STB jurisdiction, or to the federal 
railroad laws that apply to Amtrak and to passenger and freight 
railroads that are subject to STB jurisdiction.
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    \2\ All Aboard Florida--Construction and Operation Exemption, STB 
FD No. 35680, Decision served Dec. 21, 2012.
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    Congress should eliminate this loophole. All railroads operating 
intercity passenger rail service over the interstate rail network 
should be subject to federal railroad laws. A federal regulatory scheme 
that discourages other intercity passenger railroads from connecting 
with Amtrak contravenes current federal transportation policy reflected 
in the IIJA. It also gives a few for-profit passenger rail companies an 
unfair advantage over railroads subject to federal railroad laws and 
deprives the employees of these companies of the rights and benefits 
enjoyed by other railroad employees.
Railroad Mergers
    The statutory provisions governing the STB's review of railroad 
mergers and line sales and leases predate the STB. They are largely 
unchanged since enactment of the Staggers Act in 1980, when federal 
policy encouraged railroad mergers to rationalize the railroad network 
and alleviate the railroad industry's severe financial distress. 
Additionally, they do not specify that the STB must consider impacts on 
passenger rail when reviewing rail mergers.
    Indeed, the statutory provisions that apply to mergers not 
involving two Class I railroads have essentially been construed to 
require the STB to rubber stamp such transactions absent severe anti-
competitive effects, regardless of whether a merger is in the public 
interest. Some have even asserted that the STB is also prohibited from 
imposing conditions on mergers that are required by the public interest 
to avoid harm to passenger rail service or to ensure safe operations.
    Since enactment of the ICCTA in 1995, implementation of railroad 
mergers has produced rail service meltdowns that have lasted for many 
months or years. Like freight shippers, Amtrak passengers have been 
severely impacted by the resulting rail network gridlock, which has 
triggered multi-hour delays on some routes on nearly every trip. On 
many routes, the performance of Amtrak trains has never fully recovered 
to pre-merger levels. In at least two cases, a railroad merger or rail 
line lease has produced changes in freight traffic flows or track 
maintenance responsibility that threatened the continued operation of 
Amtrak routes.
    While the STB revised its regulations governing mergers between 
Class I railroads almost 20 years ago to reflect the vastly changed 
condition of the railroad industry, the old statutory provisions 
governing railroad mergers remain on the books. When the STB is 
reauthorized:
      Impacts on passenger rail service should be added to the 
statutory criteria the STB is required to consider in reviewing all 
railroad mergers and line sales/leases;
      The STB's authority to impose conditions on all 
transactions to protect passenger rail service and safety should be 
reaffirmed; and
      The STB should be empowered to disapprove any railroad 
merger, line sale, or lease transaction that is not in the public 
interest.
Rail Transportation Policy
    The preservation, improvement, and expansion of passenger rail 
service should be added to the Rail Transportation Policy, codified at 
49 U.S.C. 10101, that guides the STB's actions.
Operation of Additional Trains
    I also wanted to mention briefly the STB's authority, codified at 
49 U.S.C. 24308(e), to issue orders requiring host railroads to allow 
the operation of additional Amtrak trains.
    Nearly a year ago, Amtrak for the first time initiated a proceeding 
under that provision, seeking an order that would allow restoration of 
state-supported Amtrak service between New Orleans and Mobile. The 
second of two STB hearings in that proceeding will take place in early 
April, and the STB will issue a decision thereafter. We are gratified 
by the support for Amtrak's position in that case that was expressed at 
the first hearing last month by the FRA and members of Congress from 
both parties, particularly Chairman DeFazio who testified at the 
hearing.
    Congress enacted Section 24308(e) in 1980 to provide Amtrak with an 
``expedited procedure'' to add additional trains in the face of some 
host railroads' ``intransigence'' and demands for ``inordinate capital 
improvements.'' \3\ The enactment of the IIJA last year, with its focus 
on service expansion and unprecedented funding to make it a reality, 
reaffirmed that Congress intends for Amtrak to be able to expand its 
network without impedance or unnecessary delay. After the STB issues 
its decision in the pending case, we will advise the Committee if we 
believe any further legislative action is necessary to effectuate 
Congress's intent.
---------------------------------------------------------------------------
    \3\ House Rep. No. 96-839, Mar. 20, 1980, p. 21; House Conf. Rep. 
No. 96-1041, May 20, 1980, p. 42.
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      Developing a World Class Freight and Passenger Rail Network
    Finally, I wanted to debunk the myth that improvement and expansion 
of Amtrak service will result in the degradation of freight rail 
service. Those who assert that either seek to mislead or are unfamiliar 
with the U.S. railroad network.
    Improving our nation's rail network is not a zero-sum competition 
between passengers and freight. There is absolutely no reason why this 
nation cannot have both a world class freight rail network and modern, 
expanded intercity passenger rail service.
    Amtrak wants both freight and passenger rail to succeed. Amtrak and 
shippers have the same interest in freight railroads providing good 
service and maintaining their infrastructure. We know that some freight 
railroads, driven by a myopic focus on operating ratios and short-term 
financial performance, are not making the infrastructure investments 
they should be making. It also bears noting that the freight railroads 
that are providing good service to Amtrak, as measured by Amtrak's Host 
Railroad Report Card that ranks Class I railroads based upon relative 
minutes of host railroad-responsible delays to Amtrak trains, are not 
generally the railroads whose service freight shippers are complaining 
to the STB about.
    Another reason why freight railroads and freight shippers should 
welcome expansion of Amtrak service is the public investment in rail 
infrastructure that passenger rail service brings to the table. Over 
the last few decades, Amtrak, our state partners, and the federal 
government have invested billions of dollars in public funding to add 
capacity and upgrade tracks, signals, and other infrastructure on the 
freight railroad-owned lines over which Amtrak operates. One recent 
example is the $3.7 billion that the Commonwealth of Virginia and 
Amtrak have recently committed for passenger rail-driven infrastructure 
investments along CSX's Washington-to-Richmond/Petersburg rail corridor 
and for acquisition of CSX rail lines and right-of-way throughout 
Virginia. Virtually every regional and short line railroad over which 
Amtrak operates has benefited from significant public funding to 
upgrade tracks and other infrastructure that it would not have received 
otherwise.
    Amtrak accounts for only approximately 4% of train miles on Class I 
railroads. That percentage would not significantly increase even if all 
of the expansion contemplated in the Amtrak Connects US vision occurred 
over the next 15 years, and that expansion would be accompanied by huge 
investments of IIJA and other public funding in freight railroad-owned 
lines to accommodate the additional Amtrak service. Amtrak expansion, 
and the investment in the U.S. rail network it will bring, can provide 
a ``win/win'' for Amtrak and its passengers and for freight railroads 
and their shippers.
                               Conclusion
    I thank the members of the Subcommittee for your time today and for 
your support for Amtrak. We look forward to your work to develop an STB 
reauthorization bill that serves the interests of Amtrak passengers and 
all rail users.

    Mr. DeFazio. OK, I thank the gentleman.
    We would now turn to Mr. Ian Jefferies, president and CEO 
of the Association of American Railroads.
    Mr. Jefferies, you are recognized for 5 minutes.
    Mr. Jefferies. Chairman DeFazio, Ranking Member Crawford, 
members of the committee, thank you for the opportunity to be 
here before you today.
    The past few years have reinforced a key truth: railroads 
are an integral part of not only domestic commerce, but also 
global supply chains. This is no accident. For decades, 
railroads have invested heavily in their top-rated 
infrastructure, people, and technology, operating 24/7 to keep 
goods moving.
    The numbers tell the story: average annual investments of 
$25 billion a year, the train accident rate down 31 percent 
since the year 2000, and record or near-record volumes of 
intermodal containers, chemicals, grain, and others in the year 
2021. Rail transportation also reduces overall emissions, 
accounting for just 2 percent of transportation-related 
greenhouse gas emissions, while moving 40 percent of goods. And 
Class I freight rail employees earn total compensation more 
than 30 percent higher than the average U.S. employee.
    As we discuss the STB and economic regulation, let me be 
clear about one key point: the current regulatory structure 
makes sense. Rail rates are 44 percent lower than they were in 
1980. And true, rates are modestly higher than they were years 
ago, today roughly equal to where they were in 1990, 32 years 
ago. According to the Bureau of Labor Statistics, since 2017 
through the end of 2021, the cost to ship by rail has risen at 
a level of approximately half that of long-haul trucking, even 
though trucks compete on infrastructure subsidized by taxpayer 
expense.
    The focus at the STB should be a policy environment to meet 
projected future freight movement needs without sacrificing the 
industry's ability to make progress towards safety and 
environmental goals. DOT projects a 50-percent increase in 
freight by 2050. The more of that freight that moves by rail, 
the better for the environment, for congestion, and for highway 
degradation. But sufficient capacity is critical to meet this 
demand.
    As the statute states, railroads must be able to earn the 
necessary revenues for the infrastructure and investment needed 
to meet the present and future demand for rail service. The 
current market-based regulatory framework, developed on a 
bipartisan basis, has been fundamental to the railroad's 
ability to meet demands to date. This system provides the 
requisite balance. Railroads can compete for business with an 
appropriate regulatory backstop where markets fail.
    Therefore, the current push by some for the STB to enact 
re-regulatory policies, like forced switching, is backwards-
looking and wrongheaded. Make no mistake: forced switching 
would undermine fluidity, disincentivize investment, and 
increase emissions, all at a time when supply chains are still 
experiencing disruptions from the pandemic. Railroads already 
switch traffic today, where it makes sense, and customers can 
petition for a switch if a railroad shows anticompetitive 
conduct. The current proposal at the Board would remove that 
standard, transforming switching from a remedy into a right.
    Some point to rail profitability as justification for a new 
regulation. This is absurd. Penalizing success is bad public 
policy and shortsighted, especially when that success has led 
to consistently high investment levels back into our networks, 
levels that far exceed other industries represented here today 
as a percentage of revenue. And that level of investment is 
necessary to meet forecasted demand.
    While some members of the fewest largest trade groups might 
benefit in the short term from forced access, many customers 
would be harmed, as would the health of the overall rail 
network. Fortunately, the public record shows broad opposition 
from leading economists from rail labor, from passenger rail, 
environmental advocates, and State and local leaders. Most 
notably, I sincerely thank the 41 committee members represented 
here today, both Democrats and Republicans, who wrote to the 
STB in opposition to a forced switching rule, or urged extreme 
caution in this area.
    Re-regulation proponents argue that the STB's rate 
adjudication processes are cumbersome, time consuming, and 
expensive. Then Congress should encourage the STB to identify 
commonsense measures that would streamline rate case 
procedures, while also remaining consistent with underlying 
economic principles and statutory requirements. At the same 
time, Congress should push the STB to implement cost-benefit 
analyses to its proceedings, as nearly all other agencies 
currently do to understand the real-world impacts of their 
deliberations.
    In closing, railroads operate in a highly complex and 
dynamic market, and we continue to work toward the top-line 
goals of policymakers, specifically maximizing goods movement, 
and doing so safely. Now is not the time for ill-conceived 
policy changes that would result in a decrease in freight 
fluidity and investment. Thank you for your time.
    [Mr. Jefferies' prepared statement follows:]

                                 
  Prepared Statement of Ian Jefferies, President and Chief Executive 
               Officer, Association of American Railroads
    On behalf of the members of the Association of American Railroads 
(AAR), thank you for the opportunity to testify on these important 
matters related to the Surface Transportation Board (STB). AAR's 
members include the seven Class I freight railroads and many other 
railroads that together account for the vast majority of U.S. freight 
railroad mileage, revenue, employees, and traffic. Amtrak is also a 
member of AAR, as are various commuter railroads that, in aggregate, 
account for more than 80 percent of U.S. commuter railroad trips.
    Freight railroads form an integrated, continent-wide network and 
provide a 24/7 critical link in our nation's supply chains. Freight 
railroads are doing their part to maintain network fluidity and ensure 
there is sufficient capacity to deliver the goods upon which our 
economy depends through significant investments in their infrastructure 
and equipment, development of innovative technologies, cooperation with 
customers and supply chain partners, and operational enhancements.
    Overreaching, unnecessary regulations by the STB put our nation's 
rail advantage at risk. Congress must continue to make clear that a 
return to an unbalanced regulatory environment for railroads would 
ultimately diminish the quality of rail service and undermine the 
efficiency of supply chains.
    Freight Railroads Are Proud of Their Contributions to Our Nation
    America's freight rail network spans close to 140,000 route-miles, 
serving nearly every industrial, wholesale, retail, and resource-based 
sector of our economy. Unlike trucks, barges, and airlines, freight 
railroads operate almost exclusively on infrastructure they build, 
maintain, and improve themselves. Since 1980, freight railroads have 
spent roughly $765 billion of their own--not taxpayer--funds on capital 
expenditures and maintenance related to infrastructure and equipment. 
It takes an enormous amount of money to keep our freight rail network 
in best-in-the-world condition--more than 40 cents of every revenue 
dollar since 1980, which is six times more than the average U.S. 
manufacturer.
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    ``Crumbling'' might describe some forms of U.S. infrastructure, but 
not freight rail. The American Society of Civil Engineers recognized 
the impact of the industry's investments in its 2021 assessment of U.S. 
infrastructure by again awarding rail the highest grade of all 
infrastructure.\1\ These investments have helped the rail industry meet 
the nation's freight transportation demand during recent supply chain 
dislocations. In fact, a report released by the Northwestern University 
Transportation Center found that railroads recently showed significant 
agility in their response to rises in intermodal traffic throughout the 
COVID-19 pandemic.\2\
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    \1\ https://infrastructurereportcard.org/
    \2\ https://www.transportation.northwestern.edu/research/featured-
reports/us-railroad-covid19-report.html
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    Freight railroads could not be successful without the skill and 
professionalism of their employees, who are heavily unionized and among 
America's most highly compensated workers. In 2020, the average U.S. 
Class I freight rail employee earned total compensation of $135,700. By 
contrast, the average compensation of a U.S. employee in 2020 was 
$87,000, just 64 percent of the rail industry's compensation.
  Freight Rail Will Play a Critical Role in Meeting Future Demand and 
                              Other Goals
    Railroads have played a critical role in America's growth and 
development for more than 190 years. In the years ahead, railroads will 
be called upon to do even more. Consider:
      The Federal Highway Administration and Bureau of 
Transportation Statistics recently estimated that demand for freight 
transportation will increase by 50 percent by 2050.\3\ Railroads will 
continue to work to ensure they have sufficient capacity and capability 
to meet this demand.
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    \3\ https://www.bts.gov/faf
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      To combat climate change, our nation must reduce its 
greenhouse gas emissions. On average, railroads are three-to-four times 
more fuel efficient than trucks, meaning moving freight by rail reduces 
greenhouse gas emissions by up to 75 percent. Railroads are not resting 
on these laurels, however, and are working with their suppliers to 
develop and further incorporate a variety of alternatives to 
traditional diesel fuel--including the use of batteries, renewable 
fuels, biofuels, and hydrogen fuel cells--that could further reduce the 
industry's carbon footprint.
      Moving freight by rail is extremely safe. From 2000 to 
2021, the train accident rate fell 33 percent; the rail employee injury 
rate fell 49 percent; and the grade crossing collision rate fell 23 
percent. Maintaining and improving safety will always be the industry's 
top priority, and railroads will not stop in their efforts to 
continually reduce the occurrence of accidents and injuries.
      In a typical year, highway congestion costs Americans 
$166 billion in wasted time and fuel. However, a single train can take 
the freight of several hundred trucks off of our nation's highways and 
significantly reduce congestion.
      The affordability of freight rail saves rail customers 
billions of dollars each year. Average rail rates (measured by 
inflation-adjusted revenue per ton-mile) were 44 percent lower in 2020 
than in 1981.
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      Today, more than 70 percent of the miles traveled by 
Amtrak trains are on tracks owned by other entities--mainly freight 
railroads. In addition, approximately half of America's commuter rail 
systems operate at least partially on rights-of-way owned by freight 
railroads.
      Balanced Regulation of the Freight Rail Industry is Crucial
    Railroads work constantly to improve the safety, efficiency, and 
competitiveness of their operations, and Congress can help railroads 
reach their shared goals through oversight of the STB's rate and 
service regulatory efforts.
    Throughout history, the degree of government control over rail 
operations has tremendously impacted the industry's vibrancy and 
effectiveness. Prior to the enactment of the Staggers Act of 1980, 
excessive regulation--some of which is similar to the re-regulation 
being proposed today--was preventing railroads from earning adequate 
revenues and competing effectively in the freight transportation 
market. Congress recognized the need for a new regulatory scheme that 
allowed railroads to establish their routes and tailor rates based on 
market conditions and demand. Importantly, however, the Staggers Act 
did not completely deregulate railroads. The STB retained authority to 
set maximum rates if a railroad was found to have ``market dominance'' 
over a particular movement and the rate was determined to be 
unreasonable. The STB was also permitted to take other actions if a 
railroad engages in anti-competitive behavior. Effectively, under 
today's balanced regulations, the market is allowed to govern, unless 
and until it is determined to have failed.
    The balanced economic regulation included in the Staggers Act was 
necessary for railroads' very survival. Since the passage of the 
Staggers Act, railroad capital spending has increased dramatically, 
resulting in greater efficiency, improved safety, better service, and 
sharply lower average rates. These improvements are exactly what 
Congress hoped for.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Railroads' progress back to financial health doe doesn't mean the 
need for regulatory balance has gone away. A return to pre-Staggers 
unbalanced regulation would put railroad health back at serious risk. 
The industry would not disappear overnight, but over time the 
industry's infrastructure would deteriorate, needed new capacity would 
not be added, and rail service would become slower, less responsive, 
and less reliable--all at a time when supply chain fluidity needs to be 
increased, not throttled.
    The lessons learned from the industry's recovery post-Staggers Act 
were acknowledged in late 2020 when more than 1,000 public figures--
Democrats and Republicans--signed a letter in support of protecting the 
current balanced regulatory framework.\4\ Signatories included a 
bipartisan group of eight former U.S. Secretaries of Transportation, 
more than 550 state and local officials, more than 200 business 
leaders, nearly 90 think tanks, and 25 former administration officials 
and congressional leaders.
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    \4\ https://gorail.org//wp-content/uploads/Staggers-Anniversay-
Letter-to-STB.pdf
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    Some now claim that railroads are doing so well financially that 
they can, in essence, ``afford'' more onerous regulations and that the 
STB should effectively transfer the financial benefits of the 
railroads' hard- and long-fought financial stability to certain 
shippers. Penalizing success is bad public policy. Additionally, it is 
worth noting that rail industry rate increases trail the price 
increases of other industries, including many of the shipper industries 
who are among railroads' most strident critics. In fact, changes in 
producer price indexes, which measure the average selling prices for 
outputs of industries, show that freight railroads' 20.3 percent 
increase over the past 5 years is far below price increases implemented 
in many comparable freight transportation and shipper industries, 
including long-distance trucking (46.8 percent).

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Under the misleading call for more ``competition,'' some of these 
same shippers support re-imposing excessive, counterproductive 
regulations on railroads. While only two of these re-regulatory 
proposals--forced switching and final offer rate review--are discussed 
below, those and many others would, in one way or another, put price 
controls on railroads and limit the ability of railroads to reinvest in 
their networks, simply to increase shippers' profits. If successful, 
these re-regulatory changes would make it much more difficult for 
railroads to provide the safe, efficient, and reliable service their 
customers and our economy need to prosper. The lesson learned from 
comparing the pre- and post-Staggers freight railroad industry in this 
country is not stale: more regulation does not result in healthy 
railroads.
Forced Switching
    The STB will be holding a hearing next week to consider a proposed 
reciprocal or ``forced'' switching regulation that would require a 
railroad to use its own tracks and equipment to hand over freight to a 
competing railroad. For example, in the figure below, suppose firm 1 
wants freight shipped to firm 2. Railroad 1 could handle the move all 
by itself (on infrastructure that it invested in and maintains 
precisely to serve firm 2), or the freight could move on railroad 2 
from point A to point B, then be switched at point B and carried by 
railroad 1 to firm 2.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Longstanding precedent holds that a railroad will not be required 
by the STB to switch traffic with another railroad unless that railroad 
is determined to have engaged in anti-competitive conduct. Absent such 
a showing, railroad 1 could choose to handle the shipment from firm 1 
to firm 2 by itself, or it could agree to a joint movement with 
railroad 2. Regardless of which option railroad 1 chooses, however, 
rail customers would remain protected by the STB from unreasonably high 
rates and anti-competitive conduct.
    However, the STB is now proposing to remove the requirement that a 
shipper show a railroad engaged in anti-competitive conduct before the 
STB can order a railroad to switch certain traffic with another 
railroad. This would transform forced switching from a remedy for 
railroad abuses of market power into a right enjoyed by shippers. While 
a few industry groups might benefit in the short term from this open-
ended restructuring of the rail industry, most would be harmed--all in 
the pursuit of the STB providing a few what the free market would 
not.\5\ Congress should urge the STB to not implement its forced 
switching proposal for numerous reasons.
---------------------------------------------------------------------------
    \5\ https://dcms-external.s3.amazonaws.com/DCMS_External_PROD/
1644418195748/303762.pdf (The Small Business & Entrepreneurship 
Council, in a letter to the STB, noted: ``Forced switching would 
undermine the efficiency of the rail system, and raise costs for 
customers . . ., including small businesses, and consumers overall. 
This regulatory measure would allow large companies, who simply do not 
wish to pay market rates for shipping, and competitors to lobby so that 
government would mandate that railroads hand over traffic to 
competitors.'').
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            Forced Switching Would Harm Operational Efficiency and 
                    Network Fluidity
    Railroads have built their networks and honed their routing 
practices over decades, investing huge amounts of capital to maximize 
network fluidity and efficiencies. These efforts have benefited rail 
customers tremendously through improved service, asset utilization, and 
cost effectiveness.
    Switching railcars is costly and time-consuming and increases the 
accident and injury risk exposure for rail employees who perform such 
tasks.\6\ If switching were mandated by the STB to occur more 
frequently and wherever a customer desires, interchanges would be 
required to occur in areas where such activity is not efficient and 
where appropriate infrastructure investments have not been made. This 
would seriously disrupt traffic patterns, clog rail yards, and impact 
the functionality of supply chains.\7\
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    \6\ For additional information on the switching of railcars, please 
visit: https://www.youtube.com/watch?v=pH0oafZKiDY&t=1s.
    \7\ For additional information on railroads' efforts to address 
supply chain challenges, please visit: https://www.aar.org/supply-
chain.
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    The Intermodal Association of North America, which represents the 
combined interests of the intermodal freight industry, shared these 
concerns in a letter to the STB, emphasizing that the outcomes of 
forced switching, such as ``a decline in rail infrastructure, decreased 
network velocity, a deterioration in domestic intermodal service, and 
an adverse impact on intermodal's ability to compete with over-the-road 
trucking[,]'' are ``troubling given the supply chain challenges that 
continue, both domestically and internationally.'' \8\ Ultimately, 
forced switching would undermine freight railroads' efforts to work 
with customers and other transportation modes to find solutions to 
supply chain challenges, add significant, unnecessary complexity to 
rail operations, and harm the efficiency and quality of rail 
service.\9\
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    \8\ https://dcms-external.s3.amazonaws.com/DCMS_External_PROD/
1644526735279/303789.pdf
    \9\ https://dcms-external.s3.amazonaws.com/DCMS_External_PROD/
1644851310562/303812.pdf (Dr. Michael Mandel, Chief Economist and Vice 
President of the Progressive Policy Institute, in a letter to the STB, 
also raised similar concerns: Forced switching would ``divert resources 
away from the optimization of supply chains. Railroads would have to 
give a high priority to moving goods in a way that met the reciprocal 
switching requirements, rather than lowering costs and speeding goods 
to their ultimate customers. The result would be more supply chain 
disruptions, and higher inflation.'')
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            Forced Switching Would Create Disincentives for Railroads 
                    to Invest in Their Infrastructure
    Forced switching would create disincentives for railroads to invest 
in their networks and equipment, as railroads could then be mandated to 
use those same assets for the benefit of other railroads. To remain 
competitive in the freight transportation market and better serve 
customers, railroads must continually improve their networks by making 
significant investments in infrastructure, equipment, training, and 
technology. Forced switching will ultimately harm the quality of rail 
service at a time when the benefits of freight rail--including cost 
effectiveness and environmental responsibility--are more important than 
ever.
            Forced Switching Would Increase Transportation-Related 
                    Greenhouse Gas Emissions
    Forced switching would add countless unnecessary rail movements, 
which would increase emissions. Furthermore, the resulting operational 
inefficiencies may cause rail customers to shift freight from rail to 
more carbon-intensive modes of transportation, such as trucking. This 
would mean more greenhouse gas emissions and more congestion on 
already-crowded highways. The National Wildlife Federation, 
ConservAmerica, Third Way, and the Conservative Coalition for Climate 
Solutions also raised these concerns in a letter \10\ urging the STB to 
exercise caution when considering new regulations in order to ensure 
additional freight does not shift from the most environmentally 
friendly way to move freight over land--rail.\11\
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    \10\ https://dcms-external.s3.amazonaws.com/DCMS_External_PROD/
1644942581038/303853.pdf
    \11\ https://dcms-external.s3.amazonaws.com/DCMS_External_PROD/
1643216781771/303587.pdf (In a recent filing with the STB, the American 
Consumer Institute (ACI) also expressed concerns regarding a potential 
increase in greenhouse gas emissions due to an increased shift to road 
transportation. ACI concluded that the STB should withdraw this forced 
switching proposal until it collects and publishes an empirically based 
analysis of the costs and benefits, including to consumer welfare, 
public safety, and rail investment, of implementing such a proposal.)
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            Forced Switching Would Distort Competition in Freight 
                    Transportation Sector
    While proponents say this proposal would have a very limited impact 
on rail operations, expert analysis has found that an estimated 76 to 
92 percent of all regulated carload traffic--millions of carloads each 
year--could be eligible for forced switching under the proposal the STB 
is currently considering.\12\ Because the proposal has such broad 
application and rail customers' impetus for pursuing forced switching 
is obtaining below-market rates for rail service, implementation could 
result in sharp reductions in rail revenue--not due to a loss in 
traffic stemming from fair market competition, but instead from 
governmental intervention and interruption of competition in the 
freight transportation market.
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    \12\ https://dcms-external.s3.amazonaws.com/DCMS_External_PROD/
1644958413241/303903.pdf, pp. 67-70
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    Inadequate earnings would put America's best-in-the-world freight 
rail network at serious risk. Railroads compete fiercely in intermodal 
markets and with trucks, barges, and other modes. And as previously 
discussed, to remain competitive, railroads must earn sufficient 
revenues to continually make significant investments in infrastructure, 
equipment, training, and technologies, including locomotives that use 
low- or no-carbon alternatives to traditional diesel fuel, such as 
batteries, hydrogen fuel cells, biodiesel, and renewable diesel. By 
reducing revenues and adding significant operational complexities, 
railroads would be less competitive for the broad base of business 
needed to make these investments. If railroads are unable to make such 
infrastructure investments, there could be cascading impacts on the 
health of the rail network.
            Forced Switching Ignores the Intense Competition Railroads 
                    Face Every Day
    A fundamental tenet of the economics of competition says that where 
competition exists, there should be no regulatory intervention. Today, 
the vast majority of rail freight movements are subject to strong 
competitive forces: competition from other railroads, trucks, and 
barges,\13\ product competition,\14\ and geographic competition.\15\ In 
addition, railroads are navigating technological, regulatory, and 
structural changes that have disrupted the freight transportation 
market and will continue to do so (e.g., autonomous and/or platooned 
trucks).
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    \13\ For additional information on competition faced by railroads, 
please visit: https://www.aar.org/article/railroads-face-fierce-
competition/.
    \14\ This includes the substitution of one product for another in a 
production process (e.g., generating electricity from natural gas 
instead of coal).
    \15\ The ability to obtain the same product from, or ship the same 
product to, a different geographic area. For example, clay used for 
taconite pelletization in Minnesota is available from Wyoming mines 
served by one railroad and from Minnesota mines served by another.
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    To give an idea of the intense competition railroads face every 
day, consider the freight transportation markets for intermodal, 
chemical, and grain shipments, which are the three largest rail 
markets, together accounting for around 50 percent of rail revenue. 
Intermodal is the movement of shipping containers and truck trailers by 
rail. By definition, every intermodal unit carried by rail could 
theoretically move solely by truck. Rail also accounts for just 19 
percent of chemical transport, behind trucks and waterborne carriers, 
while railroads account for 25 percent of grain shipments, less than 
half of the share of trucks. These are hardly the market shares one 
would expect for a transportation mode that did not face strong 
competition.\16\
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    \16\ https://dcms-external.s3.amazonaws.com/DCMS_External_PROD/
1644440817654/303765.pdf (A large coalition, led by the Competitive 
Enterprise Institute and supported by organizations like Americans for 
Prosperity, Club for Growth, and Heritage Action for America, sent a 
letter to the STB stating, ``At a time when the question of competition 
policy is a matter of significant national debate, it is odd that the 
[STB] seeks to remove any discussion of competitive effects from this 
aspect of rail regulation.'' The letter also urges the STB to withdraw 
this proposal, noting ``the [STB] has made no findings of 
anticompetitive practices that would justify any mandated switching.'')
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            Forced Switching Would Impact Passenger Railroad Operations
    The majority of the train-miles operated by Amtrak and other 
passenger and commuter railroads are on tracks owned by other 
entities--almost always freight railroads. As previously noted, 
implementation of forced switching and the resultant increase in 
interchanges of railcars would add operational complexity to, and 
undermine the efficiency and fluidity of, freight rail operations. This 
increased network congestion would also impact intercity passenger and 
commuter railroads that rely on fluidity to stay on schedule. 
Furthermore, if railroads are unable to make sufficient investments to 
maintain and improve the health of their networks, the service offered 
to customers by intercity passenger or commuter rail would also be 
impacted.
    Metra \17\ and California's Rail Corridors Linking Everyone 
(CIRCLE),\18\ an organization made up of the Capitol Corridor Joint 
Powers Authority (CCJPA), the Los Angeles-San Diego-San Luis Obispo 
(LOSSAN) Rail Corridor Agency, and the San Joaquin Joint Powers 
Authority, have all urged the STB to ensure freight rail operations 
remain as efficient and fluid as possible in order to maintain on-time 
performance and encourage continued and new investments in passenger 
rail networks, especially during a time of historic federal investment.
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    \17\ https://dcms-external.s3.amazonaws.com/DCMS_External_PROD/
1644592484755/303799.pdf
    \18\ https://dcms-external.s3.amazonaws.com/DCMS_External_PROD/
1644442887130/303778.pdf
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            Freight Railroads Appreciate Congress' Efforts to Protect 
                    the Health of Their Networks
    Congress should be concerned with the impacts stemming from the 
STB's implementation of forced switching.\19\ The railroads appreciate 
the 91 Republican \20\ and 39 Democratic \21\ members of the House of 
Representatives, including Ranking Member Graves and 40 of this 
Committee's 69 members, who have already urged the STB not to take any 
regulatory action that would undermine the ability of railroads to make 
their annual capital infrastructure investments and emphasized that 
such investments are essential for railroads to continue to compete in 
a dynamic freight transportation market, enhance safety, and offer more 
cost-effective, efficient, and sustainable service.
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    \19\ For additional information on forced switching, please visit: 
https://www.aar.org/article/freight-rail-forced-access/ and https://
dcms-external.s3.amazonaws.com/DCMS_External_
PROD/1644958413241/303903.pdf.
    \20\ https://www.aar.org/wp-content/uploads/2022/02/Final-STB-EO-
Letter-July-2021.pdf
    \21\ https://www.aar.org/wp-content/uploads/2022/02/8.30.21-
Surface-Transportation-Letter-on-Climate-and-Freight-Rail.pdf
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Adjudication of Small Rate Cases
    In September 2019, the STB published a proposal, referred to as 
``final offer rate review'' (FORR), in an attempt to address what 
shippers alleged to be inadequate access to rate adjudication processes 
for small rate cases. Under this proposal, after a short discovery 
period, a complaining shipper and the relevant railroad would 
simultaneously submit ``final offers'' for the rate at issue. In 
preparing their offers, the parties would be free to choose any 
methodology to support their proposed rate.
    Despite protections in the law requiring a hearing on the maximum 
lawful rate, the STB would simply select one of the offers.\22\ The STB 
has declined to elaborate on a paradigm or framework that would guide 
its decisionmaking. As far as the railroads are aware, no other U.S. 
industry is required by the government to utilize binding final offer 
arbitration to establish maximum rates. In fact, a similar proposal by 
one agency--the U.S. Forest Service--was struck down in court.\23\ 
Congress should urge the STB to reject FORR for several reasons.\24\
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    \22\ The process is similar to ``baseball-style arbitration.''
    \23\ Stone v. U.S. Forest Service, 2004 WL 1631321 at *3 (D. Ore. 
July 16, 2004) (``In essence, this was a `baseball-arbitration'-style 
procedure, in which the decisionmaker simply chooses between the two 
reports, even though the actual fair market value may be somewhere in 
between those two values.'').
    \24\ For additional information on FORR, please visit: https://
www.aar.org/article/final-offer-rate-review-forr/ and https://dcms-
external.s3.amazonaws.com/DCMS_External_PROD/1642196240931/303531.pdf.
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            FORR Would Remove Market-Driven Principles from the STB's 
                    Review of Challenged Rates
    Similar to forced switching, FORR would represent a radical 
departure from longstanding STB standards and precedent. Historically, 
the STB has judged the reasonableness of a challenged rate and, if such 
rate was found to be unreasonably high, prescribed a maximum rate after 
a full hearing that gives proper consideration to a variety of 
statutorily-required factors. Under its FORR proposal, however, the STB 
would disregard these factors entirely and simply select whichever of 
the two proposed rates the STB felt was the ``more reasonable''--not a 
``reasonable'' rate necessarily, just more reasonable than the rate 
proposed by the other party. This means FORR could produce results that 
are totally divorced from statute and market-driven outcomes and 
principles.
            FORR Conflicts with Governing Law
    During adjudication of rate cases, the STB is required to provide 
due process to both railroads and shippers and protect their statutory 
rights to a ``full hearing,'' \25\ which requires an adjudicator with 
full decisionmaking powers, not one who must choose only one of the two 
options presented by the respective parties. Moreover, the rule of law 
requires clear legal standards that are known in advance, not standards 
that are developed ad hoc and inconsistently applied.
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    \25\ See 49 U.S.C. Sec. Sec.  10704, 10707; 5 U.S.C. Sec.  556.
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            FORR Is Not Limited Solely to Small Rate Cases
    The STB claims that FORR is intended to provide a means for rail 
customers to bring ``small'' rate challenges, and the proposal 
arbitrarily caps available relief at $4 million per case. However, FORR 
would not prevent large shippers from simultaneously filing numerous 
cases, resulting in railroads facing liability well in excess of $4 
million. There is simply no justification for expanding a highly 
expedited and simplified process to effectively include large rate 
disputes.
            Congress Should Work with the STB to Find a Better Solution
    Congress should encourage the STB to identify solutions that 
provide an additional simplified, expedited dispute resolution 
procedure for rail customers with small rate disputes, while also 
remaining consistent with underlying economic principles and statutory 
requirements. A potential option is the STB's November 2021 notice of 
proposed rulemaking to establish a new voluntary arbitration program 
for small rate cases. If structured properly, this new procedure could 
offer cost savings and flexibility to stakeholders. Freight railroads 
agree that a workable voluntary arbitration program could be a 
potentially game-changing addition to the menu of options currently 
available for resolving small rate disputes.
    Incorporate Cost-Benefit Analysis into STB Regulatory Procedures
    While executive agencies have long been required by the Office of 
Management and Budget to conduct cost-benefit analyses prior to 
promulgating significant rulemakings, the requirement to implement this 
best practice for regulatory analysis does not apply to independent 
agencies, such as the STB. In March 2019, AAR petitioned for the 
incorporation of cost-benefit analysis into the STB's rulemaking 
procedures, contending that such analyses would require the STB to 
explain the purpose of proposed regulatory actions and more fully 
examine potential impacts, including economic consequences and negative 
impacts on railroad operations and supply chain fluidity. Additionally, 
a formal cost-benefit analysis requirement would ensure that the STB's 
rulemakings fulfill its statutory objectives. Since requesting public 
comment in November 2019, the STB has taken no further substantive 
action on AAR's petition.
    Freight railroads appreciate the letter sent by 52 members of the 
House of Representatives,\26\ including Ranking Member Graves, urging 
the STB to incorporate a thorough cost-benefit analysis in its 
rulemakings. The letter further noted that the STB should ``align its 
rulemaking proceedings with the best practices of the federal 
government'' and ``impose new regulations only where made necessary by 
compelling public need and after thoroughly weighing the costs and 
benefits of any proposed actions.''
---------------------------------------------------------------------------
    \26\ https://dcms-external.s3.amazonaws.com/DCMS_External_PROD/
1581692685264/300377.pdf
---------------------------------------------------------------------------
    This petition is a common-sense reform that the STB should be eager 
to undertake, as it will only lead to better outcomes for all 
stakeholders. Furthermore, these changes would bring the STB in line 
with other federal agencies with power to substantially impact national 
commerce, such as the Federal Communications Commission, which 
voluntarily adopted new regulations that require cost-benefit analysis.
                New and Expanded Passenger Rail Service
    America can and should have safe, effective passenger railroads and 
a safe, productive freight rail system. Mutual success, however, 
requires cooperation and recognition of the challenges faced during any 
negotiation for new or expanded passenger rail service. While each 
project is unique, projects have a better chance of success if certain 
principles are understood.
    First and foremost, safety must always be the top priority. If any 
infrastructure improvements necessary to meet safety standards are 
identified, those projects must be completed prior to the commencement 
of service.
    Second, current and future capacity needs of freight and passenger 
railroads must be properly considered and balanced. To ensure this, 
host freight railroads must be part of the planning process from the 
start. Congress recognized this in the Infrastructure Investment and 
Jobs Act's (IIJA) new Corridor Identification and Development Program 
by requiring that consultation with host railroads be weighed when 
awarding grants. Such actions are essential to ensure freight railroads 
can meet the estimated 50 percent growth in our nation's freight 
transportation demand by 2050.\27\
---------------------------------------------------------------------------
    \27\ https://www.bts.gov/faf
---------------------------------------------------------------------------
    Third, expanding existing, or instituting new, passenger rail 
service requires detailed planning and, usually, additional 
infrastructure investment. Freight railroads should not be expected to 
pay for the additional capacity necessary for passenger trains. In the 
IIJA, Congress provided $21.75 billion to Amtrak for capital projects 
on the Northeast Corridor and the National Network and $36.25 billion 
specifically for projects to expand or establish new intercity 
passenger rail routes. It is crucial that this funding be spent where 
it has the greatest impact, and freight railroads are committed to 
helping to ensure this happens.
    Finally, parties must recognize that preference for Amtrak's trains 
does not mean there will never be delays. Consider high occupancy 
vehicle (HOV) highway lanes, which give preference to automobiles with 
more than one person inside. In theory, motorists in HOV lanes should 
get where they are going with little or no delay, but bad weather, 
traffic, accidents, or other problems sometimes delay those motorists. 
The same principle applies to the rail network. Amtrak is given 
preference, but preference is not a guarantee.
                               Conclusion
    ``If it isn't broken, don't fix it'' should apply at the STB. 
America's freight railroads save their customers, and ultimately 
consumers, billions of dollars each year, while also reducing 
greenhouse gas emissions, relieving congestion, and enhancing the 
safety of the freight transportation sector. The existing system of 
privately-owned freight railroads competing fairly in an increasingly 
sophisticated freight transportation marketplace under balanced STB 
regulation has served America incredibly well. It has produced what is, 
by virtually any measure, the best national freight rail system in the 
world.
    Congress should ensure that the STB does not unwisely expand rail 
regulation. Railroad performance and the efficiency of the nation's 
supply chains will only suffer if railroads' ability to maintain, 
replace, or improve their infrastructure, as well as provide safe and 
reliable service, is hamstrung by excessive operational regulations.

    Mr. DeFazio. I thank the gentleman.
    And I would urge witnesses--I know you all have written 
statements, but if you want to respond to anything that has 
been stated by another witness in your 5 minutes, that would be 
fine with me. It gets rather boring reading your statements 
before the hearing, and then listening to you read your 
statements again.
    With that, I would turn to Dennis Pierce, president of the 
Brotherhood of Locomotive Engineers and Trainmen.
    You are recognized for 5 minutes.
    Mr. Pierce. Good morning. Thank you, Chairman DeFazio, 
Ranking Member Crawford, and members of the subcommittee. I 
appreciate the opportunity to appear before you this morning. 
My name is Dennis Pierce. I am president of the oldest trade 
union in North America, the Brotherhood of Locomotive Engineers 
and Trainmen. I am also president of the Teamsters Rail 
Conference, of which BLET is the founding member. My comments 
today will focus primarily on the Class I freight railroads.
    But before I get into that, I think we should recognize 
that our members also carry millions of passengers on Amtrak, 
commuter, and intercity passenger railroads. We should not 
forget that commuter rail carries 500 million passenger trips a 
year in the most congested portions of the shared national rail 
network.
    I would like to start by telling you about the members of 
the BLET. We are in the front row. We are watching why shippers 
can't get their shipments. But our members are proud and hard-
working Americans. They work long and hard careers, moving 
America's freight safely and efficiently. They are the ultimate 
essential employee.
    But there are numerous problems that are forcing our 
members to reconsider their career choices right now: the way 
they are being treated on a day-in and day-out basis. And the 
way the railroads are being mismanaged, in our opinion, is 
breeding misery and contempt for Class I railroads.
    The root of these changes, as has already been discussed, 
generally come from the business model known as Precision 
Scheduled Railroading, which is neither precise, it is not 
scheduled, and it is not railroading. Here is just one reason 
why: the vast majority of our members do not work scheduled 
jobs. That is a big misconception. They work on-call at 
randomly chosen times dictated by rail management. In many 
cases, they get little, if any, advance notice of when that 
call will come.
    In recent years, they have been subjected to harsher and 
harsher attendance policies that demand they work day in and 
day out. These policies subject our members to disciplinary 
consequences, including termination, even if they take time off 
because they are too tired or too sick to work safely. These 
policies are destroying the lives of our members, even to the 
point of destroying their families. These policies are part of 
a fewer-employees-doing-more business model that is 
understaffing the railroads and destroying the supply chain 
with no regard to the impact on shippers.
    In sum, today's Class I's operating model is requiring our 
members to work longer trains, longer hours, longer round trips 
with less time at home than they receive in their away-from-
home terminals and in hotels, in many cases. And if personal 
issues come up that require them to be at home more than their 
legal rest, they stand to be disciplined just to tend to their 
family matters. But the workforce is stretched too far, and 
there is no elasticity to handle even the slightest unplanned 
event on the railroad, and those things happen daily.
    The point here is that poor safety and operating practices 
and burned out workers only lead to poor and inefficient 
customer service. This is where the STB can come in.
    We know the STB is here to ensure that service from the 
railroads meets the needs of the customers. But PSR has thrown 
the needs of the customers, as well as the needs of the 
employees, out the window. In practical terms, PSR and PSR-like 
strategies have led to furloughs, and most importantly, longer, 
slower trains, clogged ports, and a workforce stretched to work 
beyond the point of safe operations.
    The current business model is to furlough employees and 
just make everyone that is left do more. This business model is 
delaying shipments, leaving store shelves half empty. We have 
all seen it. But STB can play a role in changing these business 
practices.
    BLET believes that STB playing a more active role in 
regulating railroads can help by handling service complaints in 
a timelier and more effective manner. Addressing why shipments 
don't show up on time, which our members see daily, and the 
related impact on the Nation's supply chain is critical to the 
U.S. economy.
    One role for Congress would also be to better define the 
common carrier obligation, so that the existing requirements 
can be effectively enforced by the Surface Transportation 
Board. This could also come with an attendant clarification 
that Congress affirms that STB is both capable and responsible 
for enforcement of the railroad's common carrier obligations.
    BLET appreciates the opportunity to testify here today. My 
written comments get into much more detail, including our 
opposition to the so-called reciprocal switching. Congress and 
STB should take an interest in what PSR is doing to shippers, 
and because of the impact and the core impact to the shippers, 
what it is doing to the employees of these railroads. And this 
is where Congress can help give STB the legislative tools to 
ensure that America's freight railroads provide a world-class 
service.
    Thank you, and I look forward to any questions you might 
have.
    [Mr. Pierce's prepared statement follows:]

                                 
Prepared Statement of Dennis R. Pierce, National President, Brotherhood 
                  of Locomotive Engineers and Trainmen
    Good morning, Chairman Payne, Ranking Member Crawford, and Members 
of the Subcommittee. I appreciate the opportunity to appear before you 
this morning.
    My name is Dennis Pierce, and I am the National President of the 
oldest trade union in North America, the Brotherhood of Locomotive 
Engineers and Trainmen, which was founded in 1863 and represents 32,769 
members. I am also the President of the Teamsters Rail Conference, of 
which the BLET is the founding Union.
    The subject of today's hearing is to get the ``Stakeholders Views 
on Surface Transportation Board Reauthorization.'' I have several 
comments and observations regarding the BLET's views on a national 
scale. My comments today will focus on freight rail and mostly Class I 
Freight Railroads. Our members also carry millions of passengers on 
Amtrak, commuter, and intercity passenger railroads. We should not 
forget that commuter rail carries 500 million passenger trips a year in 
the most congested portions of the shared national rail network.
    I want to tell you about the members of the BLET. These people are 
proud and hard-working Americans. They have worked careers where pride 
is derived from the role they play in moving America's freight safely 
and on time. To call BLET members essential is as much a fact as 
calling a spine essential to the skeleton. The service of all railroad 
workers is the product that supports American commerce. But there is a 
problem that is forcing our members to lose pride in their work. And 
the pride in the service they provide America is being replace with the 
misery and contempt they hold for their employers at the Class 1 
Railroads in the country.
    There was a sea change in the economic philosophy underpinning rail 
service when Class 1 Railroads switched to a business model known as 
Precision Scheduled Railroading (``PSR''). Do not be confused by the 
term for this business model--it is not precise, not scheduled, and not 
railroading, that is until you focus on the members I represent. They 
are indeed being ``railroaded.'' The vast majority of our members do 
not work scheduled jobs. They work on call at randomly chosen times 
dictated by rail management, and in many cases, with little if any 
advance notice of when that call will come. In recent years, they have 
been subjected to harsher and harsher attendance policies that demand 
they work day in and day out. These policies subject our members to 
disciplinary consequences, including termination, even if they take 
time off because they are too sick or too tired to work safely. The 
policies are destroying the family lives of our members, even to the 
point of destroying their very families.
    This is all part of the railroad business philosophy of extreme 
``leanness'', which means furloughing employees to rock-bottom staffing 
and forcing the remaining employees to always work without scheduled 
days off, without paid sick days and without access to true access to 
FMLA to make sure that the work that should be done by a larger 
workforce is done by a small but harried workforce. Our members still 
believe in providing the best service to the customers who rely on rail 
car pickup and delivery, but their opinions on how to accomplish that 
are not wanted. Railroad work has always been hard, but hard workers 
need time off with their families that they can count on. These 
railroad operating employees are literally the ones who bring your 
goods to you. If you bought it, our members brought it.
    The Class 1 Railroads themselves have abandoned a customer service, 
pro-growth business model in exchange for a short-term growth Wall 
Street model. This involves pushing an operating ratio below 60% to 
return the other 40% to investors, managers and CEO's--which results in 
furloughs and risky operations.
    Speaking of adding risk and strain to railroad operations, 
railroads are running trains with typical lengths in excess of 3 miles 
(15,000-17,000 ft.) and those trains can also weigh 15,000 tons or 
more. Some trains have reached lengths of more than 20,000 feet long. 
The trains are getting longer to facilitate making the work rolls 
shorter. Twice the train length, half the employees, with new strains 
added daily to an infrastructure not designed for this business model.
    Simply put, PSR has transformed railroad companies into finance 
operations that happen to own railroads. Safety professionals are being 
supplanted by finance managers. Reporting unsafe conditions is 
discouraged because it might cause a delay that could affect a 
managerial bonus. The collateral damage to good service by railroads is 
not news to this committee. The Transportation and Infrastructure 
Committee has called for a study from the General Accounting Office 
about PSR's effects because of the myriad of complaints from labor, 
shippers, the public and the industry alike.\1\ Not all railroads, and 
not all railroad managers, want to use this model. Some still want to 
see their business grow because their customers are happy with their 
service and their employees are happy to do their jobs and to work for 
their employer. But over the past several years, it has been Wall 
Street that calls the shots; managers who don't go along with this 
approach leave or are forced out.
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    \1\ https://transportation.house.gov/imo/media/doc/2021-5-
2%20Letter%20to%20GAO%20on%20PSR%20Study.pdf
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                   Railroad Work for Operating Crews
    Railroad Locomotive Engineers operate trains. Conductors or 
Trainmen are the necessary second set of eyes and ears on the train, 
and they broadly handle the rest of the train operations from the 
ground when work on the train needs to be done. If there is an 
unplanned event, and most trains and their equipment experience 
unplanned events, the train must stop and be inspected. If that 
inspection requires a walk to the rear of the train, the train is 
stopped while the conductor dismounts the train and walks up to 3 miles 
to the rear inspecting one side. The conductor then switches sides and 
walks 3 miles back to the leading end of the train to inspect the other 
side--a six-mile walk. If this happens multiple times in a tour of 
duty, its simple math to figure how far a conductor might walk. This is 
not like a walk on a road or sidewalk. It is a walk-through train 
ballast (rocks) on uneven grades, often during the night, in darkness 
in poor terrain and bad weather.
    Railroad operating crews are subject to the federal Hours of 
Service Law (``HOS'') that allows them to work up to 12 hours at a 
time, but also allows for ``limbo time,'' a concept invented for 
railroad operating crews by the Supreme Court of the United States.\2\ 
This is important because even though a railroad crew can work 12 
hours, that doesn't mean they get to go home after that. It is normal 
for them to be forced to wait until the railroad provides them with a 
ride to get off the train. They often wait for this transportation in 
remote areas for hours, before being picked up. This then begins 
another period riding in a vehicle to their final terminal. It is not 
rare for operating crews to experience total on-duty times of 18 hours 
or more. They are then routinely forced to wait for hours in the 
cheapest hotel available before being called to repeat that same trip 
to get home, in many cases days after they left home, only to be forced 
to repeat that cycle as soon as they are legally rested to do so. It 
has been said that railroad work was ``a decent living, but a terrible 
life.'' This is why.
---------------------------------------------------------------------------
    \2\ Brotherhood of Locomotive Engineers v. Atchison, Topeka & Santa 
Fe R. Co., 516 U.S. 152 (1996).
---------------------------------------------------------------------------
    With wages stagnating while profits skyrocket, and Class 1 rail 
carriers refusing to come to the bargaining table with fair contract 
offers, engineer positions are fast becoming underpaid and overworked 
jobs. Railroaders are fed up with the job cutting and conscription-like 
attendance policies where they are forced into the terrible choice of 
either working sick or working tired, or getting fired. Your money or 
your life. Hedge fund railroading is bad for the employees, but the 
point here is that poor safety practices and burnt-out workers only 
leads to poor and inefficient customer service. Our members want to 
strike, and I do not blame them. The only reason they haven't is 
because of the law and court orders. However, our members are sick and 
tired of railroads not being held to the same high standards under the 
law as their employees (our members) are held. Railroads act this way 
because they are virtual and geographical monopolies. If you don't like 
the service on Railroad A, there is not a Railroad B down the street. 
It is a take it or leave it proposition for the customer/consumer. What 
about competition and the market forces of capitalism, one might 
inquire--not on the nation's Class 1 Railroads. There are too many 
barriers for entry to start up your own railroad to compete. This is 
where the STB comes in.
                  STB Can Help With Service Standards
    We know the STB is here to ensure that service from the railroads 
meets the needs of their customers. But PSR has become a pejorative in 
the industry and carries with it negative connotations only, and 
rightfully so. Rail management weaned on pro-growth strategies saw 
their years of training and attempts to be a better business and 
provide for shippers discarded for short term cost cutting and asset 
extraction.
    In practical terms, PSR and PSR-like strategies have led to 
furloughs, very long trains, clogged ports, and a workforce forced to 
work beyond the point of safe operations. Operational problems happen 
daily, such as trains too long to receive proper air-brake testing, and 
trains so long that they cannot be safely doubled from one yard track 
to the other because the yard tracks are physically not long enough.\3\ 
Some rail yards have been closed completely and employees furloughed 
because the rail carriers have lost interest in providing the switching 
operations necessary to deliver cars to shippers on time.
---------------------------------------------------------------------------
    \3\ Doubling a train over involves pulling train cars out of on 
track far enough so the train may then make a reverse move to couple to 
another group of train cars in another track to constitute a complete 
train that can then be air tested and inspected.
---------------------------------------------------------------------------
    All things considered, the strict adherence to PSR and like 
business models only serves to cause serious service delays to shippers 
and end of the line customers by deferring or skipping maintenance and 
inspections, furloughing employees, and closing yards. Whenever there 
is an upturn in business, or an unexpected event that affects 
operations, the capacity of the system cannot handle the increases or 
impediments. The only answer the railroads have consistent with their 
business model is to make everybody work more, thus their harsh 
attendance policies forcing employees to do just that. In fact, 
railroads are now part of the great resignation in this country. On 
just one class one, over 600 well paid and highly trained employees 
have resigned in recent weeks as opposed to be threatened with their 
jobs if they will not or cannot work every time the railroad calls. 
People cannot work all the time; and machines cannot be made to run 
without maintenance and inspections. This is a vicious cycle that will 
only be stopped by a catastrophic accident. We do not want to see that 
happen and we are here to tell the Congress that the STB can play a 
role.
                            Recommendations
    BLET believes that STB being responsible to regulate railroads can 
help by handling service complaints in a timelier and more effective 
manner without the worry that it would be interfering in commerce; 
rather, the Board would be helping commerce and the free flow of 
products carried by railroads. The Staggers Act and the Interstate 
Commerce Commission Termination Act of 1995 are not sufficient to 
protect employees, customers, and shippers against a railroad business 
model where endless cost cutting--at everyone's expense except the 
railroad itself--is the only plan.
    We do not have all the answers on how to accomplish this but 
suffice to say the rail carriers have shown no interest in our 
opinions, even though we see events daily that prevent shippers from 
receiving their goods when they should. That said, some suggestions 
might be to better define the common carrier (49 USC 11101) obligation 
so that the existing requirements can be effectively enforced by STB. 
This could also come with an attendant clarification that Congress 
affirm that STB is both capable and responsible for enforcement of the 
railroad's common carrier obligations.
    There are limits that railroad unions see as well to STB's role. We 
do not see STB to have the authority to be involved in any collective 
bargaining issues or mandating terms of a collective bargaining 
agreement. But we think that mandating and enforcing good service will 
result in proper employment levels which will support good rail 
service.
                 Proposed Changes: Reciprocal Switching
    BLET is also not in favor of certain proposals being considered by 
Congress involving the so-called concept of ``reciprocal switching.'' 
This for many reasons. Among them:
    We do not support legislation or regulation that expands or 
provides additional rights to rail carriers for ``reciprocal 
switching,'' because it departs from longstanding rules and precedent 
under our collective bargaining agreements. The detrimental effects on 
rail employees from potential ``reciprocal switching'' legislation 
should outweigh the perceived benefits from ``reciprocal switching'' 
that do not actually exist. Also, there are currently regulated means 
for shippers to use short lines using trackage rights requests.
    Another problem with reciprocal switching is that such arrangements 
could be used to avoid the imposition of protective conditions related 
to trackage rights approvals when existing workers are adversely 
affected.
    From an operational standpoint, there is no need for any additional 
rights for shippers to get their goods from railroad A to railroad B. 
Currently, to get their traffic from one railroad to another all a 
shipper would need to do is an interchange at a location(s) where it is 
possible.
    In addition, conferring any new rights to a rail carrier will not 
change the geographical layout and/or the conditions necessary to 
perform an interchange between rail carriers.
    The use of the term ``reciprocal switching,'' is a misnomer because 
interchanges are not the same thing as switching. The proper term for 
getting a shipment from one railroad to another is called an 
interchange. Interchanges only can occur where it is physically 
possible in a location with the proper rail infrastructure (e.g., an 
interlocking, wye). Neither trackage rights nor ``reciprocal 
switching'' change who is the controlling railroad operator is, i.e., 
dispatching delivery movements will always be managed by the owning 
railroad; so, allowing access to another railroad will not remedy 
whatever problems there are with the railroad that owns and controls 
the tracks.
    BLET appreciates the opportunity to testify. We know well the STB 
cannot remedy safety problems or problems governed by other federal 
agencies like the Federal Railroad Administration or Department of 
Labor. It does not weigh in on collective bargaining issues and we do 
not ask it to. What we want from STB is to lay out strong markers for 
adequate service, and to have a clear law that can be enforced for 
making customer service quality a priority. All of the safety issues, 
risks of longer trains, taxed to the max employees, monopolistic 
behavior--all of them can be a drag on service. This is where STB 
should concern itself and this is where Congress can help give STB the 
legislative tools to ensure that America's freight railroads provide 
world class service again.
    Thank you.

    Mr. DeFazio. I thank the gentleman for his statement.
    We now turn to Brad Hildebrand, member, the National 
Industrial Transportation League, and former vice president of 
Cargill--Global Rail and Barge Lead.
    Mr. Hildebrand. Good morning, distinguished members of the 
House Railroads, Pipelines, and Hazardous Materials 
Subcommittee.
    My name is Brad Hildebrand. I am a member of NIT League, 
and a recently retired vice president of Cargill Incorporated, 
where I worked for 39 years, spending the last 10 years leading 
Cargill's global rail and barge modes. I have also served on 
two different STB committees: the National Grain Car Council, 
where I was chair from 2013 to 2015; and the Rail Energy 
Transportation Advisory Committee.
    I appreciate the opportunity of addressing NIT League's 
views on the reauthorization of the STB. As a member of NIT 
League, whose members include large and small rail shippers, we 
hope that Congress will give our recommendations thoughtful 
consideration.
    A lot has been said about Precision Scheduled Railroading 
over the last 5 years. PSR is an operating methodology that has 
been championed by Wall Street to push railroads to improve 
their operating ratios and increase their bottom lines. I would 
be happy to take questions about PSR later, but, simply put, 
the STB needs greater statutory authority to provide effective 
oversight of the freight rail industry. This is especially true 
in today's inflationary market.
    The implementation of PSR among nearly all Class I 
railroads has simply heightened the problem with the lack of 
railroad-to-railroad competition. A main statutory goal of the 
Staggers Act of 1980 is to instill competition. Today we find 
ourselves in a highly consolidated rail industry with, at best, 
duopolistic railroad behaviors and expectations.
    NIT League is pleased that the Board is once again 
considering its reciprocal switching proposal. It has taken 
over 10 years to get to this point. NIT League asks that, one, 
Congress encourage the Board to reach a final reciprocal 
switching decision as expeditiously as possible; and two, 
encourage additional avenues, such as gateways for the Board to 
consider, that would facilitate railroad-to-railroad 
competition.
    Along with reciprocal switching, NIT League would like to 
point out the issues with bringing rate cases before the Board. 
Despite various provisions in the STB Reauthorization Act of 
2015, rate cases are long, expensive, and risky for all 
shippers. It is encouraging that the Board is considering its 
proposed Final Offer Rate Review. Unfortunately, no significant 
action has been taken to reduce the burden and cost of bringing 
a large rate case to the Board. There are no current rate cases 
outstanding before the STB, none. This signals that the system 
is broken and needs attention.
    For those shippers that are brave enough to bring a rate 
case to the STB, they have experienced the Board taking years 
to reach a decision, while having to spend thousands, if not 
millions, of dollars to conduct a case. I have personal 
experience where my former employer, Cargill, along with North 
American Freight Car Association, has a pending empty mileage 
case before the Board that started 7 years ago. Shippers have 
become so discouraged that they have about given up bringing 
cases to the Board.
    An area that we would like to see incorporated in the 
reauthorization is to provide statutory definition clarifying 
the common carrier obligation. With no clear definition, the 
railroads are reducing service, demarketing lines and 
commodities, and dictating terms and conditions that meet the 
railroad's goals.
    Adding more frustration is that the railroads do not incur 
any penalties when their service fails shippers. Having clarity 
around the definition of what it means to be a common carrier, 
combined with the STB developing a standard by which to measure 
common carrier service performance, should add accountability 
to the railroads to provide a level of service, as required by 
statute.
    In addition, we ask Congress to increase the level of fines 
the Board can assess when a railroad does not meet their common 
carrier obligation.
    NIT League asks Congress to consider removing commodity 
exemptions. We strongly believe that all movements falling 
under the Board's jurisdiction should have the opportunity to 
seek redress and relief without having to go through the 
existing protracted process of seeking a revocation of the 
exemption.
    In conclusion, it takes a long time for the STB to issue a 
ruling. When they do issue a decision, NIT League believes 
these decisions have gone in the railroads' favor. It is as if 
the chickens need to convince the guard dog about what the fox 
is doing to them, all the while long the fox does what foxes do 
when given the chance.
    Let me repeat that: The fox does what foxes do when given 
the chance.
    Thank you for your time and consideration of our 
recommendations.
    [Mr. Hildebrand's prepared statement follows:]

                                 
  Prepared Statement of Brad Hildebrand, Member, National Industrial 
Transportation League, and Former Vice President, Cargill--Global Rail 
                             and Barge Lead
                              Introduction
    Chairs Peter DeFazio and Donald Payne, Ranking Members Sam Graves 
and Rick Crawford, and Members of this Subcommittee, thank you for 
holding today's hearing, ``Stakeholder Views on Surface Transportation 
Board Reauthorization,'' and for the opportunity to submit these 
written comments on behalf of the National Industrial Transportation 
League (NITL).
    I am Brad Hildebrand, a longstanding Member of NITL. I also appear 
before you today as a former Vice President of Cargill--Global Rail and 
Barge Lead, Member of the Surface Transportation Board's (STB or Board) 
Rail Energy Transportation Advisory Committee and Member of the 
National Grain and Feed Association's Rail Arbitration Rules Committee.
    Let me begin by acknowledging your leadership and efforts in 
realizing the Surface Transportation Board Reauthorization Act of 2015, 
P.L. 114-70, which was the first time the Board had been reauthorized 
since 1998. This law has helped the Board to operate more efficiently 
in several aspects, but most notably, by expanding the size of the 
Board from three Members to five Members allows the agency to become 
more functional and collaborative.
    Especially considering the Act expired on September 30, 2020, this, 
combined with the continued consolidation of the railroad industry and 
in the environment of Precision Scheduled Railroading (PSR), it is the 
right time for these discussions with all stakeholders including the 
Board, shippers, receivers, rail carriers, and the customers we all 
serve.
                              Competition
    There is a lack of robust railroad-to-railroad competition in our 
industry. There are only seven Class I railroads with four of them 
responsible for moving 90% of our nation's freight. We are also facing 
the strong probability of that number being reduced to six Class I 
railroads with the pending merger of the Canadian Pacific and Kansas 
City Southern railroads. Given the exemption that the railroad industry 
enjoys from certain anti-trust protections, combined with post-merger 
duopolies that now exist in the western and eastern parts of the 
country, this creates an environment where the railroads can exert 
substantial market power over their customers who operate facilities 
served by only one railroad.
    A free-market economy works best if there is vigorous competition. 
Where a market has become highly concentrated due to a series of 
mergers, it is incumbent upon the government, and in this case the STB 
per the Rail Staggers Act of 1980, to instill or facilitate competition 
in the marketplace. For instance, the Board is considering revising its 
decades-old reciprocal or competitive switching rules in its EP Docket 
No. 711 (Sub.-1), Reciprocal Switching. The Board's current reciprocal 
switching rules were adopted more than 30 years ago when the rail 
industry was struggling financially. The STB has never granted a 
reciprocal switching request, and no new requests have been made for 
decades, because it is impossible for a shipper to meet the 
requirements due to the high legal standard--an insurmountable barrier 
in seeking relief. Not only does NITL strongly support the Board's 
efforts in this proceeding, but NITL was the organization who filed the 
initial petition before the Board in 2011 requesting the Board to adopt 
new reciprocal switching rules to give meaning to the provision in the 
Staggers Rail Act of 1980 that authorizes the Board to grant reciprocal 
switching arrangements that are ``practical and in the publics best 
interest'' or ``necessary to provide competitive rail service.'' \1\. 
Some railroads claim that, even where direct rail competition is 
lacking, there is ample competition via truck, and/or, by water barge 
or even air. While competition offered by other transportation modes is 
vital to our supply chain, it often cannot replace the need for 
railroad-to-railroad competition when a manufacturing or other facility 
is configured for rail shipments, or their customer requires rail 
deliveries.
---------------------------------------------------------------------------
    \1\ 49 U.S.C. Sec.  11102(c).
---------------------------------------------------------------------------
    Many shippers are prohibited from shipping by truck, water, or air 
due to numerous factors including commodity type, location, and 
infrastructure investments already made or needed to support rail. It 
is not easy to change transport options for each mode of transportation 
requires its own infrastructure and there are needs unique to each 
commodity. Shippers invest in their infrastructure to support freight 
rail transportation, based in large part, on what the rail carriers 
require to service our facilities--plant, manufacturing facilities, 
distribution centers, and the like.
    A lack of competition also impacts investments in capacity which 
affects the fluidity of the overall network. NITL members are 
experiencing various problems, including but not limited to, 
bottlenecks, under or over utilized gateways, missed switches, and 
doubling of trains. Then railroads' PSR routing decisions or protocols, 
elimination of hump yards, reduction in crews and other personnel, 
combined with factors beyond railroads' control such as weather events 
or natural disasters, have prevented the railroads from responding 
adequately or proactively to mitigate ahead of time.
    Lastly, the current regulations and practices/protocols of the 
railroads substantially limit shipper gateway options thereby further 
constraining rail-to-rail competition.
                                Service
    NITL deeply appreciates the STB's consideration in a pending 
rulemaking in Ex Parte No. 767, First Mile/Last Mile Service, of the 
need for Class I railroads to report First-Mile/Last-Mile (FMLM) data, 
in the aggregate, to the Board.
    Service problems experienced by shippers often occur during the 
FMLM segments of the journey. The League strongly believes that 
adoption of a FMLM service standard and reporting requirements is 
warranted and would be beneficial to rail customers, the railroads, and 
the Board. Adopting such a standard and metrics would improve 
transparency that would facilitate supply chain planning and meaningful 
dialogue between railroads and their customers to address service 
shortcomings, and it would be a crucial tool for the Board to monitor 
local rail service.
    NITL, joined by several other aligned shipper groups, initially 
expressed this concern to the Board almost two years ago, and requested 
that the Board require the Class I railroads, in the aggregate, to 
submit FMLM data. Without this data, the Board, shippers, receivers, 
and other stakeholders:
      Do not have a complete picture of the overall functioning 
of the rail network that shippers need for planning and operational 
purposes.
      Lack data to assess whether any service problems are 
specific to them or broader in scope, and whether service is improving, 
deteriorating, or remaining stable over time.

    NITL asks that Congress encourage the Board to complete, as 
expeditiously as possible, its consideration of requiring the 
submission of FMLM data, in the aggregate, from the Class I railroads.
                                 Rates
    Captive shippers pay higher rates because they lack an effective 
competitive option. The STB has, various rate reasonable remedies that 
it can use, but these do not work very well, and are applicable to a 
modest minority of shippers. Thanks in large part to the Act, and the 
recommendations made in the STB's 2019 Rate Reform Task Force Report, 
the Board is making some efforts to address this problem through its 
Final Offer Rate Review proposal that is also being considered in 
conjunction with a rail carrier-proposed voluntary arbitration process. 
The Board, however, has yet to take further action to flesh out its 
revenue adequacy constraint, rate reasonableness methodology or an 
alternative to the Stand-Alone Cost (SAC) test for larger rate cases. 
It is important to note, that per the STB's quarterly reports to 
Congress, there are no pending rate cases before the Board which 
signals that shippers continue to be wary of filing rate cases because 
the current processes are too long and expensive with continued 
uncertainty of the outcome.
                       Common Carrier Obligation
    One area where Congress can assist the Board with addressing 
service challenges is to clarify the definition of railroads' ``common 
carrier obligation.'' Currently, the statute requires railroads ``to 
provide transportation or service on reasonable request.'' \2\ The 
``reasonableness'' standard, however, is elusive. Although it requires 
railroads to provide a level a service that meets a shipper's 
reasonable needs, in practice, railroads have been able to provide 
service that is poor while still asserting that they are meeting the 
``common carrier obligation.'' The railroads have been able to 
circumvent their obligation to service the needs of the shipping public 
by using pricing to prioritize what commodities they prefer to serve 
while ``demarketing'' others. With service performance continuing to be 
unreliable and unsatisfactory to many shippers, the League believes 
that now is an appropriate time for Congress to re-evaluate the meaning 
of the ``common carrier obligation'' to ensure that it applies not only 
to service refusals but also material service reductions and 
deficiencies, combined with consequences when it is not met.
---------------------------------------------------------------------------
    \2\ 49 U.S.C. Sec.  11101(a).
---------------------------------------------------------------------------
    STB already has the statutory authority to impose fines or 
penalties. NITL suggests Congress expand the criteria for when the 
Board can assess fines or penalties that would allow shippers to 
recover appropriate damages to the extent the Board finds that 
railroads are not fulfilling their common carrier obligations, in the 
aggregate, as well as individually and are not providing adequate and 
economical service to their customers.
    In addition, the Board under current statutory authority, can 
assess a penalty up to $8,700 per violation. The amount is not enough 
unless STB were to have the statutory authority to apply this to each 
carload, or each day that a carload is delayed.
                          Commodity Exemptions
    NITL passionately believes that all commodities, whose freight rail 
movements fall under the purview of the STB, have the opportunity to 
seek redress and relief from the Board. Today, that does not exist as 
certain commodities are ``exempt.''
    The STB has the authority to revoke exemptions so long as the 
revocation standard in the statute is met. How that authority is 
ultimately interpreted is still an open question. STB initiated a 
rulemaking to review certain commodity exemptions in 2016.\3\ However, 
that proceeding has languished at the Board for too long, while denying 
many shippers of exempt commodities with direct access to the STB's 
remedies and procedures. NITL asks Congress to encourage the STB to:
---------------------------------------------------------------------------
    \3\ See STB Docket Ex Parte 704--Review of Commodity, Boxcar, and 
TOFC/COFC Exemptions.
---------------------------------------------------------------------------
      Promptly complete its consideration of commodity 
exemptions in its pending proceeding, EP Docket No. 704, Notice of 
Proposed Rulemaking, Review of Commodity, Boxcar, and TOFC/COFC 
Exemptions. It is important to note, however, that this proceeding only 
involves five to six commodity groups and there are many other exempt 
commodities for which a review is warranted.
      Interpret its revocation authority more broadly given 
today's far more concentrated market conditions than existed when the 
exemptions were adopted and the railroads' financial health.

    Other options should Congress choose a different approach, would be 
to 1) require that all exemptions be periodically reviewed by the STB 
every five years or 2) revoke all exemptions by a date certain unless 
the railroads can show that the exemption is still warranted.
             Railroad Industry's Strong Financial Standing
    On a positive note, one aim of the Staggers Rail Act of 1980 has 
been achieved: restoring the financial stability of the railroads. 
However, the resulting lack of railroad-to-railroad competition, 
enhanced by the impacts of PSR, has contributed to the current state of 
the railroads incredibly strong financial health.
    Under PSR, the railroads have sought to improve their operating 
ratios by reducing capital expenditures and lowering overhead costs. 
The improved operating ratios also have resulted in high returns 
spurring an excess in capital, which the railroads have distributed 
through repeated dividend increases to their stockholders, and via 
sizeable stock buybacks. Rather than investing in their networks to 
improve service, the railroads (as mentioned earlier) are reducing 
capacity and focusing on rewarding their investors.
    One measure of the financial health of a Class I rail carrier is 
the Board's annual determination of ``revenue adequacy.'' The Board's 
website provides information on the number of Class I carriers that are 
deemed ``revenue adequate'' from 2000 through 2020 where there is a 
trend of a growing number of Class I railroads not only achieving 
``revenue adequacy'' but maintaining it.
    For 2020, the most current year for which determinations are 
available, six railroads were deemed ``revenue adequate: BNSF, CSX, 
Grand Trunk Corp., KSC, Soo Line, and UP. The railroads' improved 
financial performance and the increasing number of carriers that are 
achieving revenue adequacy justify the Board shifting its policies from 
those that are designed to help the railroads achieve revenue adequacy 
to those that place an increasing emphasis on the national policy ``to 
allow, to the maximum extent possible, competition and the demand for 
services to establish reasonable rates for transportation by rail.'' 49 
U.S.C. Sec.  10101(1).
                             STB Operations
    The Staggers Rail Act of 1980 configured the STB as an adjudicatory 
agency. This, combined with an objective of restoring the financial 
stability to the railroads, resulted in the burden of proof being the 
responsibility of the shippers in nearly all the Board's functions. It 
is in fact fundamental to how the Board operates. Especially given the 
financial health of the railroad industry, NITL encourages Congress to 
consider statutory changes which would require the burden of proof to 
rest with the railroads pertaining to service and rate complaints.
    While NITL appreciates the demands placed on the Board, especially 
given its ever growing profile and areas of responsibility, the 
frustration continues in how long it takes the STB to reach decisions. 
The quarterly report to Congress on the status of major STB 
proceedings, as required by the Act, is helpful. And the STB's efforts 
to help streamline rate cases for particularly smaller cases combined 
with its efforts addressing service complaints, are helpful. It is 
suggested for Congress, however, to consider instilling timelines or 
deadlines for not just initiating a formal proceeding but for 
completing one. The number of resources that it takes a shipper--from 
the burden of proof and proceeding process standpoints--more often than 
not serve as a deterrent for all shippers to seek redress or relief 
from the Board. Another suggestion is for Congress, through both the 
authorization and appropriation process, is to provide the necessary 
funding for professional staff and administrative support.
            Length and Funding Levels of Next Authorization
    NITL recommends that the next authorization be a minimum of five 
years at funding levels commensurate with the previous enacted Fiscal 
Year (FY) appropriation levels.
    We support the Board receiving the highest possible annual 
authorized and appropriated funding levels because the:
      Demands placed on the STB are unprecedented given its 
regular adjudicatory responsibilities in addition to pending rail 
merger proceedings--all of which pose significant service and rate 
issues for captive shippers, and questions concerning the structure of 
a freight rail industry that promises to be even more consolidated than 
what it is today.
      Number of formal and informal railroad performance 
service complaints are increasing.
      Continued reliance on data transparency, including access 
by all stakeholders, remains where continued data and analytical 
capabilities are needed by the Board to enhance its evidence-based 
decision-making.
      Board is charged with implementing the new passenger On-
Time Performance Standards for passenger rail.
      Board operating with a full complement of Members.

    Thank you for holding this hearing and your continued consideration 
of my comments on behalf of NITL. I am happy to answer any questions 
you may have and look forward to this discussion continuing.
                               __________
                                                         Attachment

    [Mr. Hildebrand submitted an attachment to his prepared statement 
which is retained in committee files and available online at https://
docs.house.gov/meetings/PW/PW14/20220308/114465/HHRG-117-PW14-Wstate-
HildebrandB-20220308-SD001.pdf]

    Mr. DeFazio. I thank the gentleman for his statement.
    And with that we would move to our final witness, Herman 
Haksteen, president, Private Railcar Food and Beverage 
Association.
    Mr. Haksteen, 5 minutes.
    Mr. Haksteen. Thank you very much, and thank you to the 
subcommittee for holding this extremely important hearing. My 
name is Herman Haksteen. I am the president of the Private 
Railcar Food and Beverage Association. We call it PRFBA.
    My aim this morning is to shine some light on railroad 
performance, service, and financial burdens that are being felt 
by PRFBA members, and to strongly support the STB and its role, 
and perhaps more active role, in railroading today.
    PRFBA was formed in 2016. We have 18 global food and 
beverage companies that make up 100 percent of our membership. 
They are all major rail shippers and, uniquely, they all own 
rail assets. PRFBA members have railcars, and have invested 
millions of dollars in rail infrastructure. That uniquely makes 
them more committed to rail, and less able to simply move to 
other modes of transport when things in railroading aren't 
going so well. If a decision was made to go to another mode, 
that means parking millions of dollars of assets, which is 
seldom a wise decision.
    However, given service of late, many of our members find 
themselves having to do that. PRFBA members have skin in the 
game, and, because of that, we deserve to be treated as such.
    The underlying issue, in our opinion, is competition. When 
there is a lack of competition--notably railroad-to-railroad 
competition, for those that need that clarified, and especially 
at single-serve facilities or captive shippers, as they are 
called--the railroads are free to provide any service level at 
any cost. A good example of that was during the rollout of PSR, 
and what the railroads did to their shippers. Where there is a 
lack of competition in a free market economy, it is incumbent 
upon the Government--in this case, through the Surface 
Transportation Board, per the Staggers Act--to intervene.
    PRFBA members are not alone. Obviously, as the chairman 
pointed out when we started this morning, everybody has 
concerns today. But we don't need to look at concerns. We can 
look at the real facts that the railroads are not clearly 
presenting, and that is, the market is speaking.
    Unfortunately, freight is moving from rail to truck, and 
this is negatively impacting not only our supply chains, but 
our environment and our infrastructure. The results of a 
shipper survey published by Morgan Stanley that just came out 
in January said 30 to 40 percent of shippers surveyed are 
moving some or a significant portion of their freight volume 
from rail to truck. Data published by the American Trucking 
Associations indicates that, from 2017, the beginning of PSR, 
to 2021 final results, truck tonnage grew by 3\1/2\ percent, 
while rail tonnage shrunk by 5.1 percent.
    Interestingly enough, even the AAR's own website publishes 
rail traffic information. A quick look at their website shows 
that, since PSR in 2017, rail carload traffic in the United 
States has shrunk by 11 percent. Even if you add in intermodal, 
rail traffic overall, in tonnage, has still shrunk by 5 
percent.
    Assuming that most of this traffic is moving to truck, as 
the data would suggest, and using a very conservative measure, 
which would be three trucks for every railcar, this migration 
is adding 4\1/2\ million truckloads of shipments onto our 
highway every year. That additional volume is wearing out the 
infrastructure faster, it is creating unnecessary greenhouse 
gases, and it is impacting today's transportation capacity.
    Our Nation's rail advantage is hemorrhaging. The simple 
fact that rail volume is down and truck volumes are up 
illustrates that there is something wrong. That cannot be 
refuted. And the extra cost that our shippers are incurring 
because they are having to ship in other modes is a 
contributing factor of today's inflation.
    When there is a lack in the marketplace of competition, and 
our railroad volumes are plummeting, it is incumbent upon the 
Government--and, in this case, the Surface Transportation 
Board, per the Staggers Act of 1980--to help us out.
    The railroads are financially strong.
    The Staggers Act in 1980 had two primary objectives: 
instill competition, stabilize the financial health of the 
railroads. They have certainly done the latter. We now need the 
help with the competition.
    Railroad financials are public information. I quickly 
called up the fourth quarter results at the end of 2021, and it 
is amazing. And even in their financial results, they blatantly 
show all seven Class I railroads had reduced volume in the 
fourth quarter of 2021, and all seven increased their revenue 
and increased their revenue per carload. They are shipping 
less, and taking more.
    New authorization--PRFBA supports a multiyear authorization 
at the highest levels for the Surface Transportation Board.
    We echo the concerns of the other folks, and we are 
thankful that you had this hearing. If you have any questions, 
I am happy to answer.
    [Mr. Haksteen's prepared statement follows:]

                                 
Prepared Statement of Herman Haksteen, President, Private Railcar Food 
                        and Beverage Association
                              Introduction
    Chairs Peter DeFazio and Donald Payne, Ranking Members Sam Graves, 
and Rick Crawford, and Members of this Subcommittee, thank you for 
holding today's hearing, ``Stakeholder Views on Surface Transportation 
Board Reauthorization,'' and for the opportunity to submit these 
written comments on behalf of the Private Railcar Food and Beverage 
Association (PRFBA).
    I am Herman Haksteen, President of PRFBA. My aim this morning, is 
to shine a light on railroad performance, service, and financial 
burdens that are being passed on to PRFBA members, discuss how the 
Surface Transportation Board (STB or Board) are addressing these 
concerns, and make recommendations on what Congress can do to help 
stakeholders moving forward.
    PRFBA is comprised of 18 global food and beverage companies and 
manufacturers headquartered in North America. All our members own or 
lease rail car equipment. These members include PepsiCo, Inc., Molson 
Coors Beverage Company, KraftHeinz Food Company, General Mills, Inc., 
McCain Foods USA, Inc, Sysco Corporation, Bonduelle America, Boardman 
Foods, Inc., G3 Enterprises, Inc., JD, Irving/Cavendish Farms, The 
Martin-Brower Corporation, Lamb Weston Holdings, Inc., Univar 
Solutions, Darigold, Inc., Kellogg Company, Land O' Lakes, Inc., 
National Sugar Marketing, LLC, and Leprino Foods. They are major rail 
shippers--some are captive--that rely on the railroads to distribute 
their food and beverage products that are vital to the health and 
welfare of our nation. These companies are responsible for feeding 
America. Without adequate rail service, their food and beverage 
products may not be available in all regions, at all times, and will 
carry a higher price to the end consumer.
    PRFBA began in January 2016 because these companies were 
experiencing rail transportation challenges. PRFBA provided, and still 
provides, the forum for them to meet regularly to discuss opportunities 
and solutions to rail service issues. The membership collaborates with 
other aligned trade associations and stakeholders regarding industry 
changes, and proposed legislation and regulations that directly impact 
the food and beverage transportation needs of PRFBA members and the 
industry. Also, PRFBA meets with the Class I North American Railroads 
and the consumer group at the Surface Transportation Board where group 
discussions are held on rail service issues unique to its membership. 
PRFBA provides its members with a forum to work together to make rail 
work better within their supply chains.
    PRFBA members own or lease railcars. As such, they absorb costs 
associated with equipment ownership, operation, and maintenance. 
Investing millions of dollars in rail cars also greatly restricts these 
members from other transportation modes. If a decision is made to 
change modes, it means ``parking'' assets which is seldom a wise 
financial decision. PRFBA members have skin in the game and deserve to 
be treated as such.
    It is important to note that PRFBA started before the 
implementation of Precision Scheduled Railroading (PSR). Many of the 
service and cost issues back then were being experienced due to a lack 
of railroad-to-railroad competition. But with PSR implementation--
notably the reduction of workforce, serving yards, and switch days has 
resulted in PRFBA member companies dealing with the worst service and 
the highest rail costs in recent history. As Fortune 500 companies, 
PRFBA members are relying on their association to express their growing 
concerns and seek help from Congress and the Administration to get our 
railroads back on track.
                          Lack of Competition
    When there is a lack of competition, notably in this case a lack of 
railroad-to-railroad competition, and especially at single served 
facilities (or captive shippers), the railroads are free to provide any 
service level at any costs. To improve railroad financials, the 
railroads are even reducing capacity by limiting equipment 
availability. When there is reduced capacity, rates increase, service 
suffers, and railroad margins rise. When there is a lack of competition 
in a free market economy, it is incumbent upon the government, in this 
case the Surface Transportation Board (STB or Board) per the Staggers 
Rail Act of 1980, to intervene.
    Today, there are only seven Class I railroads where four of them 
move 90 percent of our nation's rail freight. Of these four Class I 
rail carriers, two are predominately located in the east and 2 in the 
west. However, most customer locations served by these carriers are 
single carrier served locations. This is a far different market from 
when the Staggers Rail Act of 1980 was enacted, when there were 40 
Class I railroads. PRFBA member companies have been adversely impacted 
by the consolidation of the rail industry and their increasingly 
captive status in many locations.
    The probability of further consolidation of the rail industry, 
where there are merger applications before the Board including a 
combination of two Class I railroads, inherently will bring on even 
more monopolistic, or, at best duopolistic behaviors within the 
railroad industry.
    PRFBA members are not alone when it comes to the current issues of 
our remaining Class I carriers. The market is speaking and 
unfortunately more freight is moving from rail to truck, which is 
negatively impacting not only our supply chains, but our environment 
and infrastructure are paying a heavy price also.
    The results of a shipper survey published by Morgan Stanley in 
January of 2022 suggests that over the past year (depending on the 
quarter), 30-40% of shippers surveyed were moving some or a significant 
portion of their freight volume from rail to truck.
    Data published by the American Trucking Association (ATA) indicates 
that from 2017 to 2021 total truckload tonnage grew by 3.5%, domestic 
air freight tonnage grew by 24.2% while rail tonnage declined by 5.1%.
    Interestingly, the Association of American Railroad's (AAR) own 
data, as presented on its website, shows a grimmer picture. Since the 
start of PSR in 2017, total carload traffic in the United States has 
shrunk by 11% when compared to 2021. Even when including intermodal 
traffic, 2021 rail volume was down 5% from 2017 as shown in the chart 
below:

                        Rail Volumes in Millions
                              [AAR numbers]
------------------------------------------------------------------------
                                        Carload    Intermodal    Total
------------------------------------------------------------------------
2017.................................       13.5           14       27.5
2018.................................       13.6         14.4       28.1
2019.................................       12.9         13.7       26.7
2020.................................       11.3         13.4       23.7
2021.................................         12         14.1       26.1
                                      ----------------------------------
  Change 2017-2021...................       -1.5          0.1       -1.4
                                      ----------------------------------
    % Total Change...................    -11.11%        0.71%     -5.09%
------------------------------------------------------------------------


    Assuming that most of this traffic migrated to truck as the data 
would indicate, at a 3-1 conversion for carload traffic, this migration 
to truck has added 4.5 million truck load shipments onto our highways. 
This additional volume is wearing out our infrastructure faster and 
creating unnecessary additional greenhouse gases.
    This does not match with the policy objectives of the Biden 
Administration and some Members of Congress as possibly one way to 
address climate change challenges and enhance safety on our nation's 
highways.
    It is important to note, that the increase in truck volume only 
pertains to those limited number of shippers who can transport their 
products by truck. Many shippers, however, have significant barriers to 
shipping by truck (or even water/barge and air) due to numerous factors 
including commodity type, location, and infrastructure investments 
already made to support a rail supply chain. For shippers that can 
change to another mode(s), it is not easy to change transport options--
each mode of transportation requires its own infrastructure and there 
are needs unique to each commodity. Shippers invest in their 
infrastructure to support freight rail transportation, based in large 
part, on what the rail carriers require to service those facilities or 
what service the railroads offer to provide via their sales and 
marketing efforts. When shippers make the difficult decision to change 
modes, it is often a last resort to meet an immediate customer need. 
These changes add huge costs resulting in higher prices for the end 
consumer.
    The simple fact that freight rail volume is down, and truck volumes 
are up, helps illustrate that something is wrong with our freight rail 
network, and the additional shipping expenses can be contributing 
factors to our current inflation concerns.
    When there is a lack of competition in the marketplace, combined 
with the railroads' exemption from most antitrust protections, it is 
incumbent upon the government--in this case the STB per the Staggers 
Rail Act of 1980--to instill competition. PRFBA asks Congress to 
consider these three areas, affected by a lack of competition, when 
developing the next STB authorization:
Maintenance, Service and Rates
    Maintenance. It is expected that private car owners will incur 
maintenance costs. But due to the limited railroad-to-railroad 
competition, railroads are free to make decisions that increase their 
profits and pass costs back to railcar owners and shippers. PSR 
operational decisions which include longer trains and more gravity fed 
hump yards, increase the wear and tear on the rail cars. Cryo Trans (a 
business I ran up until 2020) is the largest owner and lessor of food 
grade refrigerated and insulated food cars. Cryo Trans saw a 52% 
increase in car maintenance costs when comparing 2021 to 2017. During 
that same time, Cryo Trans also experienced a 330% increase in cars 
that were completely destroyed.
    Service. A lack of railroad-to-railroad competition and profit 
driven decisions also impacts service. Some PRFBA member companies are 
experiencing record poor service levels ranging from missed switches, 
reduced switching service days, bunching caused by longer trains, 
bottlenecks primarily driven from a reduction of serving yards and 
crews to the reduction of cars and locomotives, which all have led to 
longer transit times and irregular service.
    Longer transit time reduces the utilization of rail cars. For 
operators of private cars, this results in a significant financial hit. 
Depending on the car type, this expense ranges from $50 to $300, per 
day, per car. For a shipper with 250-cars, this can add $75,000 per day 
to that shipper's operating budget.
    Reduced service days has resulted in shippers having to acquire 
their own switching equipment (track-mobiles) to reduce the impact on 
operations. The capital required to acquire track-mobiles is 
significant as is the training costs associated with the operations of 
this equipment.
    Current service levels have strongly impacted On-Time Performance 
(OTP). One PRFBA member manually tracks the Class I OTP of the five 
Class I railroads providing it service throughout the United States. 
OTP is based on the railroads ability to deliver a car ``door-to-door'' 
within a day of the service schedule the railroads had previously 
agreed to. These results speak for themselves in the following chart:

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                 Feb     March    April     May      June      July                                                      Average
                                Rail                                 Jan 2021    2021     2021     2021     2021     2021      2021    Aug 2021  Sep 2021  Oct 2021  Nov 2021  Dec 2021    2021
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
BNSF...............................................................     83.4%    68.3%    57.2%    85.0%    89.5%     83.7%     96.0%    100.0%     65.0%     75.0%     88.0%     55.0%    78.8%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
UP.................................................................     69.3%    61.3%    83.3%    85.4%    81.2%     83.1%     67.1%     78.0%     67.0%     62.0%     60.0%     56.0%    71.1%
NS.................................................................     37.9%    41.4%    67.4%    74.2%    52.6%     76.6%     68.3%     95.0%     75.0%     67.0%     56.0%     50.0%    63.5%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CSX................................................................     50.4%    65.1%    47.6%    84.3%    58.0%     84.2%     81.2%     23.0%     63.0%     49.0%     33.0%     25.0%    55.3%
CN.................................................................    100.0%    56.0%    92.0%    91.0%    75.0%    100.0%    100.0%    100.0%    100.0%    100.0%    100.0%    100.0%    92.8%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


    Service in the way of OTP is mostly experienced or ``felt'' by 
shippers at the first mile or last mile (FMLM) segments of a freight 
rail movement. The railroads, however, are not required to report this 
data to the Board. (The STB does, however, require in Docket No. EP 724 
(Sub-No. 4) United States Rail Service Issues--Performance Data 
Reporting, FMLM for unit trains and intermodal service only.) In 2020, 
PRFBA joined with several other aligned shipper groups in requesting 
that the Class I railroads provide, in the aggregate, to the Board FMLM 
data.
    Considering the STB has jurisdiction to provide oversight of these 
segments of the journey, it is nearly impossible for it to do so 
because without this data, the Board simply does not know ``what it 
does not know'':
      No complete picture of the overall functioning of the 
rail network that shippers need for planning and operational purposes.
      No assessment of whether any service problems are 
specific to them or more generally, whether they are being singled out 
for any service problems, and whether general service is improving, 
deteriorating, or remaining stable.
      No determination if railroads are properly executing 
their common carrier obligation.

    PRFBA is pleased that the Board is beginning to consider requiring 
the reporting of FMLM data in EP Docket No. 767, First Mile/Last Mile 
Service. It would be helpful if Congress would encourage the Board to 
reach a final decision on this as quickly as possible requiring the 
collection of FMLM data by the Class I railroads, in the aggregate.
    In a second effort, the Board is considering revising its decades-
old reciprocal or competitive switching rules, requirements, and 
processes, in EP Docket No. 711 (Sub.-1), Reciprocal Switching. It has 
been decades since the STB has granted a reciprocal switching request 
because it is nearly impossible for a shipper to meet the current 
requirements. Due to railroads' effective stalling tactics, this 
proceeding has stalled for about a decade, or stalled for 40 years if 
you consider that the Staggers Rail Act of 1980 provided for 
competitive switching.
    The Board proposal would allow PRFBA members and other shippers 
with access to only a single rail carrier to request before the Board 
that the carrier provide a switch for freight to be moved by a nearby 
rail carrier. This proposal would provide two paths for shippers to use 
when making the request before the Board: 1) switching must be 
practicable and in the public interest or 2) be necessary to provide 
competitive rail service.
    It would be helpful for Congress to urge the Board to reach a 
decision on its reciprocal switching proposal as expeditiously as 
possible. Shippers who meet the proposed criteria should have this 
option in seeking competitive service and rates.
    Rates and associated rail costs. It is inherent that when there is 
a lack of competition, rates and passed down costs increase especially 
for captive shippers.
    Railroads, particularly when not encumbered by competition, can add 
demurrage fees and accessorial charges freely, further increasing the 
total cost of using rail. Several years ago, PRFBA's members 
participated in STB's proceedings regarding demurrage and accessorial 
charges. Shippers, including PRFBA members, were dealing with the 
railroads using demurrage charges, not as a method to incentivize 
customers to become more efficient or meet their performance 
expectations, but rather, raising fines and fees against shippers, 
imposing impossible-to-follow rules, and sending auto-invoicing fines 
without the railroads investigating if shippers were at fault. The 
amount of revenues being generated by the railroads was excessive to 
the point where some argued demurrage and accessorial charges were 
being used as revenue generators for the railroads rather than 
incentivizing shippers' behavior. Again, the lack of railroad-to-
railroad competition, combined with PSR operating decisions that are 
made with little to no communication with the shippers, fosters this 
type of railroad behavior.
    PRFBA appreciates the decisions the Board reached when issuing its 
1) Final Statement of Board Policy in Docket No. EP 757, Policy 
Statement on Demurrage and Accessorial Rules and Charges; 2) Final Rule 
in Docket No. EP 759, Demurrage Billing Requirements; and 3) Final Rule 
in the Supplemental Notice of Proposed Rulemaking (SNPR) in Docket No. 
EP 759, Demurrage Billing Requirements. These new billing requirements 
went into effect on October 1, 2021. Shippers have been receiving and 
reviewing these new bills. While the railroads are providing the 
required new billing information, there are several problems which need 
Congressional, targeted fixes and accompanying policy modifications:
      Clarify that demurrage bills are to be sent to the 
shippers when railroads demonstrate that the shippers' behavior was the 
driver of the demurrage and not railroad service problems.
      Provide 30 days for shippers to pay demurrage bills. The 
15 days allowed today by some railroads does not provide enough time 
for shippers to contest, research, and negotiate with railroads over 
questionable fees especially when the bills may be months old.
      Increase the number of ``free days'' allowed to unload 
and load rail cars and unit trains. This fix ties into the PSR 
practices discussed earlier. Due to reduced train crews, elimination of 
hump yards, increasing train lengths, and the lack of fluidity in the 
rail network, cars tend to get ``bunched-up'' at pivotal points along 
the route. As an example, a PRFBA member can receive, without advanced 
notice or even coordination from the railroads, 15 cars rather than 5 
cars. It takes additional equipment and crews (which are not always 
readily available) for the PRFBA member to load, unload and turn around 
the rail cars where the typical 48 hours for loading and 72 hours for 
unloading is not nearly enough time before demurrage fees kick-in 
especially when the need for shippers to have more time is because of 
the railroads' poor service.
      Consider reverse demurrage, in that the railroads will 
pay the private car owners a daily fee when those private rail assets 
are held up due to railroad operating issues or allow charge backs to 
the railroads for daily car hire fees to offset the cost of additional 
transit days experienced by car owners.

    These problems again correspond to the need for the Board to 
require the Class I railroads to provide FMLM data, in the aggregate, 
to the STB as PRFBA and other shippers have requested and as the Board 
is considering.
                    Railroads Are Financially Strong
    The Staggers Rail Act of 1980 had two primary objectives: instill 
competition and stabilize the financial health of the railroads. As 
discussed above, the first has yet to be accomplished--competition has 
not only deteriorated but it continues to weaken. When looking at the 
second objective, it has been met--the railroads and their shareholders 
are enjoying significantly strong financial health because of a lack of 
railroad-to-railroad competition and PSR.
    Under PSR, the railroads have sought to improve their operating 
ratios by reducing capital expenditures and lowering overhead costs. 
The improved operating ratios also have resulted in high returns 
spurring an excess in capital, which the railroads have distributed 
through repeated dividend increases to their stockholders, and via 
sizeable stock buybacks. Rather than investing in their networks to 
improve service or reduce rates, the railroads are reducing capacity 
and focusing on rewarding their investors.
    One measure of the financial health of a Class I rail carrier is 
the Board's annual determination of ``revenue adequacy.'' The Board's 
website provides information on the number of Class I carriers that 
have been deemed ``revenue adequate'' from 2000 through 2020 where 
there is a trend of a growing number of Class I railroads not only 
achieving ``revenue adequacy'' but maintaining it.
    For 2020, the most current year for which determinations are 
available, six railroads were deemed ``revenue adequate: BNSF, CSX, 
Grand Trunk Corp., KCS, Soo Line, and UP. Kansas City Southern has been 
acquired by a Canadian Pacific Railway and at a massive premium.
    A second measure of the financial health of the railroad industry 
is noted with their respective publicly available quarterly earnings 
reports. Per information pulled from the Class I's respective website, 
the following chart illustrates the financial strength of the railroads 
despite the reductions in railcar volume, while at the same time, 
driven by Wall Street, the railroads are increasing their profits every 
year.

                        4th QTR 2021 Year-to-Year Percentage Change of Class 1 Railroads
                                     [Publicly Available Financial Results]
----------------------------------------------------------------------------------------------------------------
                                   BNSF       CSX       NS        UP        KCS        CN        CP      Average
----------------------------------------------------------------------------------------------------------------
Volume in Carloads.............    -3.10%    -1.80%    -3.60%    -3.90%    -0.30%    -10.00%    -9.90%    -4.40%
Total Revenue..................    10.70%    21.30%    10.80%    11.50%     7.80%      2.70%     1.40%    11.30%
Revenue per Carload............    13.00%    13.00%    15.00%    14.70%     7.10%     13.60%    12.50%    12.70%
Operation Ratios...............    61.30%    57.60%    60.40%    57.40%    60.10%     57.90%    57.50%    59.00%
----------------------------------------------------------------------------------------------------------------

                       Common Carrier Obligation
    Railroads are conveniently using the ``common carrier obligation'' 
to ``get away with'' poor service and high rates mainly because there 
is: 1) no clear definition of the ``common carrier obligation;'' 2) no 
standard for which to measure it by; or 3) no meaningful consequence to 
the railroads if the obligations are not met. As such, PRFBA asks 
Congress to clarify via statute, the definition of ``common carrier 
obligation.''
    In theory, it means that railroads are to provide service on 
reasonable request--railroads are to provide a level a service that 
meets a shipper's reasonable needs. Considering there is no clear 
statutory definition, railroads have been able and continue to provide 
service that is poor even though asserting that they are meeting the 
``common carrier obligation.'' The railroads have been prioritizing 
what commodities to serve while ``demarketing'' others and still 
claiming they are meeting the ``common carrier obligation.''
    Along with a statutory definition clarification, it would be 
helpful for Congress to direct the STB to develop a standard by which 
railroad service performance can be measured. This ties in to how 
important it is that the Board is beginning to consider requiring the 
Class Is to report, in the aggregate, FMLM data. PRFBA appreciates, to 
a point, that the Board would need some flexibility in applying a 
statutorily clarified definition with a standard that includes not just 
FMLM data, but other elements for meeting the common carrier obligation 
which might vary from one railroad to another and from one shipper to 
another. As such, the STB should be encouraged to also review and 
evaluate the extent to which railroad operating, financial, investment, 
marketing, and other business practices may be impairing the ability of 
and incentives for railroads to fulfill their common carrier 
obligations, in the aggregate, and provide adequate and economical 
service to their customers.
    STB already has the statutory authority to impose fines or 
penalties. PRFBA suggests Congress should expand the situations when 
the Board can assess fines or penalties that would allow shippers to 
recover appropriate damages to the extent the Board finds that 
railroads are not fulfilling their common carrier obligations, in the 
aggregate, as well as individually and are not providing adequate and 
economical service to their customers.
    In addition, the Board, under current statutory authority, can 
assess a penalty up to $8,700 per violation. This is far from 
consequential or punitive. Congress needs to consider establishing a 
higher penalty amount(s) and allowing the STB to apply a penalty to 
each carload and/or each day a carload is delayed. Another option for 
Congress to consider is to statutorily provide larger penalties tied to 
the overall level of service. This might have to be applied to both 
contract movements and movements that fall to the jurisdiction of the 
STB for if not, the railroads might use contracts to avoid their common 
carrier obligation.
                           New Authorization
    PRFBA supports a multi-year authorization and at the highest 
authorization and appropriation funding levels possible. Our nation 
relies on a strong, vibrant freight rail industry--which includes the 
railroads, shippers, receivers, and other stakeholders--to bring food 
products to our homes and business in a cost-effective and reliable 
manner.
    Along with the PRFBA recommendations discussed in this written 
testimony, PRFBA also encourages you to consider the results, once 
released, of the study underway on the impacts of PSR being conducted 
by the General Accountability Office (GAO). PRFBA sincerely thanks you, 
Chair DeFazio, and you, Chair Payne, for requesting the GAO conduct 
this study last Spring in preparation for the new authorization.
                               Conclusion
    Thank you for holding this important hearing. On behalf of PRFBA, 
we are asking for Congress to take further steps that will provide the 
STB with the necessary authority--either clarifying existing authority 
or granting new authority--to provide effective oversight of the 
freight rail industry in today's environment, to further help the STB 
streamline its processes so it can act faster to provide our shippers 
with a fair marketplace. I am more than happy to answer any questions 
you might have.

    Mr. DeFazio. I thank the gentleman. With that we would now 
turn to questions.
    It seems like, in listening to the panel, we have one 
panelist presenting the view that all is well, the STB does not 
need enhanced powers, and the rail industry is just doing 
wonderfully well. In fact, they did, over the last 10 years, on 
an inflation-adjusted basis, buy back almost $200 billion worth 
of stock. So, I guess, from the perspective of Wall Street, and 
CEOs whose salaries are tied to the stock price and bonuses, 
everything is great. But all the other panelists are presenting 
a very disturbing view.
    I would just like to know what the number-one thing the STB 
could do, succinctly, from each of the panelists. And then, if 
you can be succinct, then I will ask Mr. Jefferies to respond.
    So, quickly, Mr. Jahn.
    Mr. Jahn. Thank you, Mr. Chairman. Succinctly, reciprocal 
switching. So, as I said in my testimony, right now we are in a 
situation where three-quarters of our members do not have a 
competitive option. And so, providing that option would reduce 
rates significantly.
    I'd also note that there is something called the Rail 
Customer Coalition. That is 80 trade associations representing 
9 million jobs and $5 trillion worth of economic activity in 
ag, in energy, and in manufacturing. And they all support 
taking that action.
    Mr. DeFazio. Well, I guess I'll interrupt. I was hoping we 
would move more quickly.
    But Mr. Jefferies' group has said forced switching is 
intended to lead to rate reductions. Without a plausible 
explanation for nonspeculative, competition-driven public 
benefits, these rate reductions are nothing more than a wealth 
transfer from the railroads to the shippers. And another, it 
says forced switching is not a public interest wealth transfer 
to more profitable entities.
    Anyone else want to put up their highest priority, quickly?
    Mr. Haksteen. If I may, PRFBA would like to support 
reciprocal switching. And we believe the ability for the STB to 
have enough power to be able to make these positive changes as 
quickly as possible, we absolutely--100 percent, reciprocal 
switching.
    And for those who say it doesn't work, let's check with the 
two Class I's that operate in Canada. It has worked fine there 
for many years.
    Mr. DeFazio. OK. We have got substantial agreement here. 
Anyone on the panel--other than the freight railroads--have a 
different view of the number-one priority?
    Mr. Hildebrand. [Inaudible.]
    Mr. DeFazio. What?
    Mr. Hildebrand. Yes, Brad Hildebrand, NIT League.
    Mr. DeFazio. Yes.
    Mr. Hildebrand. One of the things that I think our members 
would like to see is the changing of the responsibility to 
prove guilt, if you will.
    Today, as I mentioned in my testimony, we have to prove to 
the STB, as shippers, that the railroad is doing something 
unreasonable to us. We would like that flipped around. Given 
the profitability and the viability of the railroads today, we 
think the railroads should be the ones that have to defend what 
they are doing in their rates as being reasonable and 
competitive, versus us having to prove to the STB that they are 
unreasonable or uncompetitive.
    Mr. DeFazio. OK, thank you. Actually, that is done with 
other monopoly industries. For instance, utilities are 
regulated in that manner.
    Just one quick point. Two people have made the point about 
interswitching in Canada, and it works, but we hear here it 
would be a disaster. Can Mr. Jahn or Mr. Hildebrand, can you 
just briefly comment on Canada's provisions?
    Mr. Jahn. Yes, I would be happy to jump in there.
    Mr. Chairman, competition drives every single other segment 
of our economy. It drives innovation. It drives investment. We 
have seen that in Canada. As we've mentioned, those companies 
have increased their revenue and profits, and improved their 
operational efficiency while doing interswitching. And they 
have said that publicly.
    The last thing I will say is a study recently came out and 
said competitive rates in the United States are up 24 percent 
in the last 15 years. Noncompetitive rates are up 230 percent. 
And so, that is why we are looking for competitive switching.
    Mr. DeFazio. OK, thank you.
    Mr. Jefferies. Mr. Chairman, may I comment on the----
    Mr. DeFazio. It has got to be real quick. I have only got a 
few seconds left. Go ahead.
    Mr. Jefferies. Yes, glad to. So, the Canadian rail system 
was built and designed with switching in mind, and the number 
of potential switches in Canada are remotely minuscule, 
compared to the number of potential switches in the regime that 
the STB is proposing.
    Right now, switches can be ordered with the showing of 
anticompetitive conduct. That is the way it should be. It 
should not be a right to take one railroad's private property, 
give it to another for use at below-market rates.
    Mr. DeFazio. OK, thank you. My time has expired. I turn now 
to Mr. Crawford for his questions.
    Mr. Crawford. Thank you, Mr. Chairman. I am going to direct 
this question to Mr. Jefferies.
    We understand that the STB is reviewing a rule on 
reciprocal switching. How could reciprocal switching impact 
freight railroads' ability to transport goods and keep the 
supply chain moving?
    Mr. Jefferies. So, right now, again, the railroads enter 
into switches on a voluntary basis, when it is planned out, 
when it is part of a strategic need. A shipper can also 
petition the STB for a switch when there is a demonstration of 
anticompetitive conduct.
    Adding switches adds complexity to the rail network. It 
undermines fluidity. It adds complications. It potentially, if 
forced, if it becomes a right versus a remedy to some sort of 
wrongdoing, it creates a disincentive to investment. If I have 
a plant, and I know at any given time my competitor could be 
given access to that plant, that doesn't give me a lot of 
reason to make the long-term investments necessary.
    Forced switching would provide a remedy or a right--a 
right--to a handful of large shippers at the behest of them, 
and at the cost of other customers and constituents across the 
entire rail network. That is why rail labor has opposed. Mr. 
Pierce and I probably aren't going to see eye to eye on a lot 
of things today. That is one area where we do have a common 
agreement, common understanding, and common policy view.
    The environmental crowd has opposed. Passenger rails have 
opposed. Right-leaning groups have opposed. Left-leaning groups 
have opposed. Intermodal associations have opposed. It is not 
just Class I railroads who see this as a bad idea. It is 
practically every user of the freight rail system, save a few 
large shipper groups out there. It just doesn't make sense for 
the overall vibrancy and health of the system.
    Again, a switch can be ordered if a railroad is 
demonstrated to be acting in an anticompetitive way, and that 
is the appropriate measure, not because a shipper wants a 
backdoor way to a rate cut.
    Mr. Crawford. One of the policy suggestions in the Biden 
administration's recent supply chain report is to encourage the 
STB to require railroads to provide additional rights-of-way to 
passenger rail. How would that impact freight movement on the 
supply chain?
    Mr. Jefferies. So, let me start. I want to be clear. I 
completely agree that we can have a healthy freight rail 
network and a healthy passenger rail network, and that is done 
best when all sides sit down together, agree on the mutually 
agreed to outcome, agree to the resources required, agree to 
who is going to apply those resources. We have win-win 
situations all over the country.
    But I have to say that including a recommendation that 
increasing the amount of passenger rail on the Nation's freight 
railroads would somehow help alleviate supply chain problems is 
preposterous, and it really begs the question the work that 
went into this report. It is silly, it is silly. And that is 
not an antipassenger rail statement. It is just preposterous to 
think that adding passenger trains somehow helps the overall 
supply chain.
    Mr. Crawford. I appreciate your comments.
    Mr. Chairman, I yield back the balance of my time.
    Mr. Payne [presiding]. The gentleman yields back, and now I 
will give myself 5 minutes for questioning.
    Let's see. There are a number of groups that are an 
important part of this conversation, and have sent in their own 
views on STB's reauthorization. I have four statements that I 
would like to enter into the record.
    The first comes from the Brotherhood of Maintenance of Way 
Employes Division; the Brotherhood of Railroad Signalmen; the 
International Association of Sheet Metal, Air, Rail and 
Transportation Workers Mechanical Division; and the National 
Conference of Firemen and Oilers.
    The second comes from the Portland Cement Association.
    The third comes from the Freight Rail Customer Alliance.
    And the fourth comes from The Fertilizer Institute.
    I want to thank these groups for submitting statements for 
the record.
    Without objection, so ordered.
    [The aforementioned statements submitted by Hon. Payne are 
on pages 76-94.]
    Mr. Payne. Mr. Hildebrand, one of my top priorities as 
chairman of this subcommittee is to remove barriers in the rail 
sector. A complex and archaic rate challenge process is one of 
those barriers.
    Can you elaborate on how STB processes could provide a 
level playing field for all shippers?
    Mr. Hildebrand. Well, one of the things that the STB is 
working on right now is Final Offer Rate Review, or what they 
call FORR. That is a streamlined approach to help improve the 
accessibility of small rate cases. And we would definitely like 
to see the Board push that forward.
    Now, the--certain five of the seven Class I's have come up 
with their own arbitrary system to look at small rate cases. 
The Board is also considering that. We believe that, as a 
shipper, you should have the right to choose either FORR or 
whatever comes out from the AAR in the final ruling. We should 
have the right to pick which way we want to go.
    But clearly, that opens up an opportunity for us to bring 
what we call small rate cases to the Board for them to rule on. 
We would definitely like them to rule faster, as I said in my 
testimony, than what they are ruling today. Clearly, it is 
taking way, way too long to get a decision. So, I don't know if 
that is staffing or other issues that are slowing them down, 
but whatever we can do to streamline processes to help expedite 
cases to be heard and decided would be greatly appreciated by 
those of us that are in the shipping public.
    Mr. Payne. Absolutely. And the technology exists now that 
some of these archaic systems should still not be in place. And 
I hope this is an opportunity to move forward in those areas.
    Mr. Pierce and Mr. Jahn, I have serious concerns about the 
effect of Precision Scheduled Railroading, not only for the 
impacted workers, but also for the shippers that have to move 
their cargo. Running longer trains raises the possibility of 
safety concerns and could decrease the role of rail in the 
Nation's supply chain.
    Can you both explain how PSR has affected your work in the 
rail sector?
    And how do you think Congress should act in response?
    Mr. Pierce, let's begin with you.
    Mr. Pierce. Thank you, Chairman Payne. I think it is really 
simple to explain.
    Twice the train length, twice the amount of time to build 
that train, twice the amount of time to put that train away. If 
there is an unplanned emergency, twice the amount of time to 
walk that train. Now, we are running trains in excess of 2 to 3 
miles on any given day. [Inaudible] members, if they are forced 
to walk that train, are out there, literally, for hours on end, 
just walking to the rear of the train and walking back. Radio 
communications don't work that well that far. It has become a 
safety issue.
    At the same time, the railroad is, literally, shutting 
itself down by running trains that do not fit their physical 
plant. We park shorter trains to run longer trains, and then we 
[inaudible] because the trains that have the other crews that 
are parked don't have enough time to get to their terminal. All 
of this impacts the shipping. All of it prevents the cars from 
getting to where they need to go. It is as though the railroads 
don't really care if those cars ever get there, is our 
viewpoint.
    And just one last thing. There is no suggestion box for the 
employees to tell the railroad what they think they could do 
better. It doesn't exist. I appreciate the opportunity to bring 
those issues here. We see it every day, what could be done more 
efficiently that is not happening right now.
    Mr. Payne. Thank you.
    Mr. Jahn?
    Mr. Jahn. Thank you, Mr. Chairman. What we say about 
Precision Scheduled Railroading is that it is doing less with 
less.
    Our experience there is that rates go up and velocity goes 
down. So, just to give you one example, we have got a member 
company that has got multiple facilities in the Southeast. At 
one plant, they have lost 110 million pounds of production in 
14 months, and another site has lost 5\1/2\ million pounds of 
production over 6 months. These are lost sales, not only for 
our members--and exacerbate the inflation and the supply chain 
challenges we have--but they are also lost sales for the 
railroad, and I think that is really important. We can't ship 
what we can't make, and what is worse is we have no recourse 
under the current system.
    So, I want to thank you, Mr. Chairman. I want to thank 
Chairman DeFazio, as well. I know you have requested a GAO 
report on Precision Scheduled Railroading, and we look forward 
to the results of that report. Thank you.
    Mr. Payne. Thank you, as we do, as well.
    Mr. Newman, as railroad subcommittee chairman and long-time 
passenger rail advocate, I want to ensure that the American 
people feel the full benefits of the historic funding the IIJA 
invests in our rail network. Doing so requires cooperation from 
all partners, since so much of the freight and intercity 
passenger rail systems overlap.
    Can you describe the significance of the proceeding pending 
before the STB to restore Amtrak's gulf coast service?
    Mr. Newman. Yes, thank you, Chairman.
    Mr. Payne. And we would ask you to submit that for the 
record, because my time has expired.
    Mr. Newman. OK.
    Mr. Payne. Next we have Mr. Davis.
    Mr. Rodney Davis of Illinois. Thank you, Mr. Chair. Great 
to see the witnesses, albeit I can't wait until we get a time 
when we are here in the same room again, running hearings like 
we used to have, prior to the pandemic.
    My first question is actually for Mr. Jefferies and Mr. 
Jahn. The railroads talk about rates decreasing more than 40 
percent since the Staggers Act. However, Mr. Jahn has testified 
that rates have increased 30 percent in the past 20 years. 
Obviously, this seems contradictory. My question to both Mr. 
Jefferies and Mr. Jahn is about rates.
    Have they been increasing or decreasing?
    And do you predict rates will increase or decrease in the 
coming years?
    Mr. Jefferies, go ahead.
    Mr. Jefferies. Well, thank you for the question, and I 
could not agree more. I wish we were doing this hearing in 
person. I look forward to the opportunity to do that soon.
    So, when you think about rates, since 1980, rail rates are 
down 40 percent--44 percent, to be exact. The number Mr. Jahn 
used, I think, is from 2002, 2004, something along those lines 
that says rail rates are up 30 percent. And in my opening 
statement, I acquiesced that rates have increased in recent 
years. We are back to the levels that rates were in 1990, 32 
years ago.
    And folks talk about the year 2017. Somebody mentioned 
that, I think, as this onset of PSR. Since December 2016 
through December 2021, rail rates have increased roughly 20 
percent writ large. That is about half that of long-haul 
trucking and, quite frankly, half that of many of the 
industries represented today. So, yes, rates are back to where 
they were in 1990.
    Mr. Rodney Davis of Illinois. Well, thank you, Mr. 
Jefferies.
    Mr. Jahn?
    Mr. Jahn. Thank you, Congressman. So, rail rates did fall 
significantly in the 1980s and 1990s. However, that has long 
since reversed. Again, as Ian said, since 2001, rail rates have 
risen twice as fast as both long-haul trucking and inflation.
    I think the most important thing here, though, is what we 
are talking about, and I want to be really clear about this. On 
competitive routes, rates have gone up relatively little over a 
relatively long amount of time--24 percent over the past 15 
years. In noncompetitive situations, captive shippers--three-
quarters of our member companies are captive--those rates have 
gone up 230 percent over that same time. So, it is really 
important to understand, when we are talking about rates 
overall versus competitive and noncompetitive rates.
    And so, what has happened is, after massive consolidation 
in the industry, railroads have leveraged their market power to 
extract higher prices and shift costs to their customers.
    Mr. Rodney Davis of Illinois. I thank you, Mr.----
    Mr. Jefferies [interrupting]. One quick point on that, 
Congressman Davis, I think it is important to note that no 
shipper went from two to one railroad as the result of a merger 
at any point. And so, this is thrown around a lot, but, due to 
merger conditions, no one ever lost access to a second shipper 
because of a merger.
    Mr. Rodney Davis of Illinois. Well, thank you. Thank you 
both. I got another question for both of you. If you could 
answer real quick, because I need some time to address an 
Amtrak issue that I ask about every time that I have somebody 
from Amtrak on at a hearing.
    But Ian and Chris, most shippers have said that they 
support reciprocal switching. But AAR has said it will slow 
operations and harm shippers.
    Mr. Jahn, why would shippers--really quickly, why would 
they support something that will harm them?
    Mr. Jahn. We wouldn't support something that will harm 
them. In fact, again, a similar system has worked in Canada for 
decades.
    Secondly, we have our own financial interest for the system 
to work quickly and smoothly. And so, we are not looking for 
something to gum up the works.
    And third, the STB ultimately has the control of this 
process. They don't have to approve that application. They have 
the opportunity to deny it if we apply for it.
    Mr. Rodney Davis of Illinois. All right.
    Mr. Jefferies, would you like to explain, from your point 
of view, why shippers will be harmed?
    Mr. Jefferies. Sure, absolutely. Because it undermines 
fluidity, disincentivizes investments, and opens up one private 
company's network for use by another at the behest of a 
shipper.
    I would say that there are large shippers that are pushing 
for this, and might benefit in the short term. But the 
stakeholder group of concern is much, much broader than that, 
including--UPS filed in 2016 an opposition; rail labor has 
filed an opposition; intermodal associations filed an 
opposition; environmental groups; passenger rail has filed an 
opposition. So, the list goes on and on and on.
    And again, the Board can act on a reciprocal switch request 
right now. But there has to be a demonstration of 
anticompetitive conduct, and we think that is the appropriate 
hurdle. Thank you.
    Mr. Rodney Davis of Illinois. Thank you, Mr. Jefferies.
    I don't need a response for this from Mr. Newman or Mr. 
Jefferies, but once again the Amtrak line from Chicago through 
Champaign, Illinois, down to Carbondale has the worst on-time 
performance. We have been dealing with the short shunt issue 
with CN and Amtrak. I have been told numerous times in hearings 
here by both Amtrak and the rail industry that, ``We have got a 
solution, we are working it out.'' Still, I don't have an 
update as to when this is going to be completed.
    What technology is going to be utilized, and when can we 
begin to see progress? I certainly hope that I can get together 
with both of you in the future to figure this out, because I 
don't want to go through another hearing where we still don't 
have answers.
    Thank you, I yield back.
    Mr. Payne. The gentleman's time has expired. And let's hear 
from the gentleman from New Jersey, Mr. Malinowski.
    Mr. Malinowski. Thank you. Thank you, Mr. Chairman. Thanks 
to our guests and witnesses.
    Mr. Jefferies, it is good to see you again. I want to zoom 
out with you a little bit--no pun intended--and talk about 
capitalism. I am a capitalist. I think it is safe to assume 
that you are, as well.
    Like you, I think that balanced regulation is the goal that 
we should be striving for here. And I recognize as part of that 
discussion that our Class I railroads are not nonprofits. You 
are in the business of succeeding financially, and I want you 
to succeed financially.
    But to me, responsible capitalists do certain things. They 
serve their investors, obviously, and your member companies 
have clearly been doing a very good job serving their investors 
in the last few years. But responsible capitalists also serve 
their customers. They serve their employees, they treat them 
well, they treat them with respect. That is how you run a good, 
sustainable business. And based on what we have heard here 
today from your customers, from your employees, I think some of 
your companies are falling short here. And that is unfortunate, 
because it gives this system of capitalism that we all support 
a bad name.
    Let me raise a couple of specific issues.
    Employees and employment. Before the hearing, I looked at 
some of the transcripts of fourth-quarter earning calls from 
some of your companies. And what they are all telling Wall 
Street right now is that they don't have the workers they need, 
and that this is causing operational challenges. It is causing 
some of the supply chain difficulties that we are all 
experiencing in the economy.
    So, I want to ask you, do you think that might have 
something to do with the fact that, between 2015 and 2019, the 
Class I railroads, as part of this unyielding, maximalist 
pursuit of efficiency, eliminated 29,000 jobs, 17 percent of 
their workforce?
    Mr. Jefferies. So, you are absolutely right that workforces 
were down going into the pandemic. If you look at rail service 
metrics, they were actually pretty strong going in the 
pandemic. But certainly the pandemic created an economic shock 
that no one saw coming. Additional layoffs were necessary, due 
to the 30-percent decrease in rail traffic. Fortunately, demand 
has come back, it came roaring back, and that is why railroads 
have been hiring across all crafts for the past 12 months.
    And are we where we want to be? No. Hiring continues. And I 
think you would be hard-pressed to find an industry that isn't 
having challenges bringing people on board.
    Mr. Malinowski. Well, it is certainly true. But I think, 
again, one of the arguments that we might have had in that 
period before the pandemic is that you need some slack in the 
system, that you don't want to cut down to the bare bones on 
the basis of sort of an efficiency-first philosophy, because 
you couldn't predict the pandemic, but anyone can predict that 
there will be crises, there will be crises in the future that 
we can't predict.
    So, I mean, wasn't that a mistake, in effect, from a 
forward-planning, long-term thinking point of view?
    Mr. Jefferies. So, I don't want to--different railroads 
were in different places during that timeframe. And so, I can't 
speak for each individual railroad's decisions on what the 
appropriate employment base was for that railroad, for its 
network.
    But I can tell you, regardless of their requisite employee 
bases, everyone went through challenges and has gone through 
challenges over the past 3 years, as has every industry. And 
the important thing is that all railroads are actively hiring 
where appropriate, in regions where they need to bring on more 
employees. And they are taking additional steps, signing 
bonuses and the like, to make these careers attractive, because 
we do need the next generation of railroaders.
    We are a fully collectively bargained industry, as you 
know. Wages and benefits are roughly $135,700 per employee, on 
average. So, these are good jobs. But it is also not a job that 
you can just hire somebody and they are on the street the next 
day. These are very skilled types of jobs----
    Mr. Malinowski [interrupting]. Well, exactly, which is why 
I think probably laying off that many skilled workers in the 
name of efficiency was a mistake.
    With the time I have left, if I could just ask you to 
address the stock buyback issue, as well. I mean, the Class I's 
have spent about $150 billion on rail infrastructure since 
2010. That is fantastic. But in that same period, nearly $200 
billion in stock buybacks. Like----
    Mr. Jefferies [interrupting]. So, I will----
    Mr. Malinowski [continuing]. Explain that aspect of 
capitalism to us, because it doesn't make sense for my maybe 
old-fashioned view of how capitalism should work.
    Mr. Jefferies. So, respectfully, I can't comment on 
individual investor decisions or investment decisions, but what 
I can say is that our industry, despite what you have said, 
continues to invest 18 percent of revenues back into their 
capital plant, which far exceeds most of our peer industries.
    Mr. Malinowski. Well, thank you. I mean, we are making 
enormous public investments, as well, in infrastructure that 
you are using. And when we see numbers like that, it does give 
me pause.
    I yield back, Mr. Chairman.
    Mr. Payne. Thank you. The gentleman yields back. Now we 
will hear from Mr. Weber.
    Mr. Weber of Texas. Thank you, Mr. Chairman, I appreciate 
that. My question is going to be for Chris Jahn.
    A loaded question, I guess, Chris, all the interruptions in 
supply chain across the country. Of course, as you know, Texas 
is huge on energy and other things, we produce a lot of 
chemicals. How have your members been affected by that 
interruption?
    Mr. Jahn. We have been significantly impacted, and that has 
been a significant challenge.
    Earlier I had detailed an example where we had one member, 
in just one instance in the past year, has lost over 110 
million pounds of production at one plant, and there were 6 
million pounds of production at another plant, which not only 
cost them sales, but also cost the railroad sales, because we 
can't sell what we can't ship.
    Mr. Weber of Texas. Right. So, now I guess the question is, 
are there any potential shipper concerns with Amtrak's apparent 
intent to expand its services on freight lines across the 
national network?
    I know you have had that discussion. I have had to be off 
the line for a minute and back online for a minute, so, forgive 
me if it is redundant. Any concerns about that, Chris?
    Mr. Jahn. So, anything that stresses what is already an 
overstressed rail network is a concern for us.
    And so, the rail network has had challenges over the past 
few years. COVID has made an even more significant challenge. 
Putting another challenge on top of that seems to us to be a 
poor strategy.
    Mr. Weber of Texas. What would you say is the percentage 
that the interruption in supply chains has impacted across you 
all's--across the country, I am sure, but all of your American 
Chemistry Council folks?
    Mr. Jahn. Yes, so, it really depends, Congressman, it 
depends on where you are.
    So, some railroads have performed better than others, in 
terms of their performance. And so, again, I have highlighted 
some places in the Southeast where we have had particular 
problems. I would not say that there is anywhere, though, that 
is up to snuff.
    Mr. Weber of Texas. I am sorry, thank you for that. So, 
what is your response to concerns voiced by the freight 
railroads to the reciprocal switching rule?
    Mr. Jahn. So, again, we have got a--two things I guess I 
would say.
    One--and something I have not said yet before--is 
reciprocal switching was expressly contemplated by Congress in 
the Staggers Act. This is not something that is new. And under 
the Staggers Act it calls for competition among rail carriers 
to the extent possible. We are not getting that.
    So, what we need, then, is reasonable rates when 
competition doesn't exist. And so, what we are trying to do is 
create further competition. And so, that is not something new. 
That is not something that is--we haven't tried in Canada 
already. We have talked about that previously. That has worked 
effectively there. And the system works, and railroads have 
grown.
    And finally, it is an opportunity for the railroads 
themselves to get more traffic, and more of our work. We want 
to give them more business, if they are more competitive.
    Mr. Weber of Texas. Let me see if I can get myself unmuted 
here. Well, thank you for that.
    And then, finally, recommendations you might have for any 
potential STB reauthorization.
    Mr. Jahn. Yes. So, I think a couple of things we would look 
at to make sure that the STB has enough staff, and enough 
financial resources to give them the ability to do a better job 
on collecting data. Those are a couple of things I would point 
to.
    Mr. Weber of Texas. OK. Well, with that I am done my 
questions.
    Mr. Chairman, I ask unanimous consent to get into the 
record an American Fuel and Petrochemical Manufacturers letter 
dated March 8, 2022, to you, Mr. Chairman, and the rest of the 
group, that says, ``Stakeholder views on Surface Transportation 
Board reauthorization.''
    [No response.]
    Mr. Weber of Texas. Mr. Chairman?
    Mr. Payne. Without objection. I am sorry.
    [The letter submitted by Hon. Weber of Texas is on pages 
97-99.]
    Mr. Weber of Texas. Thank you. That is all right, thank 
you. I yield back.
    Mr. Payne. And eight other conversations going on behind 
me.
    OK, we next have Mr. Moulton for 5 minutes.
    Mr. Moulton. I thank you, Mr. Chairman. I would like to 
begin with Mr. Newman.
    Mr. Newman, you have an impressive background, and 
difficult work, obviously, for Amtrak. I wanted to ask you a 
question about passenger rail that actually extends a little 
bit beyond Amtrak.
    The STB, of course, has authority beyond Amtrak, as written 
into the law. For example, the STB has ruled that Texas 
Central, the high-speed rail project between Dallas and 
Houston, with which Amtrak has a ticketing agreement, will 
qualify as part of the interstate rail network and fall under 
STB jurisdiction.
    Can you tell me what role can STB reauthorization play in 
supporting private high-speed rail projects like Texas Central 
and Brightline West?
    Mr. Newman. Well, thank you for the question, Congressman 
Moulton.
    From Amtrak's standpoint, we are very much interested in 
being able to see improvements and increases in intercity 
passenger rail in whatever provider might be able to be 
providing that service. So, to the extent that there is a need 
or recourse to the STB to encourage the growth of intercity 
passenger rail for other operators, we think that that would be 
appropriate.
    Mr. Moulton. Mr. Jefferies, over to you. Thank you very 
much for your thoughtful response to my questions for the 
record after our full committee's hearing on North American 
supply chain issues last November.
    You probably recall that I asked how to shift more freight 
from highway to rail, which I think many people on the 
committee have acknowledged would be good for congestion, good 
for the environment, good for efficiency, if it is done well.
    Do you agree that regulation of the freight rail industry 
by the STB should not inhibit, and in fact, should perhaps 
bolster this goal of shifting more traffic to rail?
    Mr. Jefferies. I could not agree more with that statement. 
Absolutely.
    Intermodal traffic is over half rail traffic right now. 
That is going to continue to grow. It should continue to grow, 
when you look at the consumer demand we are seeing in this 
country. Last year, over the first 6 months of 2021, freight 
rail moved more intermodal units than they had at any 6-month 
period in their history.
    But we want to take on more, because we think it is good 
for the environment, it is good for congestion, it is good for 
highway degradation, and, quite frankly, a good public policy 
goal. So, absolutely.
    Mr. Moulton. So, you have also noted in your response that 
capacity is key, and there are capacity constraints on the 
roads today.
    I have to say that when you see these numbers, that you 
have invested $150 billion in capacity infrastructure 
improvements, but, as Mr. Malinowski pointed out, $200 billion 
in stock buybacks, that doesn't make us feel that you are 
striking that balance right, because if you put that $200 
billion into capacity, think about how much more we could have.
    How do you think about prioritizing that balance?
    Mr. Jefferies. So, when you are making an investment into 
the rail network, you are making a 50-year, if not 100-year, 
investment. And so, you need to invest not only for the demand 
today, but, of course, keep making those long-term investments.
    I can't comment on investor relations decisions, but what I 
can say is that sustained level of investment that freight rail 
has been able to put back into its networks has resulted in an 
infrastructure that is the highest rated by the American 
Society of Civil Engineers. It is an investment level that far 
exceeds most other industries in the U.S., with 18 percent of 
revenues going back into the capital plant.
    Mr. Moulton. No, and----
    Mr. Jefferies [interrupting]. And----
    Mr. Moulton [continuing]. Mr. Jefferies, I appreciate those 
numbers, and you have shared them before.
    I am just trying to make the point here that you may not be 
able to comment on investor decisions, as you frame it, but 
those investor decisions or investor relationship decisions 
affect your relationships with your customers, too, when you 
can't deliver the service that you could if you were able to 
put more into the infrastructure.
    I am impressed with freight rail infrastructure. My point 
is that I think it could be better. And I want to make sure 
that the STB finds its role in helping to incentivize that, 
because I want to see you grow your business even further. And 
while there is a tremendous focus on efficiency, I do share the 
concern of many members of this committee that we are not 
focused enough on growth, and I am not quite sure how we get 
there.
    One of the things that you also said--when we were talking 
about Precision Scheduled Railroading--is that it doesn't have 
a one-size-fits-all meaning. And obviously, if you are 
improving efficiency, if you are getting cars to their 
destination with less switching, more direct routes, that is 
all good. But when we hear from shippers, as we have this 
morning on the committee, that there are others who are not 
getting the service that they need, they are actually seeing 
their service go down, I wonder whether we are really finding 
the right definition for Precision Scheduled Railroading here. 
If it is not really helping grow the business, just making what 
we have more efficient, is that really the ultimate goal?
    Mr. Jefferies. Well, I think it is a--service is absolutely 
a top-line goal. Safety is the top-line goal. Service is a top-
line goal. And we need to serve our entire customer network. We 
look to do that every day.
    Now, are there areas where there are challenges? 
Absolutely. And I would probably ascertain that every industry 
is facing challenges in certain parts of its network right now. 
But----
    Mr. Payne [interrupting]. Thank you.
    Mr. Jefferies [continuing]. At the end of the day, we have 
got to try to serve all the customers we can, and growth is 
absolutely a key priority.
    Mr. Moulton. Thank you, Mr. Chairman.
    Mr. Payne. Thank you. And next we will have the 
distinguished gentleman from Tennessee, Mr. Burchett.
    Mr. Burchett. Thank you, Mr. Chairman. And I appreciate 
Ranking Member Dusty Johnson, the pride of T.F. Riggs High 
School. He was the captain of the debate team and the wrestling 
team. Quite a combination, quite a combination.
    Mr. Jefferies, my district in east Tennessee is served by 
the Knoxville and Holston River Railroad, and that is a short 
line railroad that connects both the CSX and Norfolk Southern. 
Can you talk about how forthcoming STB regulations might impact 
short line railroads?
    Mr. Jefferies. Sure, absolutely. I would also say remind me 
never to get involved with the guy who is a wrestler and a 
debate champ, but----
    Mr. Burchett. He will talk you to death while he is beating 
your head in the ground.
    [Laughter.]
    Mr. Jefferies. Exactly. But more importantly, to your 
question, I can tell you that the short line railroad industry 
has filed an opposition, and will be testifying in opposition 
of the reciprocal switching proposal that is pending before the 
STB.
    Ninety percent of issues short lines and Class I's are 
aligned on. Certainly, there are areas where one is perhaps 
more important to the other. But when it comes to STB issues, 
by and large, the short lines see eye to eye with the Class I's 
on some of the larger re-regulatory efforts that have been 
proposed, or could be considered over--at the Board.
    Mr. Burchett. OK, thank you. Some of the witnesses today 
suggested that the STB's reciprocal switching rule could 
actually increase competition within the rail industry and 
lower shipping costs. What do you make of that? Is that 
accurate, or inaccurate?
    Mr. Jefferies. I would say it is wholly inaccurate.
    The push for forced access, reciprocal switching, whatever 
you want to call it, is simply forcing one railroad to open up 
its network at the behest of a shipper. And that is not 
competition, that is just a wealth transfer, a Government-
directed wealth transfer, and it doesn't make sense.
    Mr. Burchett. All right.
    Mr. Newman, what do you think the difference is between 
State-supported and long-distance service?
    Mr. Newman. I am sorry, Congressman, could you--the 
difference between State-supported and long distance in what 
dimension?
    Mr. Burchett. I would assume in reference to Amtrak.
    Mr. Newman. I didn't quite hear the question.
    [Pause.]
    Mr. Newman. Sorry, so, the question was, what is the 
difference between State-supported and long distance?
    Mr. Burchett. Yes, sir.
    Mr. Newman. Yes, OK. Our--yes. So, routes that are over 750 
miles are our long-distance services. Those under 750 miles are 
the ones that we operate as State-supported service. And we, 
therefore, contract and arrange with a State or a set of States 
for the operation of the service.
    Mr. Burchett. OK. Well, is Amtrak--are you all planning on 
expanding the rail service?
    I know you are in 20 States, is that correct, over the next 
15 years? Is that what I read?
    Mr. Newman. Well, we currently serve 46 States.
    Our vision for expanding passenger rail, which we 
introduced last year, Amtrak Connects US, looked to identify a 
number of corridors, which we think are good opportunities for 
the expansion of intercity passenger rail. There were roughly 
20 new corridors laid out there. So, there is that number 20, 
as well as increased service--I am sorry, 29--increased service 
on another 34 existing corridors.
    Mr. Burchett. OK. I guess what I am getting at is, when you 
all expand in these States, and I know you are looking for 
funding by the States, are you going to ask for a decrease in 
appropriations for Amtrak to match that, or will it be on top 
of that?
    Mr. Newman. No, we would not be looking for a decrease in 
appropriations. Under IIJA, we have got now the--that provides 
funding for expansion for the capital that is needed for 
expanding our network.
    And although we do contract with States, and States do 
provide support for our State-supported services, our annual 
appropriations are still needed to fund our ongoing operations, 
both with our long-distance and State-supported service, and 
our Northeast Corridor.
    Mr. Burchett. Do you ever see in the future at any time 
that Amtrak will actually cash flow?
    Mr. Newman. Well----
    Mr. Burchett [interrupting]. A simple yes or no.
    Mr. Newman. I think, in the near future, it is--no, and it 
is very difficult to say.
    Mr. Burchett. Thank you, Mr. Chairman. I yield back none of 
my time.
    [Laughter.]
    Mr. Payne. Thank you, the gentleman from Tennessee. Now we 
will have Mr. Auchincloss for 5 minutes of questioning.
    Mr. Auchincloss. Thank you, Chairman. [Inaudible] to 
discuss tangible ways [inaudible] issues that are [inaudible] 
consumer, businesses and [inaudible]. Those issues in the 
Massachusetts Fourth Congressional District are represented in 
today's panel with 350 jobs in my district, making up a portion 
of the American Chemistry Council.
    Mr. Jefferies, I would like to begin with a few questions 
for you, and really about the intersection between rail and the 
ports. We are all familiar with the challenge with port 
congestion, and how that congestion can ripple through the 
ports onto the rail system. What has been the biggest cause of 
congestion [inaudible] in containers on the railroads, and how 
can the STB help address that?
    Mr. Jefferies. Thank you, Congressman. Either on my end or 
your end you broke up a little bit at the end of the question, 
so, I believe the question was about congestion at the ports, 
and supply chains, and what can be done to help address that.
    Mr. Auchincloss. I apologize, yes. What has been the 
biggest cause of congestion in moving containers onto 
railroads, and how can STB help address that?
    Mr. Jefferies. Sure, absolutely. So, I would say there is 
maybe not one cause. The supply chain challenges kind of run 
the gamut throughout the entire integrated supply chain, going 
from, whether it is a factory in Asia to the ocean carrier 
waiting off the coast to be able to be unloaded, trans-loaded 
to rail, and so forth.
    So, I think we are seeing a number of different issues, 
some of it at the port, some of it at the rail yard, although 
we have been able to work through a decent amount of it, and a 
lot of that is well documented. It is lack of short-haul 
truckers, it is lack of chassis. It was--and depending on where 
you are, still is--a breakdown of hours available to work.
    Railroads operate 24/7, always have, continue to, always 
will. Not every aspect of the supply chain works 24/7. We did 
see the news over the fall that the Ports of L.A. and Long 
Beach did expand, but we need a supply chain that is 
functioning at full throttle across the board.
    Warehouse space continues to be a major challenge. You have 
got to have a place to take containers once they get on to the 
rail. Once they get to the yard, you have got to have truckers 
to pick them up, you have got to have chassis for the container 
to go on. You have got to have a warehouse to take it to.
    And so----
    Mr. Auchincloss [interrupting]. But Mr. Jefferies, in 
particular, can you just talk about what you think the STB 
could do for any of these specific issues that you are raising?
    Mr. Jefferies. Sure. I think the STB and the administration 
writ large is taking the appropriate approach of getting people 
in the room together, and talking about what are solutions that 
interested parties can take, because most of this is private to 
private to private.
    Mr. Auchincloss. Right.
    Mr. Jefferies. And so, there has been some success there.
    Mr. Auchincloss. Yes.
    Mr. Jefferies. And that stakeholder engagement has been 
completely appropriate, in my opinion.
    Mr. Auchincloss. What is your view on on-dock rail, and 
what role do you think it can play in lessening future port 
congestion?
    Mr. Jefferies. I think it can play a very productive role, 
and certainly some of the port infrastructure programs that 
have come out of the infrastructure bill provide opportunities 
for additional buildout.
    Of course, most of the ports are public, or public-private 
partnerships. But when you are able to build out on-dock rail 
onto a spur, you can immediately put that on the train, versus 
going from ship to truck to train. You can take it inland into 
an intermodal yard, where it can be transferred, and get rid of 
some of that gridlock and traffic at the port itself.
    And frankly, that means more containers are going on train, 
versus going on truck. And we think that is a good public 
policy goal. It is more business for the railroads. It is more 
jobs for Mr. Pierce's employees and our employees. And it is 
good for environment, good for degradation, good for 
environmental justice, good for any number of things.
    Mr. Auchincloss. On this point about environmental efforts, 
can you expand more on how you are working to modernize freight 
rail with electric and hydrogen-powered locomotives?
    And maybe just take 15 seconds, because I--or 30 seconds, 
because I want to close with a question for Mr. Hildebrand.
    Mr. Jefferies. Absolutely, great question. So, railroads 
are exploring battery electric, hydrogen power, increased use 
of biofuels. You have seen reports of revenue service 
activities going on across different railroads. One railroad 
just bought 20 battery electric locomotives to use in 
switching.
    I will say the infrastructure bill includes a number of 
programs coming out of DOE that will provide funds for R&D and 
to furthering those objectives and those goals.
    It is going to be a long-term process, not overnight, but 
something we are all excited about, and it is going to be 
necessary in order to meet our emissions goals.
    Mr. Auchincloss. And Mr. Jefferies, would you be willing to 
follow up on the record with some more about what you are 
doing, as an industry, on that front?
    Mr. Jefferies. Absolutely. I would be more than happy----
    Mr. Auchincloss [interposing]. Great.
    Mr. Payne. Fifteen seconds.
    Mr. Auchincloss. All right. Final question: Mr. Hildebrand, 
is your organization updating your members about funding 
opportunities, including in the Bipartisan Infrastructure Law, 
for grade crossing improvement programs? And if not, will you?
    Mr. Hildebrand. I can't speak to that, I am sorry.
    Mr. Payne. The gentleman's time has expired.
    Mr. Auchincloss. I yield back.
    Mr. Payne. Now we will hear from Mr. Johnson for 5 minutes 
of questioning.
    Mr. Johnson of South Dakota. Thank you very much, Mr. 
Chairman. Let's start with Mr. Jefferies.
    Mr. Hildebrand, in his testimony, raised the issue that 
some commodities are exempt from a number of the STB 
provisions. He suggests there could be, every 5 years, a review 
of those exemptions. What are your thoughts, is that workable?
    Mr. Jefferies. Well, I would say there needs to be a 
demonstrated need for it. And right now, an entity can apply to 
have its commodity exemption revoked or removed. And so, that 
strikes me as the appropriate process for that.
    Exemptions are there for a reason, because there is a 
significant level of competition between modes, and unless 
proven otherwise, it doesn't make a lot of sense, in my 
opinion, at least, to just revoke those without cause.
    Mr. Johnson of South Dakota. And you just alluded to this, 
but just from an educational perspective, was the rationale--
because I think it was in the Staggers Act that these 
exemptions were allowed--is it that there was a high level of 
intermodal competition with this fresh dairy and fresh meat, 
those sorts of ag products?
    Mr. Jefferies. Right, it is competition-based.
    Mr. Johnson of South Dakota. Yes, very good. OK, so, how 
about for Mr. Hildebrand?
    Mr. Jefferies, in his testimony, suggested that new 
regulations by the STB could be subject to a cost-benefit 
analysis, as is the case with a number of other Federal 
agencies. Mr. Hildebrand, any reaction to that?
    Mr. Hildebrand. Yes. So, while, in principle, whatever 
happens should make reasonable cost-benefit analysis, and 
should clear certain hurdles, so, on a surface, not a big 
issue. But I think this is just the AAR trying to delay and/or 
prolong some of the things that the Board is trying to get 
accomplished.
    And if I may, real quick, about reciprocal switching, this 
isn't new in the United States, folks. This has been going on 
for many, many years. We are using it today.
    Mr. Johnson of South Dakota. Mr. Hildebrand, I am sorry, I 
have got to cut you off, because I think reciprocal switching, 
we have talked a lot about that today. I want to get to some of 
the areas that haven't been uncovered yet.
    I will give you an opportunity, Mr. Hildebrand, if you 
wanted to add anything more to what Mr. Jefferies said about 
your suggestion of doing the commodity exemption review every 5 
years. He suggested it was unnecessary.
    Mr. Hildebrand. We think it is very important that a path 
forward that is much easier than what is involved today to open 
up and remove exemptions is necessary.
    I mean, what do you have to lose, if you are trying to 
compete for business today? What are they hiding from? What are 
they afraid of?
    This should be a process that is allowed by the Board to 
bring things for the removal of an exemption.
    Mr. Johnson of South Dakota. A number of the witnesses 
talked a fair amount about the Final Offer Rate Review pending, 
or the rule promulgation by the STB. I don't know that we have 
had as much discussion, anywhere near as much discussion, on 
the voluntary arbitration process rule promulgation. And so, 
maybe we will start with Mr. Jefferies, and then go to Mr. 
Hildebrand, and then it can be an all-play with the time we 
have left.
    What do your all's organizations think about that pending 
rule?
    Mr. Jefferies. So, I think it is widely noted that several 
Class I railroads proposed a paradigm for an alternative 
dispute resolution program through voluntary arbitration for 
smaller rate cases. Recognizing that, the rate case process is 
less accessible for some smaller shippers.
    And we are encouraged that the Board reacted to that, and 
has put out a potential proposal that takes a lot of those 
ideas. I think the important thing is--and this aligns with STB 
Chairman Oberman's goals, as it allows private parties to work 
out disputes, and work out situations.
    Our challenge with the FORR proposal is that the STB is 
absolving itself of determining what the maximum reasonable 
rate is. It is either picking the rail suggestion or the 
shipper suggestion. And quite frankly, it usurps its own 
statutory authority, and it doesn't have statutory authority to 
be a baseball-style arbitrator.
    So, we think voluntary arbitration is appropriate. We are 
willing to make commitments. We are staying in the program, 
we----
    Mr. Johnson of South Dakota [interrupting]. And Mr. 
Jefferies, I have got to cut you off, because I do think that 
the FORR has been pretty well covered.
    Mr. Hildebrand, your thoughts on the voluntary arbitration 
process?
    Mr. Hildebrand. Yes. So, the problem with that one is that 
they want to keep it confidential. So, if you file one of these 
cases under this provision, it will never see the light of day. 
So, we will never see how many of these things are out there, 
what is the decision, what is the rationale. They want to keep 
this confidential. That is why we object to it.
    Mr. Johnson of South Dakota. So, you don't think that would 
be helpful to small shippers, and that is sort of the value 
proposition.
    Mr. Hildebrand. It will not be helpful, because I don't 
think we will use it. Why would we use it, if we don't know 
anything about what has happened before, what kind of decisions 
were rendered? People are not going to use it.
    Mr. Johnson of South Dakota. Thank you, Mr. Chairman. I 
will yield back.
    Mr. Payne. The gentleman yields back. I now have the 
gentlelady from Nevada, Ms. Titus, for 5 minutes.
    Ms. Titus. Thank you, Mr. Chairman.
    And let me say thank you to the railroad industry for your 
help in trying to get the supply chain problems in line. And 
you have been on the front lines yourselves throughout this 
pandemic, and we appreciate that. And you have done it while 
causing much less pollution than some of our trucking friends. 
So, thank you to the railroads for that.
    I have a question for Mr. Newman and Mr. Pierce.
    Mr. Newman, you mentioned in your testimony that current 
statutory provisions governing the STB's review of mergers is 
essentially rubber-stamped. And since the 1980s we have gone 
from 33 railroads to 7, and it may soon be 6. So, I would ask 
you how that process works, how those mergers have affected 
passengers.
    And then, Mr. Pierce, as we push for more profit for the 
railroads from Wall Street, how have these mergers affected our 
railroad workers, and what can we do, as we look to revise or 
reestablish or reauthorize this agency, to protect those 
workers?
    Mr. Newman. Well, thank you for the question, Congresswoman 
Titus.
    And with the--we have seen in the past, situations where 
the mergers have caused increased traffic, and therefore, 
delays. I mean, in some cases in the past there have been--
really were meltdowns as a result of the mergers. That really 
took quite a while for our passenger traffic to recover from 
those delays.
    So, our concern is that the STB have the ability to take 
the public interest into account, and ensure that the public 
interest standard is a component of the STB's review, as well 
as that the STB have the ability to make directives to ensure 
that passenger rail is able to operate successfully in the wake 
of mergers.
    Ms. Titus. Thank you.
    Mr. Pierce?
    Mr. Pierce. Thank you. I think, if you look back at the 
history of the big merger push of the late 1990s, there has 
[inaudible] said, there were multiple meltdowns, a lot of 
missteps in trying to integrate workforces, integrate what were 
once competing railroads into a single unit.
    With the two primary ones on the landscape coming forward 
with the CP/KCS and the CSX acquisition of Pan Am, we have been 
very involved with the STB about trying to make sure that the 
protective conditions that the STB has the right to impose are 
included in any decisions to make sure that the workers get a 
fair shake when it comes to how these railroads are merged into 
a single entity.
    Ms. Titus. Well, I am glad to hear that, because it is not 
all just about profit. It is about safety, as well.
    And speaking of safety, what about this tendency to put 
together small trains into one long train that is carrying 
mixed cargo?
    If there is a derailment or an accident, the exposure to 
the environment and to the people living nearby, as well as the 
people on the train--I don't know, Mr. Jefferies, do you want 
to address that?
    Mr. Jefferies. Sure. So, I think, when you look at train 
length versus incident, there has not been any correlation 
there. The leading cause of incidents is either human factors, 
track-caused incidents. In 2021, we had the lowest number of 
track-caused incidents in the history of the industry.
    But, I think it is important to note that, again, when 
train lengths are--massively vary in length, and over 90 
percent of trains operating on any given day are under 7,500 
feet long. Are there some that are longer? Absolutely. But 
railroads have the infrastructure, design the infrastructure in 
order to meet the needs of a train length, whatever that might 
be.
    Ms. Titus. Do you think it would make a difference in the 
length of train for the number of people who are working on 
that train?
    Mr. Jefferies. Well, Congresswoman, as you know, you are, I 
think, referring to efforts to mandate two people physically 
located in the cab of the locomotive at all times.
    Ms. Titus. Mm-hmm.
    Mr. Jefferies. We are vociferously opposed to that. We 
don't think it makes sense, from a safety standpoint. We 
proposed potential alternative models, where you have crew also 
stationed outside of the train along the right-of-way. Should 
there be an unplanned event, that crew person is there, with 
the tools necessary in order to investigate it.
    Also, working a planned schedule, predictable hours.
    My point being, I don't think it makes sense to mandate any 
sort of current operating paradigm in perpetuity into the 
future, because you never know what is going to evolve over 
time, in order to allow for innovation, competitiveness, and 
related. Thank you.
    Ms. Titus. Thank you.
    Mr. Pierce, you want to weigh in on that?
    Mr. Pierce. Yes, we----
    Mr. Payne [interrupting]. Quickly.
    Mr. Pierce [continuing]. We adamantly disagree with Mr. 
Jefferies on the safety aspects of two-person crews. The extra 
set of eyes and ears in the cab of locomotives is essential to 
a safe railroad operation, and there is no data that shows that 
assigning those employees on the ground is going to come with 
an equal level of safety.
    Ms. Titus. Thank you.
    Thank you, Mr. Chairman. I yield back.
    Mr. Payne. Thank you. The gentlelady yields back. Next we 
will hear from Mr. Nehls for 5 minutes.
    [Pause.]
    Mr. Payne. Mr. Nehls?
    Mr. Johnson of South Dakota. Sheriff, we can't hear you.
    [Pause.]
    Mr. Payne. We will go to Mr. Balderson.
    Mr. Balderson. Well, good morning, still--it is still 
morning. Mr. Chairman, thank you, and thank you all for being 
here. My first question is for Ian Jefferies.
    Mr. Jefferies, thank you. In your testimony you note, ``To 
remain competitive, railroads must earn sufficient revenues to 
continually make significant investments in infrastructure, 
equipment, training, and technologies,'' and that, ``If 
railroads are unable to make such infrastructure investments, 
there could be cascading impacts on the health of the rail 
network.''
    Can you expand on the unintended consequences that forced 
switching could have on the infrastructure investments your 
members make every year?
    Mr. Jefferies. Sure, I would be happy to, thank you. As 
this committee well knows, freight rail uses almost entirely 
its own funds to invest and grow and maintain its capital 
network. And when you have a potential switching regime that 
would require one railroad to open up its private assets to 
another at the behest of a shipper, it can result in a 
disincentive to maintain that network if you can't get a return 
on investment that supports continued investment. And that is 
not good for the rail network writ large, it is not good for 
most rail shippers. And quite frankly, it is not good for the 
highways, it is not good for the environment, it is not good 
for passenger rail.
    And so, our longstanding point is and will continue to be 
that we need a system that allows us to earn adequate revenues 
to invest back into the network. We have got to grow. Growth is 
absolutely key in order to meet the freight movement needs of 
this country today and into the future.
    And the STB has backstops in place. It has great dispute 
adjudication processes. It has service remedy options. Can they 
be improved? Perhaps. We have offered ways to streamline these 
processes. I know shippers have, as well. But let's improve 
what tools are there, versus continuing to add additional 
tools, ill thought-out tools, that will result in undermining 
the fluidity and health of the freight rail network.
    Mr. Balderson. Thank you for that. My next question is for 
Mr. Jahn.
    And I understand you and your members have different 
opinions on this issue than Mr. Jefferies and his members. But 
as rail customers and users, do you share any concerns that the 
proposed changes to reciprocal switching could impact future 
rail investments and their infrastructure or technology?
    Mr. Jahn. No. The short answer is no.
    So, look, competition drives investment in every sector of 
the economy, and that would be true here, as well. Railroads 
would have the incentive to earn its business going forward, 
and would have to invest and innovate, as our members do, in a 
globally competitive market. And so, we would be looking for 
the same thing to happen here, with this reciprocal switching 
proposal that has been pending for years at the STB, and 
already works effectively in Canada.
    Mr. Balderson. OK, thank you very much.
    Mr. Chairman, I yield back my remaining time. Thank you, 
both of you. I appreciate it.
    Mr. Payne. Thank you. Next we have the gentlelady from 
California, Mrs. Napolitano.
    Mrs. Napolitano. Thank you, Mr. Chair.
    Mr. Newman, we were just recently notified that Amtrak will 
continue to operate several long-distance routes and reduce 
frequencies through at least May, and likely into a peak summer 
season. We are told that Amtrak has insufficient staff and 
cannot operate 7-day service, as required by the American 
Rescue Plan Act.
    As Omicron recedes, and the Nation begins to travel 
substantially more in the summer, Amtrak needs to fully restore 
its most popular [inaudible] everyday service. What is holding 
Amtrak back, and what are they doing to restore full service as 
soon as possible?
    What methodology of recruitment are you using to bring back 
your laid-off employees and recruit new employees?
    Mr. Newman. Well, thank you for the question, Congresswoman 
Napolitano. And we are very much interested in getting our 
service back to full frequency as quickly as possible, as you 
stated, and, of course, to be able to operate safely.
    As you stated, we are, at the moment, challenged for staff, 
and we have really kicked up our recruiting efforts. We have, 
actually, long ago recalled all employees who were laid off. 
So, that is not our issue. But we have more than doubled the 
amount of our staff in talent acquisition. We have got stepped-
up efforts in recruiting at trade fairs, at trade schools. We 
have got referral incentives for employees to refer other 
employees so that we can get more folks on staff.
    As well as bringing in more people, we are also working on 
retention. So, we have got incentives to keep employees from 
retiring, and stay with us. So, while we would like to get that 
service restored--we definitely do want to get that service 
restored as quickly as possible----
    Mrs. Napolitano [interrupting]. How soon do you think----
    Mr. Newman [continuing]. It will take a bit of time.
    Mrs. Napolitano. How soon do you think you will restore the 
service?
    Mr. Newman. I think we will have better visibility here in 
the next month or two. As much as we are hiring, we also have 
got to get people through training, get equipment----
    Mrs. Napolitano [interposing]. I understand.
    Mr. Newman [continuing]. That needs to be checked, so----
    Mrs. Napolitano [interrupting]. Well, then would you mind 
letting some of us know, so that we can get the word out that 
you are recruiting?
    Mr. Newman. Yes, yes. Thank you. We can actually give you 
some good information on what we are up to, and we will keep 
you informed as we move forward. So, thank you.
    Mrs. Napolitano. Thank you very much. The next question 
will be for everybody.
    I have heard from businesses in my district that have been 
long customers of the railroad. My constituents' businesses 
have said railroad service has become less reliable and less 
efficient. The businesses contend the railroads don't provide 
on-time delivery and effective schedules they were used to for 
many years.
    The businesses also mentioned that, when they have customer 
complaints, railroads don't have enough customer service staff 
as they used to have to answer the questions.
    My question for all witnesses is, why is this happening?
    Mr. Haksteen. If I can answer the question--this is Herman 
Haksteen from the Private Railcar Food and Beverage Shippers 
Association--I believe it is happening because the railroads 
have reduced their workforce, and reduced their resources by so 
much that they are unable, simply unable to keep up with the 
current demand.
    And what your constituents are telling you is clearly 
evident in all the other facts, which is freight is moving from 
the rail to truck because the railroads can't service their 
customers.
    Mrs. Napolitano. Yes, and Mr. Jefferies, then----
    Mr. Haksteen [interrupting]. It is simply----
    Mrs. Napolitano [continuing]. Thank you very much. I am 
running short of time.
    But Mr. Jefferies, I understand from a report that you have 
less employees and you have more cargo than many years prior. 
Why haven't you been able to uptick your labor force?
    Mr. Jefferies. Well, certainly the past few years have been 
a challenge. We have been actively hiring across all crafts 
throughout the railroads and regionally, where appropriate, and 
continue to do that. And we will continue to work until we have 
the workforce that we feel is appropriate to meet demand out 
there.
    Talent is fiercely--there is fierce competition for good 
talent out there, and our workforce is highly skilled, highly 
trained, and we need folks that are up for the task and are 
willing and able to put in the time necessary, because it is an 
industry that requires a high level of dedication, skill, and 
commitment. And we are proud of the employees that we have, and 
we are always looking for more, especially today.
    Mrs. Napolitano. Well, Mr. Jefferies, same thing I told Mr. 
Newman. If you let us know that you have openings, we might be 
able to get you some recruits. Thank you.
    Mr. Jefferies. Thank you.
    Mrs. Napolitano. I yield back.
    Mr. Payne. The gentlelady yields back. We now have Mr. 
Stauber for 5 minutes of questioning.
    Mr. Stauber. Thank you, Mr. Chair, and thank you all for 
coming today to speak a little bit about your industries, and 
about how the STB reauthorization should look.
    As you all know, we are in a state of crisis when it comes 
to our supply chains and inflation. Each is tied to the other 
in many ways. So, there is no reason that a family should be 
stressed about how to feed their families as the cost of 
groceries continues to skyrocket, and we are met with bare 
shelves at the store. The shippers, the rail industry, and our 
union workforce is working to keep food on the table and get 
products across the country in a timely fashion.
    We know that the rail industry is one of the most efficient 
parts of our supply chain. However, we also know that 
Government regulation and overreach has made this job harder. 
Whether this falls within the STB reauthorization or not--and 
this question is for anyone--what could we do tomorrow to 
alleviate some of your biggest Government-related stressors 
that make your jobs more difficult?
    Mr. Stauber. Any of the panelists.
    Mr. Jefferies. I will take a first crack on that. I think 
it is all about modernizing the regulatory structure. And 
that--as I say, that might mean something to Mr. Jahn than it 
does to me, when it comes to the STB.
    But, operationally, we need to promote innovation, we need 
to promote technological deployment. That is going to result in 
more efficiency. That is going to result in a higher level of 
safety. It is not anti-worker. It is evolving the way that the 
business operates, in an appropriate way that allows it to 
maintain competitiveness.
    We need an economic regulatory regime that promotes 
investment that works for shippers where there is a market 
failure, and does so in a way that is timely and relatively 
less burdensome than it perhaps is today, yet grounded in core 
economic principles.
    Mr. Stauber. Thank you.
    Mr. Jahn. I would----
    Mr. Stauber. Anybody else want to take a shot at that? Go 
ahead.
    Mr. Jahn. Congressman, if I could, so, I would agree with 
Mr. Jefferies, that we do need to modernize and update the 
regulatory system. With all due respect, we have been trying 
for 40 years to make a broken system work. It is time to turn 
the page and try something new. In our view, that is reciprocal 
switching. That has been well discussed already.
    But the whole point under the Staggers Act is to increase 
competition among rail carriers. That is what we are trying to 
do here. So, that would be the immediate step that has been 
pending at the STB for 6 years now.
    Mr. Stauber. Thank you.
    Mr. Haksteen. If I can please add to that, this is Herman 
Haksteen.
    Getting effective oversight to make that competition to 
create a free=market-type environment needs to happen.
    And to your point, what can we do quickly? I think we need 
to remove some of the barriers so that the STB can give us that 
effective oversight.
    Mr. Hildebrand. And I would jump in real quick, if I may. 
Just streamline the processes we have to go through. If we are 
bringing up issues and/or concerns and/or problems, let's 
figure out how to streamline these things to make this more 
efficient for everybody.
    Mr. Pierce. Mr. Congressman, if I may----
    Mr. Stauber. Yes, go ahead.
    Mr. Pierce [continuing]. One of the challenges--we talk a 
lot about staffing. And even while Mr. Jefferies may be right, 
that certain railroads are having trouble finding employees, 
certain railroads still have people furloughed while they are 
forcing others to work more.
    Adding insult to injury, while you are offering incentives 
to hire, the Nation's Class I railroad employees have been 2 
years without a contract. They worked through a pandemic. The 
railroads are reporting record profits, and it is an insult to 
everyone that you are going to pay new employees more than the 
ones that got you through the crisis without a contract.
    So, there are all sorts of things that could be done to 
alleviate the staffing problems.
    Mr. Jefferies. Mr. Pierce is representing the ongoing 
collective bargaining process that both sides have been in and 
continue to negotiate in.
    Mr. Stauber. Well, thank you very much. I think that--go 
ahead. Was there another witness? Go ahead.
    Mr. Newman. Sorry, Congressman. Dennis Newman from Amtrak.
    And I was just going to say, from a little different 
perspective, from our standpoint, being able to have the 
funding at the STB for the passenger rail office so that 
efficient investigation of any performance issues that may be 
brought, I think, would be helpful.
    Mr. Stauber. Well, thank you very much, as my time winds 
down. I appreciate those comments, and it is something that I 
think colleagues on both sides of the aisle within this 
committee are hearing.
    So, I think that we need to work to alleviate some of these 
concerns, and just bring certainty to the industry. And I thank 
you all for participating today and sharing your knowledge and 
expertise.
    Mr. Chair, I yield back.
    Mr. Payne. Thank you. Next we'll hear from Mr. Lynch for 5 
minutes of questioning.
    Mr. Lynch. Thank you, Mr. Chairman. I really appreciate it.
    I, for one, I am very grateful to our rail workers, 
especially these last 2 years. It has been very, very 
difficult. They have been on the front lines, and they have 
performed magnificently on behalf of the American people in 
doing what they can to alleviate the supply chain problems that 
we have had.
    I am deeply disappointed in the layoff that we experienced 
early on. As a former union president myself, I can tell you, 
when you have layoffs in an industry, that is a red flag to 
anyone who is looking to begin a career in that industry, 
because it signals instability.
    And I also think that the rate of consolidation in rail has 
also limited our opportunity to attract more workers. They see 
Wall Street making more of the decisions to squeeze out 
employees. I think it has had a detrimental effect on the 
quality of life for those employees. And also, I worry about 
our ability to attract the next generation of rail workers.
    President Pierce, you have been--look, I have negotiated 
plenty of collective bargaining agreements during my career as 
an iron worker, and also as a labor attorney. Can you talk to 
us about the fact that we have lost so many skilled employees?
    Some of them are still furloughed, yet we have another 
effort of bringing new people into the industry. Can you talk a 
little bit about the perspective of our regular rail workers, 
and what they are dealing with on a daily basis?
    Mr. Pierce. Thank you, Congressman. I think it is a very 
critical part of what is wrong with the supply chain, and what 
is wrong with staffing.
    As I said, our membership has been--and this is all rail 
unions, this isn't just mine--they have all been without a 
contract for over 2 years, while the [inaudible] records made--
I mean, record profits. Every profit report that came out this 
spring has been best ever, and the employees see that. And the 
new people that want to go to work in a good industry see that.
    The continuing attack on the second person on the train, 
how do you hire conductors when you are telling them you want 
to get rid of them? That is counterproductive.
    Add to this these policies that the railroads are adopting 
as part of PSR, forcing workers to work more, taking over their 
family life at the expense of laying someone else off.
    It is absurd to me that there is any doubt as to why people 
are not interested in hiring out at the railroads right now. 
They are having a hard time, even at job fairs. Ten people take 
the job, only five show up when they find out what it looks 
like. And that is my job, that is our job, as unions, to try to 
improve on that. But we need a willing partner across the 
table. And for 2 years we have sat across the table with no 
willing partners to try to address these concerns.
    Mr. Lynch. Yes. I am not in on the negotiations, obviously, 
but you would think, with all of the money that we have 
collectively in Congress sent to our rail operators, that that 
inducement would encourage them to be a little bit more kind to 
our employees.
    And also, we have seen that on the passenger side in my own 
district, where we gave the rail authority in Massachusetts 
about $1.5 billion, and they turned around and laid off 50 
conductors. We got that turned around, belatedly. But there 
just seems to be a disconnect between what we are all trying to 
do and some of the policies that we have observed.
    From a safety standpoint, President Pierce, how important 
is it to have that second employee on that train, especially 
given the length of some of these trains?
    Mr. Pierce. I think it is critical. I think the second set 
of eyes and ears, the ability to, I think, address issues that 
happen on the fly--grade crossing accidents, derailments--these 
are things where the ground crew goes back in short order to 
make sure that we are addressing these catastrophes as fast as 
we can.
    There is no replacement for that, where you put someone on 
the ground in a truck, and he can even get to the remote 
locations that conductors walk to every day from the head end 
of a train that is out there, right where the accident occurs. 
So, it is just one of many ways.
    This is a cost-cutting mechanism. It is fewer people doing 
more work, and it has nothing to do with the safe operation, in 
our opinion.
    Mr. Lynch. Thank you very much. Well, I have family that 
are involved in rail, and they have got a long history there. 
And hopefully, you will have greater success. I just--I want to 
urge the rail operators to sit down and bargain in good faith 
with our brothers and sisters in the rail unions.
    Mr. Jefferies. May I comment quickly before----
    Mr. Lynch. Mr. Chairman, I yield back.
    Oh, I am sorry, sure, if I have time.
    Mr. Payne. Quickly.
    Mr. Jefferies. Very quickly.
    One, I am not the negotiator. We have a separate 
organization that does that. Of course, we are negotiating in 
good faith. That is a long, gradual process. It works well 
under the Railway Labor Act.
    Number two, even in 2016, under the Obama administration, 
there was a proposed two-person crew requirement. In the 
beginning of the rule it stated there is no data to show that 
this will improve safety.
    And three, just as a reminder, we don't take direct funds 
from the Federal Government. We are almost entirely privately 
financed, owned, and maintained. But your point is well taken 
there, and we certainly supported the infrastructure bill. 
Thank you for your time.
    Mr. Lynch. Thank you.
    Mr. Payne. Thank you. The gentleman yields back. And next 
we have Mr. Nehls for 5 minutes.
    Mr. Nehls. Thank you, Mr. Chairman.
    First off, I would like to thank all of you for being here. 
You can consider me a friend. I support the rail industry and 
appreciate everything you have done throughout this pandemic, 
and you do a great job for America. My question is really 
focused more to Mr. Newman.
    And I have a gentleman here. This is Special Agent Michael 
Garbo [indicating photograph]. Special Agent Garbo was killed 
on October 5th, 2021. He worked for the DEA. And he was 
searching an Amtrak train heading from L.A. to New Orleans when 
the train stopped in Tucson, Arizona. He was doing a search of 
that train and found some illegal substances, illegal drugs, on 
that train. And obviously, the suspect didn't like it and ended 
up getting in a firefight with Agent Garbo and took his life.
    This caused me to pause and look at security apparatus, the 
security on our rail system, and specifically Amtrak. And I 
believe that Amtrak lacks basic security protocols, making it 
appealing to drug traffickers and other criminals. And it is 
possible to board a train without ID, and take on bags without 
any sort of screening. And the reason I say that is I have 
staff and others that have jumped on an Amtrak train from DC 
here out to New York, and they have never been asked for an ID. 
They can buy a ticket, but they are not asked for an ID. As a 
matter of fact, they can take bags on that train, and none of 
those bags are scanned.
    And I think the American people would find this very, very 
difficult to understand, that when you jump on an airplane, 
they want everything but a blood sample, but you can jump on an 
Amtrak train and not need any identification whatsoever, and 
carry on bags without being scanned. And I find that very 
concerning.
    In the Infrastructure Investment and Jobs Act, Congress has 
allocated over $50 billion--with a ``b,'' $50 billion--to 
Amtrak. And Mr. Newman, you state in your testimony that Amtrak 
will use that funding to begin the modernization of Amtrak's 
assets and initiate significant expansion of Amtrak's route 
network. Could you tell the committee today if Amtrak is 
planning on using any of the $50 billion-plus to make basic 
security improvements, invest in the Amtrak police, or make the 
Amtrak experience safer for passengers by deterring crime on 
trains and in stations?
    Mr. Newman. Well, Congressman, thank you very much for the 
question. And the short answer is yes, so that the--some of the 
funding that was made available to us through the IIJA is 
available for us to use on modernizing and upgrading our 
systems, including our safety and security systems.
    And we similarly are very interested in making improvements 
in the safety and security of our trains. Our Amtrak Police 
Department cooperates and works extensively with Homeland 
Security, TSA, and Federal and local security authorities to 
make sure that we have got good cooperative practices in place, 
that we are well coordinated, and that we can do everything 
that we can to ensure the safety of your constituents, our 
passengers, and the traveling public.
    Mr. Nehls. But your current practice doesn't support that, 
because you can jump on a train from here to New York and not 
have an ID. True or false?
    Mr. Newman. You can jump on a train----
    Mr. Nehls [interrupting]. That is true. You can jump on a 
train without having an ID, because it takes place every day.
    Mr. Newman. We do have----
    Mr. Nehls [interrupting]. And you can jump on----
    Mr. Newman. [continuing]. Open access----
    Mr. Nehls [interrupting]. A train with bags, with bags 
loaded with drugs or whatever, you don't know what is in it, 
and you can jump on a train without having any bag scanned. 
That is true, too.
    Mr. Newman. That is similar to----
    Mr. Nehls [interrupting]. And you stated that you got the 
$50 billion, and that money could be used for safety and 
security enhancements, but you don't really have a plan in 
place.
    Well, I want to try to help you. I mean, I am concerned 
about America. I am concerned about our southern border. Mr. 
Newman, if you think about our southern border and the amount 
of substances and drugs coming through our southern border 
because we really have no border security, I think Amtrak is 
actually enabling the problem, because individuals with those 
drugs that get through our southern border can jump on one of 
your trains, and you don't need an ID, you can be Billy Bob, 
you can be anybody you want. You can jump on that train with 
your drugs, your substances, and move it throughout the entire 
country, because you're in several States.
    Mr. Newman. Congressman----
    Mr. Nehls [interrupting]. I think the American people 
should be concerned about this. I want to be proactive, instead 
of being reactive.
    Mr. Payne. OK, we----
    Mr. Newman [continuing]. Congressman, I would be happy to 
get you more information, and discuss with you, and hear your 
ideas, give you information about what we currently do, what 
security practices we have in place, and talk about----
    Mr. Nehls [interrupting]. So, my last comment is that I am 
drafting legislation and I want to work with you. It is called 
the Passenger Rail Security Improvements Act of 2022, and I am 
planning on introducing it this month. That would improve 
Amtrak's ticketing and baggage processes to make it more 
difficult to bring illegal drugs on board. It is not going to 
inconvenience your riders or hamper Amtrak's operation, but I 
think it is important that Amtrak uses the resources it has 
been given to modernize its security. So, I want to work with 
you on this.
    And so, would you like to sit down with me at some point in 
time, and talk about this legislation?
    Mr. Newman. Yes, sir. We would be happy to.
    Mr. Nehls. That is great.
    Mr. Newman. We would welcome that.
    Mr. Nehls. We will be reaching out to you. Thank you, Mr. 
Newman.
    Mr. Payne. The gentleman's----
    Mr. Nehls [interrupting]. I yield back.
    Mr. Payne [continuing]. Time has expired.
    That concludes the hearing for today. I would like to again 
thank each of the witnesses for your testimony today.
    I ask unanimous consent that the record of today's hearing 
remain open until such time that our witnesses have provided 
answers to any questions that may have been submitted to them 
in writing, and that my opening statement be put into the 
record, as well.
    [Hon. Payne's prepared statement is on pages 75-76.]
    Mr. Payne. I also ask unanimous consent that the record 
remain open for 15 days for any additional comments or 
information submitted by Members or witnesses to be included in 
the record of today's hearing.
    Without objection.
    This brings the subcommittee to adjournment.
    [Whereupon, at 12:12 p.m., the subcommittee was adjourned.]



                       Submissions for the Record

                              ----------                              

 Prepared Statement of Hon. Donald M. Payne, Jr., a Representative in 
   Congress from the State of New Jersey, and Chair, Subcommittee on 
             Railroads, Pipelines, and Hazardous Materials
    Good morning.
    As we approach the reauthorization of the Surface Transportation 
Board, today is an opportunity to hear from stakeholders and to 
determine what, if any, additional authorities are needed to improve 
rail service across the country.
    The STB is a unique federal agency that is the primary economic 
regulator of freight railroads.
    Among other powers, it can set maximum rates that freight railroads 
can charge shippers in response to complaints, and has the exclusive 
authority to approve mergers between railroads.
    Shippers play a critical role in the national supply chain by 
making the goods being transported across the country.
    For instance, in my district alone, there are shippers who produce 
everything from plastics to orange juice, automotive components, and 
other critical goods that are used by Americans every day.
    Shippers rely on the STB to resolve disputes with railroads, and it 
is critically important that STB has the tools necessary to keep cargo 
moving.
    I, myself, have asked the STB for help with the railroads on behalf 
of small shippers in my district, especially those who are minority and 
women-owned and may be not as large as their competitors, that need a 
level playing field to bring rate case challenges before the STB.
    Currently, those who wish to bring rate challenges in most cases 
must use an archaic method of creating a hypothetical railroad to prove 
that a rate charged by a railroad is unreasonable.
    This methodology is time consuming and expensive, with the STB's 
Rate Review Task Force concluding in April 2019 that many small 
shippers find rate cases too complex and costly to pursue.
    This is further evidenced by the fact that since 1996, there have 
only been 51 rate cases brought before the STB and zero in the last 
three years.
    Based on the stories we will hear today of the frustration shippers 
have with their railroad service, zero official complaints does not 
mean everything is fine.
    Rather, there is a barrier to smaller shippers being able to bring 
these challenges.
    I have made it a priority of my Chairmanship of this subcommittee 
to remove barriers that minority and women-owned businesses face in the 
rail sector.
    Having an archaic rate challenge process that primarily benefits 
the railroads does not sound right to me.
    I commend the STB for beginning to take action to make other 
options available and will be exploring legislative options to make STB 
oversight more accessible.
    Another issue that I am concerned about is the use of Precision 
Scheduled Railroading, or PSR, by freight railroads.
    This practice claims to make railroading more efficient by running 
fewer trains, but I have significant concerns that it reduces safety by 
cutting the number of workers and creating very long trains that can 
stretch for a mile or longer.
    According to the STB, at the end of last year, the Class I railroad 
workforce was nearly a third less the size it was in 2015.
    This reduction in workforce came, largely before the COVID-19 
pandemic struck, and its weakness was on display at a very inopportune 
time.
    Instead of having a robust and flexible workforce to absorb supply 
chain disruptions, PSR apparently created its own worker shortage when 
workers were needed the most.
    In 2019, this committee held a shippers roundtable where shippers 
expressed concerns that PSR could impact service reliability and 
ultimately question railroads' ability to meet common carrier 
obligations.
    Chairman DeFazio and I have requested a GAO study on the effects of 
PSR. I am eagerly awaiting the results of the study.
    These are only a few of the issues that will come up at today's 
hearing.
    One other specific issue I would like to hear more about is 
feedback on the STB's efforts to enforce Amtrak's legal right to access 
so we can develop more intercity passenger rail corridors as we 
discussed in this committee in December and Amtrak's preference on 
railroads so that Amtrak trains can run on-time.
    It is my hope to hear from witnesses about all the things the STB 
is doing right and how Congress can further enhance its authorities to 
ensure that freight railroads are meeting their legal obligations.
    I thank the witnesses for being here today and I look forward to 
their testimony.

                                 
  Prepared Statement of Hon. Sam Graves, a Representative in Congress 
     from the State of Missouri, and Ranking Member, Committee on 
                   Transportation and Infrastructure
    Thank you, Chair Payne, and thank you to our witnesses for being 
here today.
    The STB exercises authority over railroad commercial practices, 
including shipping rates and disputes between shippers and carriers.
    This year alone, the STB has before it multiple important issues, 
including a proposed rule on reciprocal switching and a proposed merger 
of two Class One railroads, as well as the potential resumption of 
Amtrak service on the Gulf Coast.
    The Surface Transportation Board Reauthorization Act of 2015 was 
the STB's first authorization in almost 20 years, and authorized 
funding through fiscal year 2020.
    Despite not being reauthorized, the STB has continued to receive 
funding through continuing resolutions. The FY 2022 appropriations bill 
passed last year would provide a full year of funding for the agency.
     It is important to hear from stakeholders on ways that the STB can 
be improved to meet their needs and to operate efficiently and 
effectively in the coming years.
    I look forward to hearing more from our witnesses on these issues.
    Thank you, Chair Payne. I yield back.

                                 
 Statement of the Brotherhood of Maintenance of Way Employes Division/
 IBT; Brotherhood of Railroad Signalmen; International Association of 
Sheet Metal, Air, Rail and Transportation Workers Mechanical Division; 
and National Conference of Firemen and Oilers, 32BJ/SEIU, Submitted for 
                the Record by Hon. Donald M. Payne, Jr.
    The Brotherhood of Maintenance of Way Employes Division/IBT; 
Brotherhood of Railroad Signalmen; International Association of Sheet 
Metal, Air, Rail and Transportation Workers Mechanical Division; and 
National Conference of Firemen and Oilers, 32BJ/SEIU \1\ commend the 
Subcommittee for holding hearings concerning reauthorization of the 
Surface Transportation Board. With the railroad industry suffering from 
the Class I railroads' implementation of their new cost-cutting 
business model (which includes so-called ``Precision Scheduled 
Railroading'') the holding of hearings on STB reauthorization is indeed 
timely. The STB is the agency charged with overseeing and regulating 
railroads and enforcing certain statutory rail service requirements, 
but as the statute is currently written, the STB is not well-equipped 
to adequately perform those functions in the context of the new 
operating model.
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    \1\ These unions represent railroad workers employed in various 
rail industry craft and classes on all of the Class I freight 
railroads; and on Amtrak, commuter railroads, and short line and 
regional railroads. In particular, BMWED and BRS represent railroad 
employees who construct, inspect, maintain and repair railroad track 
and right of way, bridges and structures; signal and communication 
systems; SMART MD and NCFO represent railroad employees who inspect, 
maintain, repair, and fuel locomotives and perform other work in rail 
shops.
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                               I. Summary
    In recent years, the Class I railroads have changed the way they 
operate trains, interact with shippers, maintain their property and 
equipment, and staff their operations. Part of this derives from 
implementation of so-called Precision Scheduled Railroading (``PSR''); 
but the changes have been made organization-wide. There is an across-
the-board effort by the railroads to reduce operating ratios (operating 
expenses as a proportion of operating income--lower ratios yield higher 
profits) to historic lows by ruthlessly cutting costs (and thereby 
dramatically increasing profits, shareholder value, and executive 
compensation). During this period, shipper complaints escalated, and 
communities expressed concerns about reductions in service and longer 
trains. Reductions in employment have exacerbated the service problems 
caused by the new business model. Congress should move expeditiously to 
reauthorize the STB; in doing so, Congress should clarify and better 
define the common carrier obligation and ensure that the Board has the 
tools and resources to enforce that obligation.
     II. Effects of the New Business Model on Employees and Service
    Since 2015, Class I employment has been reduced by about 30%. In 
addition to furloughs that have dramatically reduced the size of the 
work force, railroad workers are retiring earlier than the planned and 
are quitting mid-career at unprecedented rates; and furloughed workers 
are declining recalls because they know that once the railroad has 
cleared whatever backlogs it has, or handled any surge in demand, they 
will be furloughed again, because the new business model dictates a 
minimal work force. Before implementation of the new business model, 
furloughed employees rarely declined recall to service. And employees 
with 8, 10, 15 years of service rarely quit; now that is commonplace 
because the jobs have been degraded by the railroads, as the workers 
are told to do more with less, are pressured to cut-corners on 
inspection and maintenance, and are being required to work frequent and 
consecutive double-shifts because the railroads are having difficulty 
hiring and retaining workers.
    Lately, as they are criticized for their service, the railroads 
have tried to use the pandemic and tightness of the labor market 
generally to explain the worker shortages. This is a canard. The work 
force was substantially reduced before the pandemic. First the 
railroads ruthlessly cut junior workers (the future of the industry) 
then they ran off many senior workers \2\. The railroads also reduced 
the work force even more during the pandemic. Employment is down 20% 
since the start of the pandemic but carloadings are only down 3%; in 
essence 80% of the pre-pandemic work force is responsible for moving 
and supporting movement of 97% of the pre-pandemic freight. As a result 
profits are up 8%. So the Class I's continued to cut employment in 
excess of reductions in traffic and thereby again increased profits. 
The recently announced record profits are not the result of growth or 
better railroading, but of reducing costs.
---------------------------------------------------------------------------
    \2\ One Class I railroad chief operating official told a group of 
union officers that anyone who complains that they cannot properly do 
their job with the workload assigned to them is probably in the wrong 
business.
---------------------------------------------------------------------------
    The railroads claim that are trying to hire, but their hiring can't 
keep up with the departures of senior workers who are fed up with their 
conditions of employment. So the carriers have been unable to increase 
their workforces from the rock bottom levels they reached as demand 
increased and service problems followed. And even if they could hire to 
keep up with the numbers of departing workers, they would be replacing 
experienced, skilled workers with trainees. The railroads also complain 
that they are hiring but new hires are leaving after a few weeks. They 
say that don't understand why that is happening or criticize the work 
ethic of younger workers. But they fail to acknowledge that they have 
degraded jobs that were once ones people aspired to; and that they have 
assigned workloads and schedules that people find intolerable; all 
while they refuse to increase employee compensation and benefits. The 
worker shortage the Class I's face is entirely of their own making. The 
excuses and prevarications they offer are disingenuous and should be 
disregarded.
    As common carriers, it is the responsibility of the railroads to 
maintain work forces sized to be sufficient not only for when 
everything is going well, but also when frequently encountered, and 
infrequent but anticipatable, events occur (such as snow, polar 
vortexes, heavy rains, seasonal demand like harvest time in the Fall 
and demand for petroleum products in the Winter). That means having 
enough Signalmen to respond to malfunctioning crossings and switch 
engines; enough Maintenance of Way employees to respond to right of way 
washouts, track obstructions and heat-buckled rails; enough shopcraft 
workers to do complete inspections and maintenance of equipment, 
especially when fleets of locomotives and cars have been reduced and 
much equipment has been mothballed; enough Dispatchers to handle all 
train movements, particularly as the railroads run longer trains and 
pack more cars into the same physical space; and enough operating 
employees so when there are delays which cause train crews to reach 
their Hours of Service limits, there are backup crews that can continue 
to move the trains to customers, and enough yard and local crews to 
bring cars from terminals to shippers.
    The reductions in railroad workforces have dramatically affected 
the ability of the Class I railroads to meet reasonable customer 
demands for service--after all, it is the workers who provide and 
support the service. The railroads claim that all is fine, that their 
service has never been better. But their workers know it is not; and 
the cascading shipper complaints refute the railroads's contentions. In 
their filings with the STB, shippers have related their problems to job 
cuts by the Class I's. Shippers have cited reductions in yard and local 
crews (who do the actual pickup and delivery of cars in and near 
terminals), and the long trains which mean more cars being managed by 
fewer employees. They also complain about more bad order cars that 
result from less rigorous inspections and that there is no longer 
anyone they can contact regarding service issues. Shippers from whom 
the railroads cannot reap maximal profits face steeper costs when 
shipping by rail, or are subjected to service conditions or 
requirements that discourage them from using rail transportation, even 
if they have structured their businesses to ship by rail. These are not 
shippers who can only be served at a loss; the railroads can make a 
profit serving these shippers, just not the level of profits desired by 
Wall Street. This is at odds with the common carrier obligation and the 
prior business model, where railroads sought to grow the business and 
increase profits by increasing revenue. Now the goal is to shrink the 
business and cut costs.
    The STB has sent letters to railroads seeking explanations for 
service problems and initiated several proceedings related to service 
problems and shipper complaints. The unions cannot recall any like 
inquiries or proceedings in the 15 years between complete 
implementation of the major merger and control transactions and 
adoption of the new business model.
              III. What Exactly Is the New Business Model?
    The new business model is based on extensive across-the-board cost-
cutting to reduce operating costs in derogation of the railroads' 
common carrier obligations, and without regard to the impact of the 
strategy on employees or the quality of service to customers. Adoption 
of this approach is not driven by railroading imperatives or a desire 
to grow the business. It is driven by finance interests; by corporate 
officers, shareholders, predatory hedge funds and so-called 
``activist'' investors who seek to extract value from these essential 
enterprises. This is readily apparent because adoption of this model 
was first promoted by investors at CP and CSXT (Pershing Square, Mantle 
Ridge) who installed Hunter Harrison to implement the cost-cutting 
business model. This business model was initially rejected by US rail 
managements (NS fought a hostile takeover by CP, the CSXT Board 
resisted until Mantle Ridge was able to install its Directors, BNSF's 
Matt Rose mobilized the industry against the CP takeover of NS and 
famously resisted the model as bad for the industry--instead he 
advocated growth). The so-called ``activist investors'' who promote the 
new model do not want to increase profits by ``growing the business''. 
They want to increase the profit margin and are happy to shrink the 
business and limit their customers to those that can be served most 
profitably.
    While the railroads refer to their new way of doing business as a 
new mode of operations called Precision Scheduled Railroading, PSR is 
just one aspect of the larger cost-cutting business model. This is 
demonstrated by the overall reduction in engineering forces 
(Maintenance of Way workers and Signalmen) who inspect, maintain and 
repair the tracks, rights of way, structures and signal systems. If PSR 
was just a change in operations, it would not involve a reduction in 
engineering forces. Nor would it lead to a reduction in the number of 
Dispatchers whose jobs in juggling the movements of longer trains have 
become more complicated, not less complicated. The overall reduction in 
inspection and maintenance of the tracks, right of way, structures, 
signal system, and equipment (locomotives and cars) is not related to 
changes in operations. Maintenance of way and signal territories have 
been expanded as the engineering work force has been reduced; 
Maintenance of Way workers and Signalmen report that they are hard-
pressed to do all the inspection and maintenance work required for 
their territories and that they have been required to defer needed 
repairs. Locomotive Mechanics and Carmen report that they are being 
rushed through inspections of locomotives and cars, with railroads 
moving equipment out for service before inspections are completed. 
These changes have nothing to do with efficient operations and 
everything to do with cost-cutting to boost profits.
    Thus, PSR itself is not the problem; it is a symptom of the 
problem. PSR is just branding. It is designed to sound scientific, but 
it is just brutal cost-cutting. It is not ``precise'' it is just 
forceful; it is really inflexible scheduled railroading. It converts a 
model where the railroads as common carriers worked with their 
customers (the shippers) on pickups and deliveries, to one where the 
shippers have to conform their operations, their work days, their 
organization of supplies in and product out, to the railroad's 
preferences and algorithms. The industry has gone from a ``customer 
service'' model to a ``customer serves us'' model. PSR then is just a 
manifestation of a business model designed to extract value from the 
railroad for the benefit of its shareholders to the detriment of 
customers and employees, and long term to the detriment of railroads 
themselves once the so-called ``activist investors'' move on.
                        IV. How Did This Happen?
    The changes in the industry occurred as a result of the combination 
of extreme deregulation followed by industry consolidation authorized 
by the STB. The Staggers Act and ICC Termination Act substantially de-
regulated the railroads, but the ICC/STB then authorized consolidations 
of the major railroads. The result was two major carriers east of the 
Mississippi, two major carriers west of the Mississippi and two 
carriers running down the center of the country. All of these 
transactions were expressly authorized by the ICC and STB as ``in the 
public interest''.
    In approving the major merger and control transactions of the 1990s 
that reduced the number of Class I carriers to a mere handful, the ICC 
and STB relied on Staggers Act amendments and the de-regulatory 
mandates of the Staggers Act and ICCTA. Those transactions were 
approved based on the notion that shippers and the public would benefit 
from the consolidations. The railroads asserted, and the ICC and STB 
agreed, that the mega-carriers would provide better and faster service 
through longer-end-to-end runs, reduced interchanges, and greater 
system velocity; that efficiencies would be achieved that would result 
in savings that would be passed along to shippers and the public in 
general; and that the economies of scale available to larger carriers 
would allow for increased investment in rail infrastructure.
    In the post-Staggers minimal regulation environment, after the big 
merger and control transactions were consummated, the profits of the 
new mega-carriers soared. And for a while, the railroads followed-
through on their representations that service would improve, and 
infrastructure investments would increase. But several years ago, hedge 
funds and private equity interests took note of railroad profitability 
and the very light nature of the regulatory regime.
    Once the finance interests realized that they could take control of 
these railroads and drive operating ratios down without loss of 
business, or a regulatory response, they forced implementation of 
policies to drive down costs and increase earnings for short term 
gains. As rail carriers that pursued this path saw their operating 
ratios decline, and their stock prices increase, other railroads 
adopted similar business models. Shipper complaints escalated. The STB 
held hearings and tinkered with complaint programs, but it seemed to be 
of the view that there was little it could do under the post-Staggers 
de-regulatory regime.
    So the problems with the new business model are a feature, not a 
bug. Shippers, communities, legislators, and employees are distressed 
and looking for solutions. A key question is: whether the public 
interest is being served as envisioned in the merger and control 
decisions under the carriers' new operating model? The unions submit 
that the answer is plainly--no. The unions signatory to this statement 
believe that Congress, should recognize that the consequences of the 
combination of deregulatory drift, and government approval of the 
transactions that created the current mega-Class I carriers, require 
changes to the STB and the statute it administers so they are 
appropriate for the industry that exists today, not the industry that 
existed in 1980 or 1996.
                           V. Recommendations
    The Unions recommend that Congress move as quickly as possible to 
reauthorize the STB. In doing so Congress should clarify and better 
define the common carrier obligation, and bolster the STB's ability to 
enforce that obligation. The common carrier obligation is about 
service; it requires provision of reasonable and adequate service; but 
it is a somewhat amorphous concept rooted in British common law. 
Clarifying and fleshing out the obligation will benefit all industry 
stakeholders. First and foremost, shippers will be able to measure 
railroad performance against some more definite criteria, and they will 
be better positioned to pursue complaints of poor service. Railroads 
will benefit because they will have a better sense of their service 
obligations and will be able to resist forces pushing for relentless 
cost-cutting by citing more clear statutory service obligations. And 
rail workers will benefit because a pendulum swing back to more of a 
customer service philosophy will mean increased employment and an 
emphasis on working well and conscientiously, rather than fast and 
within constraints inconsistent with good railroading. Congress should 
also make sure that the Board has the tools and the staff necessary for 
it to perform its function of ensuring that the service provided by 
railroads satisfies the common carrier obligation; and that service is 
consistent with the commitments made by the railroads, and with the 
service expectations of the Board and the public when the Board 
approved the merger and control transactions that created the mega-
carriers we have today.
    The Class I railroads will likely charge that the modest measures 
proposed by the Unions will recreate the regulatory regime of the 1970s 
that they blame for damaging the industry. But the pre-Staggers 
regulatory regime was not the proximate cause of the harm to the 
railroads. Government creation of the interstate highway system and 
government support for the aviation system were the principal causes, 
and the effect of those policies then rendered a rail regulatory regime 
designed when there was no modal competition with railroads, and in 
response to railroad domination of transportation, inappropriate for 
the times. Additionally, the recommendations of the Unions concerning 
STB reauthorization would not reinstate the heavy regulatory regime 
that existed pre-Staggers. The Unions only propose clarification and a 
more detailed description of an existing statutory obligation. And just 
as it would be inappropriate to recreate the statutory environment of 
the 1940s-1970s, it would be inappropriate to retain a statutory 
environment designed in 1996, when the industry today is much different 
from the one that existed prior to the big merger and control 
transactions that made the industry what it is today.
    The Class I's will also presumably argue, as they have elsewhere, 
that Congress and the Board should not involve themselves in service 
issues, that these problems can all be resolved in the ``marketplace''. 
But the Class I railroads are not actors in a free and open market. 
Today's Class I's are duopolies that exist as a result of ICC/STB 
approvals of consolidations of previously separate carriers. The merger 
and/or control transactions that created every one of the Class I 
railroads required ICC or STB approval based on findings that the 
transactions were consistent with the public interest. Furthermore, 
ICC/STB approval of those transactions came with exemption from anti-
trust law and all other laws (including the Railway Labor Act) as 
``necessary'' to the ``carry[ing] out'' of those transactions. 49 
U.S.C. Sec. 11321. It should be remembered that the current Class I 
railroads would never have been allowed to come into existence (and 
never would have been able to ignore anti-trust restrictions and 
Railway Labor Act requirements) if the railroad industry existed in the 
sort of open market environment the railroads pretend they are part of 
when they protest any plan for the STB to respond to service issues.
    When the railroads conjure the specter of failing railroads as a 
result of clarifying, and delineating elements of, the existing common 
carrier obligation, it should be noted that between 2004 and 2020 
profits for the Class I railroads increased by 536%, stock prices for 
the three publicly traded Class I's increased by 1046%, with 
shareholder return on investment up 1374%. And since 2007, the publicly 
traded carriers have spent over $72 billion for stock buy-backs. Over 
this same period, wages have increased only 56% (14% adjusted for 
inflation). Rates for shippers have increased over that same period, 
but they are still below pre-Staggers and 1990s rates in real dollars. 
(Rail compensation since 1980 is up less than 2% in real dollars). And 
Union Pacific recently told investors that it just had its best year 
ever; BNSF this past week announced that its last year produced record 
profits. So, any alarms from the Class I's about potential disaster if 
their service obligations are clarified and the common carrier 
obligation better enforced should not be credited.
    Finally, there are some who argue that the current problems can and 
should be remedied by competitive fixes, like reciprocal switching. But 
such changes would have the effect of undercutting existing collective 
bargaining agreements; and they would not even work as desired in the 
real world of railroad operations. But, even if the optimistic 
assumptions of proponents of required reciprocal switching are 
realized, that will have only minimal impact on the overall problem of 
decline in the quality of rail service. Instead, the railroads should 
be accountable to provide the quality of service historically required 
of, and provided by, rail common carriers; the quality of service that 
was promised in the mega-merger and control transaction applications of 
the 1990s, assumed in the ICC/STB decisions approving those 
transactions, and that existed prior to the railroads' implementation 
of the new cost-cutting business model. Rather than restructuring the 
industry or statutorily mandating rules that would alter products of 
transactions that were deemed to be in the public interest, Congress 
should clarify existing service requirements and give the STB the 
resources to see that the service provided by the Class I's is 
consistent with the common carrier obligation and with what was 
promised when the big merger and control transactions were authorized.
        Respectfully,
           Brotherhood of Maintenance of Way Employes Division/IBT.
                                 Brotherhood of Railroad Signalmen.
           International Association of Sheet Metal, Air, Rail and 
                        Transportation Workers Mechanical Division.
              National Conference of Firemen and Oilers, 32BJ/SEIU.

                                 
 Letter of March 4, 2022, from Sean O'Neill, Senior Vice President of 
  Government Affairs, Portland Cement Association, Submitted for the 
                  Record by Hon. Donald M. Payne, Jr.
                                                     March 4, 2022.
The Honorable Donald Payne,
Subcommittee Chair,
Railroads, Pipelines, and Hazardous Materials Subcommittee, Washington, 
        DC 20515.
The Honorable Rick Crawford,
Subcommittee Ranking Member,
Railroads, Pipelines, and Hazardous Materials Subcommittee, Washington, 
        DC 20515.
    Dear Subcommittee Chair Payne and Ranking Member Crawford:
    The Portland Cement Association (PCA), which represents the 
majority of U.S. cement manufacturers, appreciates the opportunity to 
submit a statement for subcommittee's hearing entitled Stakeholder 
Views on Surface Transportation Board Reauthorization. We welcome the 
occasion to share the perspective of our members on rail operations and 
interactions with the Surface Transportation Board (Board).
    Portland cement is a manufactured powder that is the primary 
ingredient in concrete. Portland cement acts as the bonding agent in 
concrete, similar to the role of flour in cake mix. As an essential 
construction material and a basic component of our nation's 
infrastructure, portland cement is utilized in virtually all 
construction applications, including highways, streets, bridges, bike 
lanes, mass transit, airports, schools, offices, homes and other 
commercial and residential buildings, dams, and water resource systems 
and facilities. The low cost and universal availability of portland 
cement ensures concrete remains one of the nation's most essential and 
widely used construction materials.
    Approximately 87 million metric tons of cement were produced 
domestically in 2020 at the 100 cement manufacturing plants in 34 
states.\1\ There are distribution centers in almost every state. That 
volume will continue to grow as the economy recovers from the COVID-19 
pandemic as well as seeks to implement the substantial levels of 
investments made by the Infrastructure Investment and Jobs Act.
---------------------------------------------------------------------------
    \1\ https://pubs.usgs.gov/periodicals/mcs2021/mcs2021-cement.pdf
---------------------------------------------------------------------------
    The cement industry is regional in nature. Most cement 
manufacturing plants are located near large limestone deposits, the 
principal ingredient in producing portland cement. In recognition of 
the regional nature of the cement industry, it is critical that there 
are reliable and cost-effective transportation options. The average 
cement shipments range between 250 and 300 miles. Truck transportation 
is not economically viable beyond 100 to 125 miles. As such, the cement 
industry relies on railroads to deliver our product to the marketplace 
beyond the economical range of trucks. Several cement plants also have 
access to water transportation for domestic shipments. These plants 
look to barge, rail and trucks to transport their product. In summary, 
domestic cement manufacturers have historically relied heavily on rail 
transportation to move the majority of shipments between cement plants 
and distribution terminals, and that reliance has only grown in the 
recent years.
    Most bulk cement shipments are from the manufacturing plants to the 
more than 300 regional distribution terminals, where the cement is then 
delivered by truck to the distribution network consisting primarily of 
local contractors and ready mixed concrete producers. It is critically 
important to PCA members that the railroads provide reliable, 
efficient, and cost-effective service to meet the widespread and 
growing demand for our product. What is critical to note is that eighty 
percent of cement manufacturing plants are captive to a single 
railroad. Due to the absence of competition, these plants are charged 
substantially higher rates and often receive less reliable service. 
Conversely, cement plants served by more than one railroad generally 
have lower rates and more reliable service.
    PCA members almost universally experienced a decline in rail 
service when Class I railroads moved to precision scheduled railroading 
(PSR). With challenges already facing the logistics of consistent 
service, this shift has resulted in a significant increase in missed 
switches and increased demurrage billings. This has led to increased 
costs to cement manufacturers not only through increased demurrage but 
lost sales. One single anecdotal example represents the potential 
magnitude of this difficult situation. Due to poor rail service to one 
terminal location, a specific shipper lost between 60,000 to 100,000 
tons of annual volume. This amount would be enough to build as many as 
3,000 standard-sized homes. Many of our members have seen their rail 
service further decline over the last two years with staffing cuts and 
challenges associated with the COVID-19 pandemic. While large parts of 
the economy were impacted by the various restrictions, construction in 
many cases remained in place as an essential activity, and in some 
cases volumes and demand increased as projects were accelerated due to 
reduced traffic levels. Coupling a reduction in service through 
staffing, PSR and continued or increased demand, has left cement 
shippers in some very difficult situations.
    Compared to other commodities shipped by rail, cement is a small 
percentage of any Class I rail carrier's business. None of our members 
can put together a whole train of cars for shipment. PCA members point 
to this as contributing to the especially poor rail service they 
experience, which is patently inequitable. Class I rail carriers should 
provide the same service to all customers, and this is something the 
Board should recognize in rulings taken related to smaller shippers.
    Under law, the Board has the authority to exempt a person, class of 
persons, or a transaction or service from the protections of the 
statute. Of note, hydraulic cement has been exempted from Board 
oversight for nearly 27 years.\2\ In making the exemption decision, the 
Board noted that the transportation of hydraulic cement was 
competitive, with intramodal, intermodal, and geographic competition 
existing in many markets. At the time, the feeling of the Board was 
that rates were at competitive levels.
---------------------------------------------------------------------------
    \2\ Rail General Exemption Authority--Exemption of Hydraulic 
Cement, Ex Parte No. 346 (Sub-No. 34) (ICC served July 26, 1995), 1995 
WL 438371 at *4 (``Hydraulic Cement Exemption Decision'').
---------------------------------------------------------------------------
    However, in the more than quarter century since this exemption went 
into effect, the combination of vigorous competition both within the 
rail industry and between different modes of transportation has 
diminished to the point of irrelevance. Over this time, cement 
manufacturers have unfortunately become increasingly dependent upon 
rail transportation. Much has changed in the cement industry with 
significant energy improvements at production facilities. For example, 
in 1974, there were 179 cement manufacturing plants compared to the 
approximately 100 today. In 1974 the average capacity of a cement plant 
was 500,000 tons annually compared to one million tons currently. This 
demonstrates that while the cement industry continues to be regional in 
nature, the distance our members are shipping their product has 
increased and has led to greater reliance on Class I railroads to meet 
these shipping needs.
    Under statute, the Board is given the authority to oversee freight 
railroads' rates and practices under circumstances specified in the 
statute. Due to the exemption of Board oversight for hydraulic cement, 
cement manufacturers are not able to take advantage of this oversight. 
For more than ten years, the cement industry has been involved in a 
case petitioning the Board to revoke the exemption of Board oversight 
of hydraulic cement shipments, as a result of these historical dynamics 
facing the industry. During this time, the cement industry has provided 
the Board ample evidence of how the shipping needs of the cement 
industry have changed. Specifically, that cement manufacturers do not 
have a cost competitive alternative to Class I railroads to move their 
product from manufacturing plants to terminals. We hope the Board would 
move forward with a favorable ruling to revoke the exemption of Board 
oversight of hydraulic cement.
    Additionally, hydraulic cement is not unique in being exempt from 
Board oversight. Reauthorization of the Surface Transportation Board 
should require the re-evaluation of all exemptions in place and a 
process for reviewing exemptions on a regular basis to evaluate whether 
competitive, intramodal and intermodal shipping options exist. This 
concept could inform the basis of legislative action requiring the 
Surface Transportation Board to enact an exemption review based on a 
set of objective criteria at a statutorily determined interval. A five-
year period, similar to reviews conducted by other agencies for various 
programs, is in our opinion a reasonable interval this review can be 
conducted by the Board.
    Finally, it is important for PCA to acknowledge that there are some 
actions taken by the Board that benefit all shippers, even those that 
are exempt from Board oversight. For example, with the move to more 
precision scheduled railroading many of PCA members have experienced an 
increase in demurrage billing. We appreciate the Board in 2020 
releasing a policy statement clarifying the principles the Board would 
consider in evaluating the reasonableness and accessorial rules and 
charges. As part of this, we appreciate that the Board clarified that 
rail carrier demurrage rates and policies are subject to Board 
regulations even if they involve the shipment of exempt commodities, 
including hydraulic cement.
    In closing, thank you again for the opportunity to share the cement 
industry's perspective on our rail service and actions the Surface 
Transportation Board can and should be taking. If you have any further 
questions, please feel free to contact Sean O'Neill, PCA's Senior Vice 
President of Government Affairs.
        Sincerely,
                                              Sean O'Neill,
      Senior Vice President of Government Affairs, Portland Cement 
                                                       Association.

                                 
    Statement of Emily Regis, Vice President, Freight Rail Customer 
    Alliance, Submitted for the Record by Hon. Donald M. Payne, Jr.
                              Introduction
    Chairs DeFazio and Payne, Ranking Members Graves and Crawford, and 
Members of the Subcommittee, thank you for holding today's hearing, 
``Stakeholder Views on Surface Transportation Board Reauthorization,'' 
and for the opportunity to submit these written comments.
    I am Emily Regis. I am the Fuels Resource Manager for Arizona 
Electric Power Cooperative, Inc., or AEPCO, a nonprofit rural electric 
generation and transmission cooperative in Arizona. We serve six member 
nonprofit distribution cooperatives that provide retail electric power 
to more than 400,000 residences and business in Arizona, California, 
and New Mexico, predominately in lower income areas. AEPCO relies on 
the Union Pacific Railroad, BNSF Railway, and a short line to deliver 
coal for our power plants. As things stand now, we cannot keep the 
lights on unless the railroads deliver the coal.
    I also serve as Vice President of the Freight Rail Customer 
Alliance or FRCA. FRCA represents large trade associations for more 
than 3,500 electric utility, agriculture, chemical and alternative fuel 
companies, and their customers in all 50 states. FRCA's members, like 
AEPCO, depend on railroads to be able to run their businesses and serve 
their customers. In addition, I serve as President of the National Coal 
Transportation Association (NCTA), an association of coal consumers, 
producers, and service providers. I also currently serve as a Member, 
representing the small utility sector, of the Rail Energy 
Transportation Advisory Committee of the Surface Transportation Board 
(Board or STB).
    In addition, I had the privilege of participating on behalf of FRCA 
during the subcommittee's Railroad Shippers Roundtable that was held in 
2019. That informal roundtable discussion and this hearing are 
important public venues to 1) learn more about the longstanding 
challenges facing freight rail shippers and 2) what Congress, the STB, 
and stakeholders, can do to support freight rail. It is a vital 
component of our nation's economy as a key element in the supply chain. 
It is relied upon by farmers to deliver crops to market and by 
utilities and propane suppliers to receive the fuel we need to serve 
our customers. Freight rail also enhances our global competitiveness.
                               Thank You
    To begin, FRCA appreciates your leadership in realizing the Surface 
Transportation Board Reauthorization Act of 2015 (Act), P.L. 114-110, 
which marked for the first time since 1998 that the Board was 
reauthorized. The reauthorizing law: (1) provided much-needed reforms 
to the Board's process to address numerous historical shortcomings 
experienced by the Board and industry stakeholders; (2) improved the 
Board's transparency; (3) helped the Board operate more expeditiously 
and efficiently; and (4) better enabled the Board to strike a more 
equitable balance among the interests of its diverse stakeholders. The 
Act also expanded the size of the Board from three Members to five 
Members to allow the agency to become more functional and 
collaborative. Considering that the Act expired on September 30, 2020, 
FRCA again welcomes this opportunity to share its members' experiences 
and views as you develop the next STB authorization.
    FRCA also thanks Chairs DeFazio and Payne for requesting the 
Government Accountability Office (GAO) to conduct a study on the 
impacts of Precision Scheduled Railroading (PSR). The results of this 
study, once finalized and released, promise to assist all stakeholders 
in developing the next STB authorization.
    These submitted written comments will discuss: 1) continued rail 
carrier service performance problems that some FRCA members and many 
other shippers continue to experience, and 2) offer some suggestions on 
how Congress can assist the Board in better utilizing its existing 
statutory authority or by granting additional statutory authority to 
address those problems more effectively.
    Need for a Balanced Approach if Differential Pricing Is To Work
    FRCA wishes to make clear that is not calling for reregulation or a 
return to the pre-Staggers Act era. To the contrary, the largely 
captive shippers that are FRCA members appreciate the need for 
differential pricing and a vigorous and healthy railroad industry. We 
agree that one size does not fit all.
    But there is a need for balance so that markets can work. When 
railroads face neither effective competition from other railroads, nor 
effective oversight, shippers and the economy suffer. In 1980 there 
were 40 Class I railroads. Today there are only seven Class I carriers 
moving 90% of our nation's freight with several pending new mergers 
before the Board including two Class I carriers and in an era of PSR. 
When there is a lack of competition in the marketplace, more 
specifically, the lack of competition between rail carriers where 
railroads enjoy immunity from most anti-trust protections, it is 
incumbent upon the Federal government, in this case the STB per the 
Staggers Rail Act, to facilitate competition.
    FRCA also deeply appreciates the efforts of STB Chairman Oberman 
and the Board to address the lack of competition and poor service in 
the railroad industry, particularly since the emergence of PSR. For 
instance, FRCA appreciates the Board's consideration in a pending 
rulemaking of the need to have Class I railroads report First-Mile/
Last-Mile (FMLM) data, in the aggregate, to the Board. Such FMLM data 
is critical for measuring the end-to-end service being provided by the 
common carrier railroads.
    Without that data, shippers and the Board: 1) lack insight into the 
overall functioning of the rail network that shippers need for planning 
and operational purposes; 2) lack data to assess whether any service 
problems are specific to them or more general, whether they are being 
singled out for any service problems, and whether service is improving, 
deteriorating, or remaining stable generally; 3) are hamstrung in 
assessments of the extent to which railroads are properly discharging 
their common carrier obligation. Requiring submission of the data 
should not unduly burden the railroads in so far as they must 
necessarily already collect, monitor, and utilize the data, especially 
to the extent they seek to adopt and utilize the principles of PSR. 
While the Board does require the submission of significant railroad 
performance data pursuant to United States Rail Service Issues--
Performance Data Reporting, Docket No. EP 724 (Sub-No. 4), the data 
does not include the FMLM component except in so far as it is 
incorporated in the rail origin to rail destination data for unit 
trains and intermodal service.
    FRCA also appreciates that the challenges the pandemic poses for 
railroads, as it does for all of us that depend on employees working in 
close proximity with each other to operate large, complicated physical 
assets. Nonetheless, railroad service and volumes appear to have been 
disproportionately affected, notwithstanding what should be significant 
advantages, particularly in the ability to operate long trains with 
only two train crew members.
        Lack of Railroad Competition--Higher Rates for Shippers
    In general, captive shippers pay higher rates because they lack an 
effective competitive option. The STB has, various rate reasonable 
remedies available in theory, but they work for only a modest minority 
of shippers. Thanks in large part to the Act, and the recommendations 
made in the STB's 2019 Rate Reform Task Force Report, the Board is 
making some efforts to address this problem through a Final Offer Rate 
Review process that is also being considered in conjunction with a rail 
carrier-proposed voluntary arbitration process. In addition, the Board 
issued a Final Rule on Market Dominance which was in response to 
another recommendation in the Rate Reform Task Force Report ``to 
develop a standard for pleading market dominance that will reduce the 
cost and time of bringing a rate case.'' The Board may also be renewing 
its competitive access efforts in reciprocal switching, which FRCA 
strongly supports, but the railroads have been able to stall those 
efforts for now eight years, or over forty when one considers that 
reciprocal switching was part of the Staggers Rail Act of 1980.
    The Board, however, has yet to take further action to flesh out its 
revenue adequacy constraint, rate reasonableness methodology or on 
alternatives to the Stand-Alone Cost (SAC) test for larger rate cases. 
The railroad industry and markets have changed vastly since 1980, and 
updates to these three elements are needed so that shippers can have 
viable options to obtain rate relief, especially when the stand-alone 
cost methodology is a poor fit for their circumstances. With PSR, the 
railroads have reduced and eliminated their ability to respond to 
challenges and opportunities to save costs. But rates have gone up, not 
down, as service has been reduced and compromised.
      Lack of Railroad Competition--Financial Health of Railroads
    The railroads always highlight to their investors their reduced 
operating ratios. Those reductions have not been achieved from growing 
volumes or improving service. Instead, they result from raising rates, 
reducing quality of service, and lowering costs, often on the backs of 
their workers. Under these circumstances, operating ratio reductions 
reflect how service reductions, not cost savings, are being passed 
through to customers.
    A goal of the Staggers Rail Act of 1980 was to restore financial 
stability to the U.S. rail system. By all accounts, this goal has been 
achieved. The railroads have not needed to raise new equity in decades 
and have excellent debt capital at favorable interest rates. Under PSR, 
the railroads have sought to reduce their capital expenditures. The 
railroads' high returns have led to excess capital, which they have 
sought to distribute through repeated dividend increases as well as 
sizeable stock buybacks. Rather than invest in their networks to 
improve service, the railroads have sought to reduce capacity and 
focused instead on rewarding their investors.
    One measure of the financial health of a Class I rail carrier is 
the Board's annual determination of ``revenue adequacy.'' The Board's 
website provides information on the number of Class I carriers that 
have been deemed ``revenue adequate'' from 2000 through 2020. For the 
period form 2014-2020, substantial segments of the railroad industry 
have achieved revenue adequacy under the Board's measure, and some have 
done repeatedly:
      2014, 2015, and 2016: Four.
      2017: Five.
      2018: Three.
      2019: Five.
      2020: Six (BNSF, CSX, Grand Trunk Corp., KSC, Soo Line, 
and UP).

    Only Kansas City Southern (KCS) failed to achieve revenue adequacy 
in any of those years, and it has now been acquired into voting trust 
by Canadian Pacific Railway and at a massive premium. The Board's 
revenue adequacy findings confirm the railroads industry's accumulation 
of substantial railroad strength.
    However, FRCA has long been concerned that the Board's annual 
determinations of ``revenue adequacy'' for Class I carriers do not 
reflect the true health of the overall railroad industry and its 
individual carriers. FRCA believes that the health of the rail carriers 
is actually much stronger than what the figures and pattern from above 
illustrate.
    In a competitive environment, this would not happen. Volumes would 
flow to competitors with lower rates or better service, and the cost 
savings would be passed through to consumers. The lack of effective 
competition among railroads is why the railroads are able to raise 
rates, lower costs, degrade service, and increase their margins and 
profits.
    The resulting service problems can be more severe than the rate 
problems that result from the lack of effective service. In particular, 
many electric utilities across the country have, for the past 18 months 
or so, faced difficult weather conditions, natural disasters, and an 
increase in natural gas prices (for those utilities that can burn 
natural gas) that has forced utilities to burn more coal. However, 
despite the need for more coal, utilities have been hit with poor rail 
carrier service performance resulting in unpredictable coal deliveries 
which in turn increases costs. While AEPCO and most other coal-burning 
utilities can stockpile coal, doing so costs money. The variability of 
service means that a utility can never know if its stockpile is too big 
or small. In addition, the quality of coal is compromised when the 
stockpile is too big or not big enough.
    To provide an indication of the inadequacy and lack of 
predictability in service FRCA, along with NCTA and the National Rural 
Electric Cooperative Association (NRECA) have the results from its 4th 
Utility On Time Performance (OTP) Metric Survey. It should be noted 
that these results include both plants and utilities that are captive 
to a single railroad and those that have the ability to receive service 
from two carriers. In other words, the service problems are hardy 
confined to captive shippers, but extends to those that are sometimes 
called ``competitively-served.''
    The data collected covers July 2021 through December 2021 
representing 28 plants that ship coal in the United States on the Union 
Pacific Railroad, BNSF Railway and the Norfolk Southern. Coal Supply 
regions represented in the data include, the Southern Powder River 
Basin (SPRB), and Northern Powder River Basin (NPRB), Rockies, Northern 
Appalachia (NAPP), Central Appalachia (CAPP) and Illinois Basin (ILB):

----------------------------------------------------------------------------------------------------------------
               Coal Regions                   SPRB      NPRB     Rockies    NAPP      CAPP       ILB      Other
----------------------------------------------------------------------------------------------------------------
Plants....................................        14         4         2         1         1         4         2
----------------------------------------------------------------------------------------------------------------

Service
    The utilities that responded to the survey reported the following:
      92% reported rail service issues that have impacted their 
company's coal transportation.
      60% reporting railroad service as worse than it was in 
2019 and 2020.
      64% of those respondents also reporting that their 
company had to modify its operations in the second half of 2021 because 
of railroad service issues, disruptions, and delays.
            1. Utilities responded to specific questions about how 
                    their operations have been impacted by railroad 
                    service issues:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
                    
Costs
    Of those utilities that responded, over 90% reported that railroad 
service issues have increased costs for their utility. The utilities 
were asked how much they estimate that railroad service issues in 2021 
have increased costs in general for their company.
      30% of the utilities reported cost increases of between 
$100,000 and $ 1 M.
      50% reported cost increases of between $1 M and $10 M.
      20% reported cost increases of over $10 M to $20 M.
            2. The utilities were asked what specifically they 
                    attribute these cost increases to:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
                    
            3. The utilities were also asked what type of railroad 
                    service issues they experienced:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
                    
Nominations
    Another area that can be challenging for both utility shippers and 
railroads is the nomination process. Utilities provide the railroads 
with information on volume nominations (anticipated supply needs) and 
their required train loading schedule for each month, utilities are 
required to provide a trainload or volume nomination request to the 
railroad via online interactive planning tools on each railroad's 
website.
    For the six-month period of July-December 2021, the chart below 
shows that for the 28 plants that responded the number of trainloads 
they were short of their trainload nominations each month:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    To provide a full year comparison, the chart below shows the 
utilities that participated in the survey for the January thru July 
2021 period, combined with the 3rd Utility OTP Metric Survey results 
covering July through December 2021 survey, shows the percentage of 
nominated trainloads received by plants and not received.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Transit Time
    For the six-month period of July-December 2021, this survey also 
collected monthly utility railroad performance metrics to show mine to 
plant transit time by railroad and mine source by month. The carriers 
and mine regions serving the participating plants were reported as 
follows:

------------------------------------------------------------------------
            Railroads               UPRR      BNSF       NS       Multi
------------------------------------------------------------------------
Plants..........................         6        17         3         2
------------------------------------------------------------------------



----------------------------------------------------------------------------------------------------------------
                     Mine Region                        SPRB      NPRB     Rockies     ILB      NAPP      CAPP
----------------------------------------------------------------------------------------------------------------
Plants..............................................        16         4         2         4         1         1
----------------------------------------------------------------------------------------------------------------


            1. The chart below represents the group of plants shipping 
                    coal from the SPRB coal region reporting the 
                    percentage of forecasted trainload nominations 
                    received as equal to, 10% better, 10% worse, 20% 
                    worse and 30% worse than their forecast nominated 
                    trainloads.

----------------------------------------------------------------------------------------------------------------
                SPRB Plants (16)                   Equal to    10% Better   10% Worse    20% Worse    30% Worse
----------------------------------------------------------------------------------------------------------------
July...........................................          31%           6%          19%          25%          19%
Aug............................................          38%           6%          19%           6%          31%
Sept...........................................           6%           6%          44%          19%          19%
Oct............................................           6%           6%          50%           6%          31%
Nov............................................          25%           6%          13%          44%          13%
Dec............................................          19%           6%          25%          38%          13%
----------------------------------------------------------------------------------------------------------------


            2. The chart below represents the group of plants shipping 
                    coal from the NPRB coal regions:

----------------------------------------------------------------------------------------------------------------
               NPRB Plants (4)                    Equal to        10% Worse        20% Worse        30% Worse
----------------------------------------------------------------------------------------------------------------
July........................................              50%              50%               0%               0%
Aug.........................................              25%              25%              25%              25%
Sept........................................              50%              25%              25%               0%
Oct.........................................              25%               0%              75%               0%
Nov.........................................               0%              50%              50%               0%
Dec.........................................              25%              25%               0%              50%
----------------------------------------------------------------------------------------------------------------


            3. The chart below represents the group of plants shipping 
                    coal from the ILB coal regions:

----------------------------------------------------------------------------------------------------------------
               ILB Plants (4)                     Equal to        10% Worse        20% Worse        30% Worse
----------------------------------------------------------------------------------------------------------------
July........................................              50%               0%               0%              50%
Aug.........................................               0%              25%               0%              75%
Sept........................................               0%               0%               0%              50%
Oct.........................................               0%               0%               0%              75%
Nov.........................................               0%               0%              25%              75%
Dec.........................................               0%               0%               0%             100%
----------------------------------------------------------------------------------------------------------------


            4. Two plants shipping coal from the Rockies reported their 
                    forecasted nominations received as the following:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                    Rockies (2)                           July             Aug              Sept             Oct              Nov              Dec
--------------------------------------------------------------------------------------------------------------------------------------------------------
Plant A...........................................       20% Worse        20% Worse         Equal to         Equal to        30% Worse        30% Worse
Plant B...........................................        Equal to        10% Worse        10% Worse        20% Worse        20% Worse        20% Worse
--------------------------------------------------------------------------------------------------------------------------------------------------------


            5. One plant shipping coal from NAPP reported its forecast 
                    nomination as 30% worse than forecasted for July, 
                    August, September, October, and December and equal 
                    to its forecast in November 2021.
Comments from Shippers
    Along with the plant forecasted trainload nominations received 
questions, the survey also collected comments from shippers about their 
respective experiences with the carriers over the six-month period July 
through December 2021. Some of those comments are listed below.
    1.  Railroads seem to be worried about velocity and reducing set 
count on their systems. Unfortunately, even if you gain velocity and 
reduce equipment it still takes the same amount of crews to move 
forecasted coal and they all seem to be short
    2.  The number of permits (trainload nominations) would have been 
higher however the railroad elected to park half of my rail fleet which 
reduced the number of permits they could satisfy
    3.  Service issues related to locomotive power problems and lack of 
crews have been ongoing for several months.
    4.  Lack of crews may be the biggest issue, our railroad will leave 
an unloaded train on our site for up to 2-3 days until another set is 
unloaded, then they send a crew to double the trains and depart.
    5.  Communication was terrible.
    6.  Even though our railroad service was not great in 2021, our 
communication with the railroads was great. They were all forthcoming 
with their challenges, even giving us frequent updates on their efforts 
to hire new staff and get them trained. We could tell they were doing 
the best they could and were prioritizing our shipments over other 
traffic.
    7.  Increased bunching of trains caused us to incur costs to add 
coal to our stockpile and then pull coal off our stockpile more than in 
the past.
    8.  All 4 major providers had issues with crews, power, and 
communication in 2021. Reduction in employees that worked the 24-hour 
desks resulted in terrible communication and lack of crews kept trains 
sitting.

    Bottom line is that July 2021-December 2021 was an incredibly 
challenging time for many utilities who were experiencing railroad 
transportation service issues in receiving coal supply to power plants.
                        Suggestions for Congress
    Absent effective competition, we need effective oversight and truly 
streamlined processes. We are not asking for the Board or Congress to 
micromanage service. We are asking for backstops that can be enforced. 
As you and your Congressional colleagues consider the next 
authorization of the STB, FRCA asks that you consider the following:
1. Common Carrier Obligation
    The common carrier obligation, to provide service on reasonable 
request, is supposed to require that carriers provide a level of 
service that meets a shipper's reasonable needs. But it has not been 
serving that function, as railroads have been providing service that is 
both poor and unreliable, For example, UP's most recent monthly 
announcement (CN2022-4, February 4, 2022, https://www.up.com/customers/
announcements/customernews/allcustomernews/CN2022-4.html) showed trip 
plan compliance of 68% for manifest (reflecting an improvement of 6 
percentage points) and 78% for intermodal. That's inadequate, and it is 
based on internal calculations that are not disclosed to the shipper, 
the Board, or the public.
    We believe the common carrier standard needs to be something 
meaningful, with consequences to apply that is not met. In the 
reauthorization, FRCA recommends a statutorily clarified definition of 
``common carrier obligations'' and calls upon the Board to:
      Review and evaluate the extent to which railroad 
operating, financial, investment, marketing and other business 
practices may be impairing the ability of and incentives for railroads 
to fulfill their common carrier obligations, in the aggregate, and 
provide adequate and economical service to their customers, including 
those shipping or receiving under contracts or exempt transportation 
arrangements.
      Collect data needed for that evaluation, including data 
regarding first-mile/last-mile service issues and the extent to which 
shipper and receiver investment in railroad infrastructure is not 
efficiently utilized by the railroads (which the Board is in its 
initial consideration stages in Ex Parte No. 767, First Mile/Last 
Mile).
      Impose fines and other penalties or allow shippers to 
recover appropriate damages to the extent the agency finds that 
railroads are not fulfilling their common carrier obligations in the 
aggregate as well as individually and are not providing adequate and 
economical service to their customers, including those shipping or 
receiving under contracts or exempt transportation arrangements. In 
terms of a fine or a penalty, current statute generally limits the 
Board's penalty authority to about $8,736 per violation. That is too 
little, unless applied to each carload or each day each carload is 
delayed.

    An alternative is larger penalties tied to the overall level of 
service. Legislation might be needed to establish such penalties and to 
include contract and exempt movements in the assessment. Otherwise, 
railroads might use contracts to evade their common carrier obligation.
    Another option for Congress to consider, is awarding damages to the 
injured shipper, but that almost never happens and would likely turn 
into a protracted and expensive proceeding for the shipper.
2. Rates
    FRCA suggests that the next authorization encourage the Board to 
continue its proceedings on Revenue Adequacy and when determining a 
revenue adequate constraint commensurate with current market 
conditions, the Board shall consider but not limited to:
      Viable and effective revenue adequacy constraint is 
needed as part of the Board's oversight.
      Continued recognition that rail carriers need 
differential pricing to cover their costs and serve as many shippers as 
possible. But once rail carriers recover their costs and achieve 
revenue adequacy, allowing further unrestrained rate increases, does 
not guarantee further infrastructure investment but rather, punishes 
captive shippers. (The Board's predecessor, the Interstate Commerce 
Commission, recognized this in 1985.)
      Measuring revenue adequacy based on whether a rail 
carrier's return on investment exceeds the cost of capital can be a 
reasonable approach, but other measures should be considered.
      Not including the use of ``replacement cost 
methodologies'' when determining rail carrier revenue adequacy.
      The measurement period should be of a fixed length--five 
years is sufficient.
      Rate increase constraint should be a key element of a 
revenue adequacy constraint.
      A shipper to use the simplified road property investment 
analysis in a simplified SAC case against a revenue adequate rail 
carrier.
      Continued development of the Report's recommended use of 
Incumbent Network Cost Analysis (INCA) in a simplified SAC case.
3. Commodity Exemptions
    The elimination of commodity exemptions should also be considered. 
When the exemptions were adopted, tariffs and contract summaries needed 
to be filed. Those requirements ended over twenty-five years ago. 
Exemptions are a solution to a problem that no longer exists.
4. Length and Funding Levels
    FRCA recommends that the next authorization be a minimum of five 
years at funding levels commensurate with the previous enacted Fiscal 
Year (FY) appropriation levels for the STB.
    The highest possible annual authorized and appropriated funding 
levels for the Board is made more acute by the:
      Unprecedented demand placed on STB's regular activities 
and resources given the pending rail merger proceedings before the 
Board--all of which pose significant service and rate issues for 
captive shippers, and questions concerning the structure of a probable 
more consolidated freight rail industry.
      Implementation of the On-Time Performance Standards for 
passenger rail.
      Number of formal and informal railroad performance 
service complaints
      Continued reliance on data transparency and access by all 
stakeholders let alone additional data and analytical capabilities to 
continue enhancing the Board's evidence-based decision-making.
      Board operating with a full complement of Members.

    Thank you for holding this hearing, allowing FRCA to submit its 
comments, and for your continued consideration. We are happy to answer 
any questions you may have and look forward to the dialogue continuing.
                               __________
                                                         Attachment

    [Ms. Regis submitted an attachment to her statement which is 
retained in committee files and available online at https://
movecoal.org/shared-files/1895/FRCA-House-Comments-3-8-22-Combined.pdf, 
``Attachment to Written Comments.'']

                                 
    Letter of March 8, 2022, from Corey Rosenbusch, The Fertilizer 
    Institute, Submitted for the Record by Hon. Donald M. Payne, Jr.
                                                     March 8, 2022.
The Honorable Donald M. Payne Jr.,
Chairman,
Subcommittee on Railroads, Pipelines, and Hazardous Materials, B376 
        Rayburn House Office Building, Washington, DC 20515.
The Honorable Rick Crawford,
Ranking Member,
Subcommittee on Railroads, Pipelines, and Hazardous Materials, B376 
        Rayburn House Office Building, Washington, DC 20515.
The Honorable Peter A. DeFazio,
Chairman,
Committee on Transportation and Infrastructure, 2251 Rayburn House 
        Office Building, Washington, DC 20515.
The Honorable Sam Graves,
Ranking Member,
Committee on Transportation and Infrastructure, 2264 Rayburn House 
        Office Building, Washington, DC 20515.

Via Electronic Mail

Re: Hearing on Surface Transportation Board Reauthorization
    Dear Chairman Payne, Ranking Member Crawford and Committee Chairman 
DeFazio and Ranking Member Graves:
    Thank you for holding today's hearing regarding ``Stakeholder Views 
on Surface Transportation Board Reauthorization.'' The Fertilizer 
Institute (TFI) appreciates the opportunity to share information on the 
freight rail marketplace and the critical role of the Surface 
Transportation Board (STB or Board).
    TFI represents companies that are engaged in all aspects of the 
fertilizer supply chain in the United States. The fertilizer industry 
ensures that farmers receive the nutrients they need to enrich the soil 
and, in turn, grow the crops that feed our nation and the world. 
Fertilizer is a key ingredient in feeding a growing global population, 
which is expected to surpass 9.5 billion people by 2050. Half of all 
food grown around the world is made possible through the use of 
fertilizer, hence its importance to farmers and food production.\1\
---------------------------------------------------------------------------
    \1\ Stewart, W.M., Dibb, D.W., Johnston, A.E. and Smyth, T.J. 
(2005). ``The Contribution of Commercial Fertilizer Nutrients to Food 
Production.'' Agron. J., 97: 1-6.
---------------------------------------------------------------------------
    The U.S. fertilizer industry generates more than $130 billion in 
economic benefit each year and supports approximately 487,000 American 
jobs.
                         Statement of Interest
    Nearly 44% of all fertilizers produced globally, or more than 200 
million tons of material, are exported annually. Moving this material 
from production facilities to farms requires virtually every mode of 
transportation and a carefully orchestrated system of logistics to 
serve farmers on a just-in-time basis. While all fertilizer touches a 
truck at least once before it reaches the farm, in terms of ton-miles, 
over half of all fertilizer moves by rail year-round throughout the 
United States. In the agricultural sector, fertilizer appears to rely 
on rail the most.\2\
---------------------------------------------------------------------------
    \2\ ``The Importance of Highways to U.S. Agriculture.'' U.S. 
Department of Agriculture. Page 13. December 2020.
---------------------------------------------------------------------------
    TFI works closely with the rail industry and regulators to promote 
safety for employees, the public, and first responders. We want the 
rail industry to be successful because its success is essential to our 
success.
               Freight Rail Marketplace and STB Oversight
    The rail industry has changed a great deal over the past 40 years 
following enactment of the Staggers Rail Act of 1980. For example, 
years of rail industry consolidation have resulted in just four 
railroads handling over 90 percent of the freight rail traffic in the 
United States. Now two-thirds of rail stations are served by just one 
railroad. Moreover, the rail cars used to transport shipper commodities 
are now approximately 73% owned, leased, and maintained by shippers.\3\ 
In 1985, only 30% of rail cars were owned, leased, and maintained by 
shippers.\4\ This shift is quite relevant as it pertains to the 
efficient (or inefficient) utilization of shipper assets.\5\
---------------------------------------------------------------------------
    \3\ ``Petition for Rulemaking to Adopt Rules Governing Private 
Railcar Use by Railroads.'' Docket No. EP 768, Surface Transportation 
Board.
    \4\ Roman, Jay. ``STB's Annual Rail Rate Index Study: A Deeper 
Dive.'' Railway Age. January 27, 2022.
    \5\ 100% of tank cars are owned, leased, and maintained by 
shippers.
---------------------------------------------------------------------------
    As we approach a half century of the Staggers Act, it is important 
to recognize its success and work constructively to modernize oversight 
of the rail marketplace to reflect the substantial changes that have 
taken place.
    The STB is the primary regulatory agency responsible for rail rate 
and service matters. Practical regulatory reforms that improve STB 
oversight of the rail marketplace are desperately needed. The very 
first of 15 enumerated rail transportation policies in the Staggers Act 
is ``to allow, to the maximum extent possible, competition and the 
demand for services to establish reasonable rates for transportation by 
rail.'' \6\ Yet this has been the least successful of these policies 
due to rail consolidation that has reduced the number of rail 
competitors and regulatory policies that have prevented application of 
those provisions in the Staggers Act that were intended to facilitate 
greater competition. STB modernization can help promote competitive 
freight rail service to make U.S. manufacturers and farmers more 
competitive in the global marketplace.
---------------------------------------------------------------------------
    \6\ 49 U.S.C. Sec.  10101(1)
---------------------------------------------------------------------------
    From 2005 to 2017, rail rates for carloads of anhydrous ammonia, 
the building block of all nitrogen fertilizers and one of the most 
efficient sources of nitrogen for farmers, increased 206 percent. This 
is three times more than the increase in the system-wide average rail 
rate per car. As it stands now, rate and service cases are so 
expensive, cumbersome and time consuming that fertilizer shippers do 
not have an effective forum to adjudicate such extreme increases in 
rail rates. The lack of meaningful oversight further distorts the 
market and the costs of this distortion are paid by the fertilizer 
industry, farmers, and everyone who consumes food.
    The Transportation Research Board stated that the STB's rate review 
procedures are ``unusable by most shippers.'' \7\ The STB's current 
rate review standards were put in place for coal shippers more than 
three decades ago when the railroad industry was quite different and 
over two dozen railroads competed across the country. While rail 
industry fortunes have changed a great deal, the rate review process 
has not. Rate and service cases at the STB typically take five years at 
a cost of more than $5 million. The time and expense to file a rate 
case does not work.
---------------------------------------------------------------------------
    \7\ ``Modernizing Freight Rail Regulation.'' Committee for a Study 
of Freight Rail Transportation and Regulation. Transportation Research 
Board (Special Report 318). 2015, Page 191.
---------------------------------------------------------------------------
    Much to the credit of the entire Board and that of current Chairman 
Oberman and former Chairman Begeman, in recent years, the Board has 
initiated a number of efforts to reform its outdated oversight 
mechanisms. Likewise, the Board is also taking steps on long-pending 
updates for reciprocal switching,\8\ which is an important way to 
promote more competition in the rail industry and more closely reflect 
the system in Canada that already allows Reciprocal Switching.\9\ The 
Board's forthcoming March 15-16 hearing on Reciprocal Switching is 
helpful and TFI urges Congress to be supportive of STB's efforts on 
this matter. It is critical that the Board finalize the Reciprocal 
Switching rulemaking.
---------------------------------------------------------------------------
    \8\ Does the AAR Fear Competition? Railway Age, March 2, 2022.
    \9\ Known in Canada as Interswitching.
---------------------------------------------------------------------------
             Rail Service Challenges and Statutory Changes
    Rail service is not always bad. However, all too often, this is a 
serious challenge for the fertilizer industry. Rail carrier 
implementation of large cost-cutting initiatives, such as precision 
scheduled railroading (``PSR''), have disrupted rail service to many 
shippers. PSR has made it more difficult and expensive to ship 
fertilizer.
    Most recently, rail carrier cycle times amongst all or most Class I 
carriers have been substantially slower in the first quarter of this 
year. TFI attributes the erosion of cycle times to a combination of (1) 
implementation of PSR, which appears to have eliminated too much rail 
carrier personnel, thus compromising rail carrier operational 
elasticity and (2) COVID-related infections causing rail labor to be 
unavailable. COVID infections, for example, would be less of a problem 
if there were more back-up crews.
    Poor cycle times and service has resulted in costly, inefficient 
utilization of shipper assets. This has negatively affected the ability 
of TFI's members to ship fertilizer and pre-position the essential 
product for the busy Spring planting season. When rail service 
deteriorates--which is increasingly common--shippers often do not have 
enough cars to ship the product volumes that need to move. This forces 
shippers and producers to curtail production and raises costs on 
everyone, except for the rail industry, which is now the leading profit 
industry in the country.
    As rail carriers divested themselves from rail car ownership, they 
have also divested themselves out of the inherent incentives that 
encourage the efficient use of rail cars.\10\ This is a significant 
cost for shippers and there is little to no statutory nor regulatory 
remedies for it.
---------------------------------------------------------------------------
    \10\ As previously cited, shippers own or lease 73% of the cars 
that are used to ship commodities.
---------------------------------------------------------------------------
    The Board's oversight regarding PSR and associated changes in 
demurrage and accessorial fees has been greatly appreciated. Likewise, 
TFI is pleased to be engaging with the Board as part of its proceeding 
on first-mile/last-mile service and data (Ex Parte 767).
    While demurrage and accessorial charges are increasingly levied on 
shippers, there is almost no accountability when it comes to rail 
carrier first-mile/last-mile service. TFI recognizes the role that 
appropriate and fair demurrage charges have on rail network fluidity. 
Reciprocity is also needed. Under the current system, rail carriers 
have little incentive to provide reasonable and consistent rail 
service, hence the frequent concerns (and periodic crises) voiced by 
shippers on this topic. Congress should consider statutory changes that 
would enforce the same principal on railroads, as poor rail service and 
inefficient utilization of shipper-owned assets is a serious cost for 
all consumers.
                               Conclusion
    STB modernization is critical to U.S. manufacturers and farmers. 
Especially following PSR, rail carriers no longer seem to have enough 
staff to consistently fulfill their obligations to shippers. These 
``obligations'' are not just about ``shippers.'' These are obligations 
to the American public and our nation, which gave at no-cost to 
railroads 10% of U.S. land (183 million acres \11\) so they could build 
a national network.
---------------------------------------------------------------------------
    \11\ Grant, Michael J. ``Railroad Land Grants.'' Encyclopedia of 
the Great Plains. 2011.
---------------------------------------------------------------------------
    Policymakers and regulators should continue the thoughtful work 
that is needed to modernize rail marketplace oversight so that this 
critical part of our nation's supply chain and economic security does 
not languish at the short-sighted hands of Wall Street.\12\
---------------------------------------------------------------------------
    \12\ Ziobro, Paul. ``A Revolution Sweeping Railroads Upends How 
America Moves Its Stuff.'' Wall Street Journal. April 3, 2019.
---------------------------------------------------------------------------
    Thank you again for holding today's hearing and for the opportunity 
to submit this statement. TFI looks forward to working with Congress to 
strengthen our nation's supply chain, including the STB's statutory 
authorities and oversight. Should you have any questions, please reach 
out to Justin Louchheim of my staff.
        Sincerely,
                                          Corey Rosenbusch,
                                          The Fertilizer Institute.

                                 
 Post-Hearing Comments From Witness Brad Hildebrand, Submitted for the 
                  Record by Hon. Donald M. Payne, Jr.
                              Introduction
    Chairs Peter DeFazio and Donald Payne, Ranking Members Sam Graves 
and Rick Crawford, and Members of this Subcommittee, thank you for 
providing this opportunity for me, Brad Hildebrand, to submit 
additional comments following the March 8, 2022, hearing, ``Stakeholder 
Views on Surface Transportation Board Reauthorization,'' on behalf of 
the National Industrial Transportation League (NITL).
                          Reciprocal Switching
    It was troublesome that much of this congressional hearing focused 
on the Surface Transportation Board's (Board or STB) reciprocal 
switching proposal given that the Board held a two-day public hearing 
on March 15 and 16, 2022 (EP 711 (Sub.-1), Reciprocal Switching. 
Further, it was disappointing that the witness testifying on behalf of 
the Association of American Railroads (AAR) claimed that this is a 
backdoor venue for shippers to force a reduction in railroad rates. The 
railroads are treating reciprocal switching as if it will be an 
existential threat to their business.
    The AAR is correct that there is a process in place for shippers to 
request a competitive switch. However, this decades-old STB procedure 
does not work as it requires shippers to demonstrate anticompetitive 
conduct which is legally unattainable to reach. As such, shippers have 
not and are not bringing competitive switch requests to the Board under 
the current rules.
    The STB proposal is about enhancing competition. It offers two new 
paths for shippers to request a competitive switching remedy from the 
Board that is 1) Practical and In the Public Interest or 2) Necessary 
to Provide Competitive Rail Service.
    The AAR's dialogue during the hearing pointed out several 
misconceptions about the Board's proposal. First, the AAR wants us to 
believe that the operations of its entire network would be severely 
jeopardized because the thousands of switches that its members would be 
forced to make to accommodate the interchanging of traffic with a 
competing railroad. On the contrary, the burden of proof would rest 
with the requesting shippers to demonstrate there is an established 
working interchange between the two rail carriers. Second, the 
requesting shippers would have to prove that the switching request 
falls under one of the above-mentioned paths and the respective 
criteria is met. It is NITL's belief that should the proposed 
reciprocal switching process become a Final Rule, there would not be a 
wholesale move for every shipper across the country to request a new 
reciprocal switch--as stated in AAR's continued messaging. Under the 
Board's proposal, it will still be a long and costly process for 
shippers to pursue. Shippers would want to be certain that their 
request for opening-up competition to their facility would meet all of 
STB's criteria before they make this kind of financial commitment. 
Should the Board's proposal become a Final Rule, there mere fact that 
exists, could hopefully result in competitive service and competitive 
rates without shippers having to go to the Board in the first place. 
This competitive driver is not present under the current rule.
                        Final Offer Rate Review
    I appreciate this opportunity to clarify NITL's position on the 
Board's proposed Final Offer Rate Review (FORR). NITL supports the FORR 
in EP 755, Final Offer Rate Review and EP 655, Expanding Access to Rate 
Relief. These rules would establish a series of procedural deadlines 
intended to allow the STB to issue a decision 135 days after a rate 
complaint is filed when dealing with cases in which the shipper seeks 
rate relief of $4 million or less. The railroad and the shipper would 
each be required to submit a final offer (as in baseball-style 
arbitration). This is only after the STB has determined that the 
railroad has market dominance over the shipment(s) in question. The STB 
would only be allowed to select one of the offers without modification. 
NITL encourages the Board to swiftly issue a Final Rule on its FORR 
proposal.
    In addition, NITL opposes the Small Alternative Voluntary 
Arbitration proposal put forth by several Class I railroads in a July 
2020 petition filed before the Board. NITL finds several objectionable 
elements of this proposal including 1) an exemption from FORR for five 
years; 2) confidentiality of the results of the arbitrator's decision; 
and, 3) rail carriers would have the right to withdraw from the program 
under certain circumstances, such as if the Board adopts a material 
change to its existing rate reasonableness methodologies or creates a 
new rate reasonableness methodology after a shipper or railroad has 
opted into the program.
    NITL views this rail carrier proposed Small Alternative Voluntary 
Arbitration process as NOT voluntary for shippers and was an 11th hour 
attempt by the railroads to further stall the STB's consideration of 
its FORR proposal.
                          Commodity Exemptions
    NITL would like to re-affirm its request to Congress that it 
requires the Board to eliminate all exemptions for commodities and to 
do so in a streamlined, transparent process. As NITL stated in its 
submitted written comments, we ask Congress to encourage the STB to:
      Promptly complete its consideration of commodity 
exemptions in its pending proceeding, EP Docket No. 704, Notice of 
Proposed Rulemaking, Review of Commodity, Boxcar, and TOFC/COFC 
Exemptions. It is important to note, however, that this proceeding only 
involves five to six commodity groups and there are many other exempt 
commodities for which a review is warranted.
      Interpret its revocation authority more broadly given 
today's far more concentrated market conditions than existed when the 
exemptions were adopted and the railroads' financial health.

    Other options should Congress choose a different approach, would be 
to 1) eliminate all exemptions by a date certain unless the railroads 
can show that the exemption is still warranted or 2) require that all 
exemptions be periodically reviewed by the STB every five years.
    It is important to remind Congress, that if a commodity or a class 
of commodities are ``exempt'' that means that those shippers that ship 
these commodities cannot seek service or rate redress or relief from 
the Board unless the shippers first go through a tedious, time 
consuming, and costly process before the Board requesting that the 
exemption be revoked. In that process, the shipper is required to 
demonstrate before the STB that a market dominant rail carrier makes 
these movements. If shippers have successfully demonstrated market 
dominance before the Board, then the shippers can pursue informal or 
formal service or rate complaints or cases.
    AAR is correct, and as just stated, there is already a process in 
place before the Board for exempted commodities to seek revocation. 
However, given the continued consolidation of the rail network and 
utilization of Precision Scheduled Railroading, exempted commodities 
are an answer to a problem that no longer exists.
                      Enhanced Statutory Authority
    As you continue thinking through and developing the next STB 
authorization, NITL requests that Congress keeps in mind the second 
major commitment of the Staggers Rail Act of 1980: instill railroad-to-
railroad competition in the marketplace. The Board needs additional 
statutory authority and tools to not just facilitate railroad-to-
railroad competition, but to move the pendulum closer to the middle 
where all stakeholders can effectively operate in a competitive 
environment. The burden of proof should not always be placed on the 
shippers to achieve a fair and balanced hearing before the Board or 
before Congress.
    NITL believes that if carriers are deemed revenue adequate by the 
Board, then they should be the ones having to prove to the STB that 
their service performance, rates, terms, and fees are reasonable. 
Formal rate and fee cases need to be heard and decided within a maximum 
two-year period. During this time, the Board should be allowed to put 
an injunction on the contested railroads' rates, terms, fees, or 
service practices while the case is being heard by the Board. It is 
simply not right that the railroads can continue to collect what 
shippers are asserting to be as unreasonable rates and fees. Currently, 
it is extremely difficult to near impossible for shippers to seek an 
injunction on these rates and fees. Shippers would need to prove that 
the railroads' action(s) would put their business into serious peril if 
not jeopardy. Conversely, if the Board had the statutory authority to 
issue an injunction, combined with a case completion time deadline, 
would facilitate the finalization of Board decisions.
    While the STB has made some progress on considering alternate 
economic proposals or models to the three methods that are currently 
available for large shippers to pursue formal rate cases [Stand-Alone 
Cost (SAC), Simplified SAC, and Three Benchmark], Congress needs to 
provide statutory authority to the Board allowing it to shift the 
burden of proof from shippers to railroads. As I said in my oral 
remarks during the hearing, there are no new pending rate cases before 
the Board. This is NOT because shippers are happy with the status quo, 
it is because these methods are too complex and too expensive for 
shippers to fight with the burden of proof on the shippers.
                               Conclusion
    Thank you for your continued leadership on freight rail shipper 
issues and consideration of our reauthorization proposals. NITL looks 
forward to continuing this important dialogue.

                                 
  Letter of March 7, 2022, from Michael Johnson, President and Chief 
   Executive Officer, National Stone, Sand, and Gravel Association, 
         Submitted for the Record by Hon. Donald M. Payne, Jr.
                                                     March 7, 2022.
The Honorable Donald Payne, Jr.,
Chairman,
House Committee on Transportation and Infrastructure, Subcommittee on 
        Railroads, Pipelines, and Hazardous Materials.
The Honorable Rick Crawford,
Ranking Member,
House Committee on Transportation and Infrastructure, Subcommittee on 
        Railroads, Pipelines, and Hazardous Materials.
    Dear Chairman Payne and Ranking Member Crawford:
    The National Stone, Sand, & Gravel Association (NSSGA) respectively 
submits this letter to thank Chairs Peter DeFazio and Donald Payne, 
Ranking Members Sam Graves and Rick Crawford, and the Members of the 
Subcommittee on Railroads, Pipelines and Hazardous Materials 
(Committee) for holding this important and timely hearing on 
``Stakeholder Views on Surface Transportation Board (STB) 
Reauthorization'' on March 8, 2022. NSSGA strongly supports the funding 
of the STB to ensure it can properly and effectively carry out its 
statutory duties.
    NSSGA is the leading voice and advocate for the aggregates 
industry. Our members are stone, sand, and gravel producers and the 
equipment manufacturers and service providers who support them. NSSGA's 
member companies produce more than 90 percent of the crushed stone and 
70 percent of the sand and gravel consumed annually in the United 
States. Aggregates are the building block that builds towns and cities 
and the connections in between. The industry is synonymous with 
infrastructure but more than that. Aggregates play a crucial role in 
everything we touch--roads, railways, bridges, tunnels, water supply, 
sewers, electrical grids, and telecommunications.
    As a result, NSSGA members will play a crucial role in the success 
of the Infrastructure Investment and Jobs Act (``IIJA'') that became 
effective on November 15, 2021. The IIJA will help rebuild America's 
roads, bridges, and rails. It will strengthen supply chains by making 
long overdue improvements for the nation's ports, airports, rail, and 
roads. The aggregates industry will supply the materials needed to make 
these projects happen.
    Fully funding the STB to ensure it can properly regulate the rail 
industry is vital to the U.S. infrastructure and our members' ability 
to supply construction materials. Rail service delays create shortages 
and drive the cost of needed aggregates for important infrastructure 
projects, including highways, flood control, water supply, and other 
environmental improvement projects. The aggregates must then be 
supplied from other sources, which requires transporting over a longer 
distance and increasing cost, and increased emissions.
    The current state of the rail industry has left customers captive 
to service provided by a single railroad, and given the nature of the 
rail industry, there is no possibility of new rail entrants to provide 
competition. The rail industry is highly consolidated, having only 7 
Class I railroads compared to 40 in 1980, with the possibility that 
only 6 will exist by 2023. The consolidation of the industry has given 
railroads even less competition, creating, as some economists have 
pointed out, a duopoly in the East and the West. U.S. Railroads have 
also adopted the rail operating model called Precision Scheduled 
Railroading over the last five years, which has resulted in poorer 
service and higher rates for its customers. This model has had a direct 
impact on the aggregates industry and our ability to supply needed 
construction materials to projects.
    The STB is the economic regulator of the U.S. freight rail industry 
and serves as a crucial backstop when railroads have market dominance. 
Without a fully functioning STB, railroads would be free to charge 
captive rail shippers more unreasonable rates and engage in 
unreasonable practices. Also, railroads could provide inadequate 
service to shippers who rely on rail without any repercussions if 
proper regulation is not in place. The STB presently is working on 
practical solutions to address the problems that currently exist in 
freight rail: (a) a proposed rule change on reciprocal switching to 
improve competition in freight rail; (b) a program to monitor rail 
service at the first and last mile of a route; and, (c) a new rate case 
process called Final Offer Rate Review, which will make the rate case 
process more accessible and useable for shippers. The U.S. needs a 
funded and functioning STB to continue this important work.
    In conclusion, the NSSGA strongly supports the STB's mission and 
urges Congress to fully fund this agency, so its member companies can 
obtain these critical transportation services that are needed to build 
our infrastructure and sustain our communities. NSSGA encourages 
Congress to support STB regulatory reforms and to enact its own laws 
which will level the playing field between railroads and their 
customers.
        Sincerely,
                                           Michael Johnson,
   President and CEO, National Stone, Sand, and Gravel Association.

cc:  Members of the House Committee on Transportation and 
Infrastructure, Subcommittee on Railroads, Pipelines, and Hazardous 
Materials

                                 
  Letter of March 8, 2022, from Chet M. Thompson, President and Chief 
   Executive Officer, American Fuel and Petrochemical Manufacturers, 
          Submitted for the Record by Hon. Randy K. Weber, Sr.
                                                     March 8, 2022.
The Honorable Peter A. DeFazio,
Chairman,
Transportation and Infrastructure Committee, 2165 Rayburn House Office 
        Building, Washington, DC 20515.
The Honorable Donald M. Payne, Jr.,
Chairman,
Subcommittee on Railroads, Pipelines, and Hazardous Materials, 
        Transportation and Infrastructure Committee, 2165 Rayburn House 
        Office Building, Washington, DC 20515.
The Honorable Sam Graves,
Ranking Member,
Transportation and Infrastructure Committee, 2164 Rayburn House Office 
        Building, Washington, DC 20515.
The Honorable Rick Crawford,
Ranking Member,
Subcommittee on Railroads, Pipelines, and Hazardous Materials, 
        Transportation and Infrastructure Committee, 2164 Rayburn House 
        Office Building, Washington, DC 20515.

RE: Stakeholder Views on Surface Transportation Board Reauthorization

    Dear Chairman DeFazio, Ranking Member Graves, Subcommittee Chair 
Payne, and Subcommittee Ranking Member Crawford:
    On behalf of the American Fuel & Petrochemical Manufacturers 
(AFPM), thank you for your leadership and commitment to improving the 
competitiveness and efficiency of the United States freight rail 
system. All stakeholders would benefit from a healthier and more 
competitive and dependable freight rail system, and the Surface 
Transportation Board (STB) has a key role in achieving these goals. STB 
reauthorization is a top priority for AFPM and rail shippers, and this 
forum provides an opportunity for rail shippers to highlight potential 
topics for consideration in future legislation.
    AFPM is a trade association representing virtually all the U.S. 
refining and petrochemical manufacturing capacity. Our members produce 
the fuels that drive the U.S. economy and the chemical building blocks 
integral to millions of products that make modern life possible. Rail 
transportation is vital to our members, as well as to manufacturers and 
customers downstream that depend on our products. Refineries and 
petrochemical manufacturers across the country rely on the rail network 
as an essential part of their supply chains.
    Consolidation within the rail industry has left just four railroads 
in control of 90 percent of U.S. rail traffic. Due to this 
consolidation, rail shippers, including AFPM member companies, face 
escalating rates, service challenges, a lack of competitive options, 
and ineffective means to resolve commercial disputes with railroads. In 
fact, 75 percent of refiners and petrochemical manufacturers today are 
served by only a single railroad. With limited competition, freight 
rail rates have continued to increase whereas railroad costs have 
remained relatively flat.
    Further, the widespread introduction of Precision Scheduled 
Railroading (PSR)--a railroad operational method focused on maximum 
asset utilization and reduction of operating ratios--has exacerbated 
rail competition issues and caused a shift in railroad focus from 
serving rail customers to maximizing profits. According to a recent 
report from Escalation consultants:
      Real rates rose more than 43 percent, while railroad 
costs only increased by 8 percent between 2004-2019.
      Revenue from non-competitive rates increased 230 percent, 
while revenue from competitive rates only increased 24 percent.
      In 2019, half of all Railroad revenue was generated from 
non-competitive rates.
      Rail rates have increased 2.4x more than truck rates.\1\
---------------------------------------------------------------------------
    \1\ See Rail Rates Climb Higher as Competition Gets More Scarce 
(freightrailreform.com)

    AFPM commends the STB for actively addressing the root causes of 
many of these challenges and tackling important rail competition 
issues. That said, STB reauthorization provides an opportunity to 
further update government policies that have not kept pace with these 
post-consolidation changes and have left many rail customers without 
access to competitive transportation options or an effective way to 
resolve problems with rates and service. Competition among railroads, 
or at least the realistic threat of competition, can serve as an 
important safeguard against inadequate service or unreasonably high 
prices. When considering STB reauthorization, AFPM supports reforms 
that:
      Increase Competitive Options--STB should adopt policies 
that will promote greater access to competitive rail service, such as 
reciprocal switching (STB Docket No. EP 711-1). Congress expressly 
granted the STB authority to require reciprocal switching in the 
Staggers Rail Act of 1980, which is needed now more than ever to spur 
greater competition within captive rail markets.
      Reform Outdated Policies--Current rate dispute processes 
are too complex and expensive to be a viable option in most cases. 
Congress clearly described and reaffirmed that the STB is intended to 
provide multiple avenues for rail shippers to dispute potential unfair 
rates.\2\ Future STB reauthorization should consider additional options 
to dispute rates and encourage the adoption of both Final Offer Rate 
Review (Docket No. EP 755) and Voluntary Arbitration (Docket No. EP 
765).
---------------------------------------------------------------------------
    \2\ Public Law 104-88, 109 Stat. 803, 810 and Public Law 114-110, 
129 Stat. 2228.
---------------------------------------------------------------------------
      Foster a Strong Rail Network--Market forces and sensible 
federal policies are needed to ensure everyone benefits from a healthy, 
affordable, and dependable freight rail system. STB reauthorization 
should consider reporting requirements that would provide critical 
insight into the health of the rail network. This could include first 
mile and last mile data reporting (STB Docket No. EP 767) as this data 
has the potential to identify rail network bottlenecks.

    AFPM thanks the subcommittee for its time and consideration of all 
stakeholder viewpoints on STB reauthorization. AFPM emphasizes the need 
for a fair and competitive rail market for the energy and petrochemical 
industries and the U.S. economy and the important role the STB plays in 
ensuring equitable and competitive rail markets. AFPM shares Congress's 
goal of ensuring the flow of commerce on our nation's rail system and 
looks forward to continued collaboration. AFPM and our members 
appreciate your consideration of these reauthorization priorities.
        Sincerely,
                                          Chet M. Thompson,
  President and CEO, American Fuel and Petrochemical Manufacturers.



                                Appendix

                              ----------                              


 Question from Hon. Donald M. Payne, Jr., to Dennis Newman, Executive 
   Vice President of Strategy, Planning, and Accessibility, National 
                Railroad Passenger Corporation (Amtrak)

    Question 1. Can you describe the significance of the proceeding 
pending before the STB to restore Amtrak's Gulf Coast service?
    Answer. The STB's decision in the Gulf Coast case will have a major 
impact on whether Amtrak, USDOT and our state partners will be able to 
carry out Congress' direction, reflected in the Infrastructure 
Investment and Jobs Act (IIJA), to significantly expand Amtrak service. 
In order to do that, Amtrak must be able to restore or add additional 
routes and trains on host railroad-owned lines, without unreasonable 
delay or inordinate demands for capital investments, as Congress 
intended when it enacted the ``Additional Trains'' provision of the 
Rail Passenger Service Act (49 U.S.C. 24308(e)).

    Questions from Hon. Eric A. ``Rick'' Crawford to Dennis Newman, 
  Executive Vice President of Strategy, Planning, and Accessibility, 
            National Railroad Passenger Corporation (Amtrak)

    Question 1. Please identify and explain any concerns Amtrak has 
about reciprocal switching.
    Answer. While it is possible that increases in reciprocal switching 
could affect rail network congestion, we believe that the current 
Surface Transportation Board is cognizant of this issue and do not 
anticipate that it would adopt policy changes that would negatively 
impact the rail network. Other factors, such as the failure of some 
host railroads to fulfill their statutory obligations to give Amtrak 
trains preference over freight and to allow operation of additional 
Amtrak trains, and operational changes (such as operating freight 
trains too long to fit in sidings on single track lines) made by some 
freight railroads in recent years to implement so-called ``Precision 
Scheduled Railroading,'' have had a much greater impact on rail network 
congestion and the performance of Amtrak trains than we anticipate 
might result from any changes in reciprocal switching policies.

    Question 2. Does Amtrak have any advice for the Surface 
Transportation Board (STB) when it comes to finalizing the 2016 
proposed reciprocal switching rule or abandoning the rule altogether?
    Answer. No. We believe that the current Surface Transportation 
Board is well equipped to address this issue.

    Question 3. Is it possible for reciprocal switching to potentially 
cause track congestion and service disruptions that would impact on 
time performance for Amtrak's trains?
    Answer. Please see response to Rep. Crawford's question 1 above.

    Question 4. What percentage of Amtrak's ridership prior to COVID 
was tied to state supported services versus the National Network and 
the Northeast Corridor? What portion of ridership has returned?
    Answer. State supported services accounted for 47.5% of Amtrak's 
systemwide ridership in FY19, the last full fiscal year before COVID. 
As of March 2022, ridership on state supported services is at 77.6% of 
pre-COVID levels (vs March FY19), and systemwide ridership is at 81.9% 
of pre-COVID.

    Question 5. How does Amtrak work with its freight partners when it 
wants to establish a new service?
    Answer. When Amtrak proposes to operate new or expanded passenger 
rail service on a host railroad, it notifies the railroad. The host and 
Amtrak thereafter engage in discussions regarding the proposed 
operation. If Amtrak and the host cannot reach agreement, we seek to 
resolve differences under the terms of our operating agreement or at 
the Surface Transportation Board. Recent examples of agreements for new 
services between Amtrak (or Amtrak and a state partner) and host 
railroads include the agreements for additional frequencies between 
Chicago, IL and Milwaukee, WI and Chicago and St. Paul, MN, and new 
service between New Orleans and Baton Rouge, with Canadian Pacific, and 
with CSX and the Commonwealth of Virginia for major increases in 
service between Washington and Richmond and elsewhere in Virginia.

    Question 6. Recently the Governor of Pennsylvania announced an 
agreement between Amtrak and Norfolk Southern on expanding passenger 
rail in the state. Please explain the agreement and specifically 
indicate whether it will require infrastructure investment and whether 
Pennsylvania utilized a study to assess current and future capacity 
needs.
    Answer. The recently announced agreement to expand passenger 
service in Pennsylvania is between Norfolk Southern and the 
Commonwealth's Department of Transportation, not Amtrak. Public reports 
indicate that the Commonwealth will invest nearly $171 million dollars 
in specific NS infrastructure. Amtrak was not involved in any capacity 
studies that may have been performed.

    Question 7. Occasionally Congressional members reference the 
agreement between CSX, Virginia, and Amtrak as an example of what can 
be accomplished when all parties work together. Did this effort require 
an assessment or a study on capacity?
    Answer. The agreement among CSX, Amtrak and the Commonwealth of 
Virginia is part of a $3.7 billion investment that includes 
construction of a new bridge across the Potomac River; Virginia's 
purchase of 350 miles of right-of-way and 225 miles of track from CSX; 
and construction of additional track that will allow near hourly Amtrak 
service between Washington and Richmond; increased service between 
Richmond and Petersburg and Newport News; and a 75% increase in 
Virginia Railway Express Fredericksburg Line service. Capacity was 
assessed as part of the planning for that investment before Amtrak 
became involved.

    Question 8. Canadian Pacific recently announced it would work with 
state and local governments, Amtrak, and other interested parties to 
restore service between New Orleans and Baton Rouge, Louisiana. State 
level opposition to investing in infrastructure upgrades stymied these 
plans in the past. What changed and who will pay for infrastructure 
upgrades?
    Answer. While we defer to our partners in Louisiana state and local 
government to speak authoritatively to their position on this service, 
it is our understanding that Louisiana's current governor, John Bel 
Edwards, is a strong supporter of the service.
    A combination of federal grant funding, such as grants included in 
IIJA (e.g. Federal-State Partnership for Intercity Passenger Rail and 
Restoration Enhancement Grant program funds), and state and local funds 
will likely be used to make any necessary infrastructure upgrades.

    Question 9. Who pays for the infrastructure required when a new 
service is established? Can a new service can be established without 
further infrastructure investment? Please explain how Amtrak considers 
the needs of the current users when establishing new services. Please 
provide specific methodologies and examples.
    Answer. New service can be established without infrastructure 
investment where there will be no unreasonable impairment of freight 
transportation of the rail carrier. Whether additional infrastructure 
should be considered to support operation of a new or expanded Amtrak 
service depends upon many factors. The cost of any infrastructure that 
Amtrak, its state partners, and the rail carrier agree on has typically 
been funded by the Amtrak state partner that proposed the new or 
expanded service and/or federal grants; in some cases, Amtrak has also 
provided or committed funding. Under federal law (49 U.S.C. Sec.  
24308(e)), the host railroad has the burden of demonstrating that the 
additional Amtrak trains would impair unreasonably its freight 
transportation, and that additional infrastructure may be necessary as 
a result.

    Question 10. What is the difference between starting a new service 
versus restarting a service? Why did Amtrak not reinstate the Gulf 
Coast line after Hurricane Katrina in 2005? Why the 17-year lag on this 
route?
    Answer. The differences between starting a new service and 
restarting a service depend upon the specific services at issue. Amtrak 
did not reinstate Sunset Limited service between New Orleans and 
Jacksonville/Orlando following Hurricane Katrina because the hurricane 
damaged Amtrak stations along the Gulf Coast and the service provided 
by the Sunset Limited had ceased to be viable due to extremely poor on-
time performance, attributable primarily to freight train interference, 
that had eroded ridership, reduced revenues, required significant 
lengthening of schedules, and increased costs and equipment 
requirements. Amtrak has been attempting for over a decade to reinstate 
service on the Gulf Coast line but this proved to be impossible due to 
the lack of cooperation and agreement by the host railroads.

    Question 11. In relation to the Gulf Coast route proposal, the 
proposed trip time is about three hours and 20 minutes and the average 
speed is less than 50 miles per hour. How competitive is the proposed 
passenger rail service relative to other transportation modes?
    Answer. Amtrak and our sponsoring state partners believe that this 
service will be competitive. Train travel is often not the fastest 
alternative door-to-door, but its inherent safety, comfort, and ability 
for passengers to relax, work, or eat and drink more comfortably than 
other modes of travel make it a highly popular alternative. The average 
speed on many very successful Amtrak corridor services is less than 50 
mph. For example, the Pacific Surfliner (2.8 million passengers in 
FY19); the Capitol Corridor (1.8 million passengers in FY19) and the 
Downeaster (557,000 passengers in FY19).

    Question 12. Amtrak Connects US map identifies a vision for state-
supported corridors. Do you have a similar vision, or plan to create a 
vision, for the long-distance, national network?
    Answer. Section 22214 of the Infrastructure Investment and Jobs Act 
directs the Secretary of Transportation to lead a comprehensive study, 
to be completed by November 2023, on increasing long distance service. 
Amtrak plans to participate in and support the DOT study. Decisions 
regarding expansion of long distance service will be based upon the 
study's findings and future federal appropriations to Amtrak. Amtrak 
intends to continue operating its current long distance network into 
the future subject to ongoing federal appropriations, and has launched 
a comprehensive effort to develop a proposal for replacing the fleet 
operating the long distance network leveraging funding opportunities 
also made possible by the IIJA.

    Question 13. Amtrak has proposed to introduce four daily trains 
between New Orleans, Louisiana, and Mobile, Alabama, without any 
infrastructure. Has Amtrak done any analysis that shows that the 
proposed passenger trains will consistently meet the Federal Railroad 
Administration (FRA) on-time performance metrics for intercity 
passenger trains? Please provide supporting data and analysis.
    Answer. Since federal law (49 U.S.C. 24308(c)) requires that Amtrak 
trains be given preference over freight transportation, the proposed 
Amtrak trains will be able to meet the FRA on-time performance metrics 
for intercity passenger trains if the host railroads give them 
preference as law requires. There is no requirement that Amtrak 
affirmatively demonstrate this. Amtrak, the state members of the 
Southern Rail Commission and the federal government are prepared to 
invest over $60 million for infrastructure along the Gulf Coast 
corridor.

    Question 14. According to an Amtrak Inspector General report, after 
Amtrak settled with the Department of Justice (DOJ) for $2.5 million 
that Amtrak does not anticipate being in compliance with the American 
Disabilities Act (ADA) within the new timeline. Is that accurate, and 
if you miss the timeline again will another taxpayer funded DOJ 
settlement be needed?
    Answer. The provisions of the DOJ settlement agreement applicable 
to station compliance will be in effect until December 2030, but the 
agreement does not establish a specific deadline for completing all 
stations compliance work. It is theoretically possible for DOJ to 
assert new claims after the expiration of the settlement agreement, but 
that is highly unlikely.

    Question 15. Will Amtrak keep its commitment to the State of 
Nevada, the County and the City of Elko, and Amtrak's passengers on the 
California Zephyr, which connects San Francisco to Chicago, and 
complete the station safety improvements agreed to by Amtrak in its 
letter dated January 28, 2013, to the City of Elko pursuant to its 
Accessible Stations Development Program?
    Answer. Yes. Amtrak's ADA Stations Program (ADASP) team is working 
on designs which are at 90% after a significant period of review by 
Union Pacific Railroad (UPRR) and finally coming to an agreement. 
Amtrak has in the meantime contracted with a local transportation 
company to provide connectivity to both platforms to accommodate 
customers with a disability.

    Question 16. Will Amtrak support and update (if necessary) its 
Memorandum of Understanding between it and the City of West Wendover, 
Nevada dated February 11, 2015, to provide passenger service for the 
city along the California Zephyr route and logistically support the 
city's design and construction of a new passenger rail station?
    Answer. In 2015, Amtrak agreed to stop at West Wendover, Nevada on 
the California Zephyr route. Amtrak informed Union Pacific Railroad of 
our desire to do so, but the project came to a halt when UP informed 
Amtrak and the city that a station track would be required to avoid 
Amtrak stopping on the mainline. This was an unusual demand since 
Amtrak trains routinely stop at passenger stations on host railroad 
mainlines, but UP insisted. This significant additional cost changed 
the financial characteristics of the project. Amtrak continues to 
support this project and will connect with the city manager of West 
Wendover and UP to determine whether the parties' positions have 
changed since 2015. Amtrak will work with the city to review and update 
the MOU as necessary and discuss station/platform design.

    Question 17. Should Amtrak ensure that a state funding partner 
supports appealing to the STB for host railroad on-time performance 
relief before seeking formal action? If not, why? Outside of STB 
action, are there other options available to both Amtrak and state 
partners to work with host railroads on on-time performance related 
issues?
    Answer. The statute gives multiple parties the right to go to the 
Board, including entities for which Amtrak operates intercity passenger 
rail. While Amtrak has the independent right to bring a case to the STB 
regarding State-supported service, we would always consult with and 
seek the input of our partners before filing an action under 213.
    Going to the STB is a last resort, and we believe that direct 
negotiations with the railroads and targeted investments to improve 
train movement in certain areas is a good course of action that can 
improve on-time performance.

    Questions from Hon. Jesus G. ``Chuy'' Garcia to Dennis Newman, 
  Executive Vice President of Strategy, Planning, and Accessibility, 
            National Railroad Passenger Corporation (Amtrak)

    Question 1. Mr. Newman, what will be the impact to intercity 
passenger rail and our ability to spend the $66 billion from the 
Infrastructure Investment and Jobs Act (IIJA) to expand passenger rail 
services if Amtrak does not win the current case at the Surface 
Transportation Board on the Gulf Coast rail service?
    Answer. The Gulf Coast case is the first time the STB has been 
asked to resolve the issue of Amtrak's right to expand intercity 
passenger service free from unreasonable delay and inordinate demands 
by the host railroads. In order for Amtrak, USDOT and our state 
partners to carry out Congress' direction, reflected in the 
Infrastructure Investment and Jobs Act (IIJA), to significantly expand 
Amtrak service, there must be a remedy available when an amicable 
resolution cannot be reached with the host railroads.

    Question 2. Mr. Newman, it has taken over a decade to get to this 
point on restoring the Gulf Coast rail service after its suspension 
following Hurricane Katrina in 2005. That timeline follows multiple 
Congressional directives to restore the Gulf Coast Rail service, 
including the creation of the Gulf Coast Working group that included 
the two host freight railroads.
    What steps can Congress take to shorten the negotiating process of 
restoring passenger rail service between Amtrak and the freight 
railroads when the freight railroads choose to seek to appeal Amtrak's 
invocation of Amtrak's right to start passenger rail service on a host 
railroad's tracks?
    Answer. The ``Additional Trains'' provision of the Rail Passenger 
Service Act, 49 U.S.C. 24308(e), that authorizes the Surface 
Transportation Board (STB) to issue orders requiring host railroads to 
accommodate additional Amtrak trains was intended to allow Amtrak to 
add or restore service in an expeditious manner without inordinate 
demands by host railroads for capital investments. Following years of 
unsuccessful negotiations with host railroads over restoration of Gulf 
Coast service, Amtrak initiated a proceeding under that provision for 
the first time last year, seeking an order that would allow Amtrak to 
restore service between New Orleans and Mobile. After the STB issues 
its decision in that proceeding, we will advise the Subcommittee 
whether we believe legislative action is necessary to effectuate 
Congress' intent.

   Question from Hon. Jesus G. ``Chuy'' Garcia to Dennis R. Pierce, 
  National President, Brotherhood of Locomotive Engineers and Trainmen

    Question 1. Mr. Pierce, in your testimony you note the harm from 
Precision Scheduled Railroading to workers, including recent attendance 
policies implemented by railroads as a result of PSR.
    Congresswoman Marie Newman and I recently sent a letter to the BNSF 
railroad which implemented their Hi-Viz policy earlier this year. We 
asked BNSF to address concerns about the Hi-Viz policy that unions 
raised to Rep. Newman and myself.
    Can you explain the BNSF Hi-Viz attendance policy and why your 
members and others have strong concerns?
    Answer. The BNSF Hi-Viz attendance policy is just one more 
outgrowth of PSR style railroading. At its core, the policy forces 
employees to work additional shifts short of termination, all part of a 
concerted effort to force fewer employees to do more work. Like similar 
policies on CSX and Union Pacific, these policies have been forced upon 
the employees, with all the Class 1 Rail Carriers refusing to negotiate 
with our Union on these workplace issues.
    As background, the vast majority of BLET's members do not work 
scheduled jobs, nor do they have scheduled days off. They work on-call 
at randomly chosen times dictated by rail management, and in many 
cases, with little if any advance notice of when that call will come. 
In recent years, our members have been subjected to unfairly punitive 
attendance policies that demand they work around the clock every day. 
Like a similar policy on CSX and Union Pacific, the BNSF Hi-Viz 
attendance policy subjects our members to disciplinary consequences, 
including termination, even if they take time off because they are too 
sick or too tired to work safely. The policies are destroying the 
family lives of our members, even to the point of destroying their very 
families.
    These policies are also understaffing the railroads and destroying 
the supply chain with no regard for the impact on shippers.
    The workforce is stretched too far, and there is no elasticity to 
handle even the slightest unplanned events, and they happen daily.
    While the Union Pacific policy assesses points when employees are 
unable to report for work, the BNSF Hi-Viz attendance policy is a 
point-based system that starts each employee with 30 points, and then 
deducts points when employees are unable to report for work. Point 
accrual is capped at thirty and if any employee exhausts all their 
points they are subject to discipline or possible dismissal. This 
forces an employee into a disciplinary situation just for trying to 
take time off. As noted above, these same employees are on call 24/7 
and are now being forced to work day after day, never having access to 
scheduled days off.
    Congress should be very concerned about the impact that policies 
like Hi-Viz have on the Nation's supply chain. This is not just a BNSF 
issue. Most, if not all, Class 1 Railroads have draconian attendance 
policies that put workers at risk for working in heightened states of 
fatigue. These policies also force workers to report for work when they 
are ill, as there are few if any exceptions to point deductions or 
points assessed when too sick to work safely.
    Policies like these have led to thousands of rail workers either 
resigning or being terminated just to have some quality of life outside 
of work. Compounding the rail carriers' inability to hire new employees 
is the fact that the Unionized employees of Class 1 Rail Carriers have 
not had a negotiated wage increase since July 1, 2019, almost three 
years ago. Even with Rail Carriers reporting record earnings, they have 
stonewalled the Unions at the national bargaining table for well into 
the third year, refusing to recognize the contribution that these 
employees make to the nation's supply chain. These Rail Carriers do not 
care if, or how, they negatively impact the supply chain, but the 
entire nation pays the price when goods do not arrive on store shelves 
when they should.

  Questions from Hon. Eric A. ``Rick'' Crawford to Dennis R. Pierce, 
  National President, Brotherhood of Locomotive Engineers and Trainmen

    Question 1. Please identify and explain your organization's 
position and opinion on reciprocal switching. Would you advocate for 
any revisions should the proposed rule be reconsidered?
    Answer. I have attached BLET's submission to the Surface 
Transportation Board opposing additional rules allowing for so-called 
reciprocal switching.\\ In short, the reciprocal switching 
changes being discussed are not the ``silver bullet'' for shippers that 
some claim they are. Railroad infrastructure is not like the Nation's 
highway system. In most cases, only one rail carrier has rail access to 
any given shipper. Allowing shippers to force an additional rail 
carrier onto that singularly owned railroad does not change that the 
owning railroad will still manage the operation of the involved rail 
line. In many cases, the rail line is too congested to get any shipment 
to the shipper. We know this because rail carriers already have STB 
regulated ``trackage rights'' in certain instances where one rail 
carrier runs over the rails of another to service a customer. In many 
cases, the last train moved by the owning railroad is the train 
operated by the foreign carrier operating on trackage rights. Adding 
another layer of access at the whim of a shipper does guarantee any 
improvements to customer service.
---------------------------------------------------------------------------
    \\ Editor's note: BLET's submission to the Surface 
Transportation Board is retained in committee files.

    Question 2. Will the reciprocal switching rule impact the movement 
of goods and the supply chain?
    Answer. As noted in my previous response, allowing additional rail 
carriers onto another rail carrier's rail lines does not guarantee any 
improvement to the movement of the nation's goods. Regardless of who 
delivers the rail cars, it is the owning railroad that may park a 3-
mile-long train on top of the only access point to a given shipper for 
days on end. Railroads are not like highways, and current rules 
governing where cars are interchanged between rail carriers come with 
the tools, if enforced, that better address customer service without 
adding any new rules. In reality, the bigger problem for shippers is 
that PSR style railroading doesn't actually seem to care if or when any 
shipper gets its rail cars delivered. Self-imposed employee shortages, 
coupled with the complete mismanagement of the current workforce and 
the operation of the owning roads will not be improved by what is being 
proposed.

   Question from Hon. Eric A. ``Rick'' Crawford to Brad Hildebrand, 
  Member, National Industrial Transportation League, and Former Vice 
             President, Cargill--Global Rail and Barge Lead

    Question 1. Please identify and explain your organization's 
position and opinion on reciprocal switching. Would you advocate for 
any revisions should the proposed rule be reconsidered?
    Answer. The National Industrial Transportation League (NITL) 
supports the reciprocal switching proposal as issued by the Surface 
Transportation Board in 2016, in EP Docket 711 (Sub.-1), Reciprocal 
Switching.
    There is a lack of robust railroad-to-railroad competition in our 
industry. There are only seven Class I railroads with four of them 
responsible for moving 90% of our nation's freight. We are also facing 
the strong probability of that number being reduced to six Class I 
railroads with the pending merger of the Canadian Pacific and Kansas 
City Southern railroads. Given the exemption that the railroad industry 
enjoys from certain anti-trust protections, combined with post-merger 
duopolies that now exist in the western and eastern parts of the 
country, this creates an environment where the railroads can exert 
substantial market power over their customers who operate facilities 
served by only one railroad.
    A free-market economy works best if there is vigorous competition. 
Where a market has become highly concentrated due to a series of 
mergers, it is incumbent upon the government, and in this case the STB 
per the Rail Staggers Act of 1980, to instill or facilitate competition 
in the marketplace.
    The Board's proposed reciprocal switching rules is one avenue where 
the agency can instill competition in the marketplace. The STB proposal 
is about enhancing competition. It offers two new paths for shippers to 
request a competitive switching remedy from the Board that is 1) 
Practical and In the Public Interest or 2) Necessary to Provide 
Competitive Rail Service.
    The Board's current reciprocal switching rules were adopted more 
than 30 years ago when the rail industry was struggling financially. 
The STB has never granted a reciprocal switching request, and no new 
shipper requests have been made for decades, because it is impossible 
for a shipper to meet the current requirements due to the high legal 
standard--an insurmountable barrier in seeking relief. As such, NITL 
was the organization who filed the initial petition to request new 
reciprocal switching rules to the Board in 2011. NITL, along with the 
support of other shipper organizations, asked the Board to give meaning 
to the provision in the Staggers Rail Act of 1980 that authorizes the 
Board to grant reciprocal switching arrangements that are ``practical 
and in the publics best interest'' or ``necessary to provide 
competitive rail service.'' \1\
---------------------------------------------------------------------------
    \1\ 49 U.S.C. Sec.  11102(c).
---------------------------------------------------------------------------
    Adding to the elements that drove NITL to file its initial petition 
in 2011 is today's market environment that include:
      The financial health of the rail industry today is strong 
if not thriving--but only to the benefit of Wall Street and railroad 
shareholders.
      As noted above, the industry is highly concentrated with 
the probability of even more consolidations in the near-term.
      Nearly all Class Is began and continue to implement a new 
railroad operational method, Precision Scheduled Railroading (PSR) or 
at a minimum some version of it, which continues to result in dismal, 
costly problems for shippers.

    The bottom line is that shippers continue to suffer dismal service 
and increasing rates--especially those shippers who are only served by 
one carrier. The STB's proposed reciprocal switching rules is one way 
the Board can foster competition in the marketplace.
    Some railroads claim that, even where direct rail competition is 
lacking, there is ample competition via truck, and/or, by water barge 
or even air. While competition offered by other transportation modes is 
vital to our supply chain, it often cannot replace the need for 
railroad-to-railroad competition. Many shippers are prohibited from 
shipping by truck, water, or air due to numerous factors including 
commodity type, location, and infrastructure investments already made 
or needed to support rail. It is not easy to change transport options 
for each mode of transportation requires its own infrastructure and 
there are needs unique to each commodity. Shippers invest in their 
infrastructure to support freight rail transportation, based in large 
part, on what the rail carriers require to service our facilities--
plant, manufacturing facilities, distribution centers, and the like.
    As NITL stated previously, it does not share the messaging or 
opinions of the railroads notably expressed by the Association of 
American Railroads about the Board's competitive switching proposal. 
First, the operations of the railroads' entire network would NOT be 
severely jeopardized because the thousands of switches that its members 
would be forced to make to accommodate the interchanging of traffic 
with a competing railroad. On the contrary, the burden of proof would 
rest with the requesting shippers to demonstrate there is an 
established working interchange between the two rail carriers. Second, 
the requesting shippers would have to prove that the switching request 
falls under one of the above-mentioned paths and the respective 
criteria is met. It is NITL's belief that should the proposed 
reciprocal switching process become a Final Rule, there would not be a 
wholesale move for every shipper across the country to request a new 
reciprocal switch. Under the Board's proposal, it will still be a long 
and costly process for shippers to pursue. Shippers would want to be 
certain that their request for opening-up competition to their facility 
would meet all of STB's criteria before they make this kind of 
financial commitment. Should the Board's proposal become a Final Rule, 
there mere fact that exists, could hopefully result in competitive 
service and competitive rates without shippers having to go to the 
Board in the first place. This competitive driver is not present under 
the current rule.
    Again, thank you for the opportunity to respond to this QFR. NITL 
looks forward to this important dialogue continuing.

   Questions from Hon. Eric A. ``Rick'' Crawford to Herman Haksteen, 
        President, Private Railcar Food and Beverage Association

    Question 1. If the STB were to be reauthorized, how might this 
impact your route operations model?
    Answer. Regarding the first question, PRFBA supports:
    Multi-Year--Congress needs to continue developing a reauthorization 
and working towards a final measure as soon as possible especially 
considering the STB Reauthorization Act of 2015, P.L. 114-10, expired 
on September 30, 2020.
    Highest Possible Authorized Levels--PRFBA recommends that the 
authorization levels be commensurate with the recently enacted FY 
appropriation levels (including the level proposed in the 
Administration's FY 2023 Budget). This is needed because the: 1) 
demands placed on the STB are unprecedented given its regular 
adjudicatory responsibilities in addition to pending rail merger 
proceedings--all of which pose significant service and rate issues for 
captive shippers, and questions concerning the structure of a freight 
rail industry that promises to be even more consolidated than what it 
is today; 2) number of formal and informal railroad performance service 
complaints are increasing; 3) continued reliance on data transparency, 
including access by all stakeholders, remains where continued data and 
analytical capabilities are needed by the Board to enhance its 
evidence-based decision-making; 4) Board is charged with implementing 
the new passenger On-Time Performance Standards for passenger rail; 
and, 5) Board operating with a full complement of Members.
    GAO Study on PSR--PRFBA encourages Congress to consider the 
results, once released, of the study underway on the impacts of 
Precision Scheduled Railroading (PSR) being conducted by the General 
Accountability Office (GAO). This study, requested last Spring, 
promises to help guide further discussions as Congress, the Board, and 
interested stakeholders debate, develop, and realize the next STB 
reauthorization.
    Common Carrier Obligation--Railroads are conveniently using the 
``common carrier obligation'' to ``get away with'' poor service and 
high rates mainly because there is: 1) no clear definition of the 
``common carrier obligation;'' 2) no standard for which to measure it 
by; or 3) no meaningful consequence to the railroads if the obligations 
are not met. As such, PRFBA asks Congress to clarify via statute, the 
definition of ``common carrier obligation.''
    In theory, ``common carrier obligation'' means that railroads are 
to provide service on reasonable request--railroads are to provide a 
level a service that meets a shipper's reasonable needs. Considering 
there is no clear statutory definition, railroads have been able and 
continue to provide service that is poor even though asserting that 
they are meeting the ``common carrier obligation.'' The railroads have 
been prioritizing what commodities to serve while ``demarketing'' 
others and still claiming they are meeting the ``common carrier 
obligation.''
    Along with a statutory definition clarification, it would be 
helpful for Congress to direct the STB to develop a standard by which 
railroad service performance can be measured. This ties in to how 
important it is that the Board is beginning to consider requiring the 
Class Is to report, in the aggregate, FMLM data. PRFBA appreciates, to 
a point, that the Board would need some flexibility in applying a 
statutorily clarified definition with a standard that includes not just 
FMLM data, but other elements for meeting the common carrier obligation 
which might vary from one railroad to another and from one shipper to 
another. As such, the STB should be encouraged to also review and 
evaluate the extent to which railroad operating, financial, investment, 
marketing, and other business practices may be impairing the ability of 
and incentives for railroads to fulfill their common carrier 
obligations, in the aggregate, and provide adequate and economical 
service to their customers.
    STB already has the statutory authority to impose fines or 
penalties. PRFBA suggests Congress should expand the situations when 
the Board can assess fines or penalties that would allow shippers to 
recover appropriate damages to the extent the Board finds that 
railroads are not fulfilling their common carrier obligations, in the 
aggregate, as well as individually and are not providing adequate and 
economical service to their customers.
    In addition, the Board, under current statutory authority, can 
assess a penalty up to $8,700 per violation. This is far from 
consequential or punitive. Congress needs to consider establishing a 
higher penalty amount(s) and allowing the STB to apply a penalty to 
each carload and/or each day a carload is delayed. Another option for 
Congress to consider is to statutorily provide larger penalties tied to 
the overall level of service. This might have to be applied to both 
contract movements and movements that fall to the jurisdiction of the 
STB for if not, the railroads might use contracts to avoid their common 
carrier obligation.
    Demurrage--PRFBA appreciates the decisions the Board reached when 
issuing its 1) Final Statement of Board Policy in Docket No. EP 757, 
Policy Statement on Demurrage and Accessorial Rules and Charges; 2) 
Final Rule in Docket No. EP 759, Demurrage Billing Requirements; and 3) 
Final Rule in the Supplemental Notice of Proposed Rulemaking (SNPR) in 
Docket No. EP 759, Demurrage Billing Requirements. These new billing 
requirements went into effect on October 1, 2021. Shippers have been 
receiving and reviewing these new bills. While the railroads are 
providing the required new billing information, there are several 
problems which need Congressional, targeted fixes and accompanying 
policy modifications:
      Clarify that demurrage bills are to be sent to the 
shippers when railroads demonstrate that the shippers' behavior was the 
driver of the demurrage and not railroad service problems.
      Provide 30 days for shippers to pay demurrage bills. The 
15 days allowed today by some railroads does not provide enough time 
for shippers to contest, research, and negotiate with railroads over 
questionable fees especially when the bills may be months old.
      Increase the number of ``free days'' allowed to unload 
and load rail cars and unit trains. This fix ties into the PSR 
practices discussed earlier. Due to reduced train crews, elimination of 
hump yards, increasing train lengths, and the lack of fluidity in the 
rail network, cars tend to get ``bunched-up'' at pivotal points along 
the route. As an example, a PRFBA member can receive, without advanced 
notice or even coordination from the railroads, 15 cars rather than 5 
cars. It takes additional equipment and crews (which are not always 
readily available) for the PRFBA member to load, unload and turn around 
the rail cars where the typical 48 hours for loading and 72 hours for 
unloading is not nearly enough time before demurrage fees kick-in 
especially when the need for shippers to have more time is because of 
the railroads' poor service.
      Consider reverse demurrage, in that the railroads would 
pay the private car owners a daily fee when those private rail assets 
are held up due to railroad operating issues or allow charge backs to 
the railroads for daily car hire fees to offset the cost of additional 
transit days experienced by car owners.

    Commodity Exemptions--PRFBA believes that all commodities, whose 
freight rail movements fall under the purview of the STB, should have 
the opportunity to seek redress and relief from the Board. PRFBA 
recommends Congress eliminate commodity exemptions.
    Today, that does not exist as certain commodities are ``exempt'' 
and the current revocation standard that must be met by shippers, 
remains ambiguous, lengthy, and costly for shippers. STB initiated a 
rulemaking to review certain commodity exemptions in 2016.\1\ However, 
that proceeding has languished at the Board for too long, while denying 
many shippers of exempt commodities with direct access to the STB's 
remedies and procedures.
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    \1\ See STB Docket Ex Parte 704--Review of Commodity, Boxcar, and 
TOFC/COFC Exemptions.
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    Moreover, when the exemptions were adopted, tariffs and contract 
summaries needed to be filed. These requirements ended over twenty-five 
years ago. Exemptions are a solution to a problem that no longer 
exists.

    Question 2. Please identify and explain your organization's 
position and opinion on reciprocal switching. Would you advocate for 
any revisions should the proposed rule be reconsidered?
    Answer. Regarding the second question, PRFBA strongly supports the 
reciprocal switching proposal announced by the Board in 2011, Docket EP 
711 (Sub No.-1), Reciprocal Switching.
    When there is a lack of competition, notably in this case a lack of 
railroad-to-railroad competition, and especially at single-served 
facilities (or captive shippers), the railroads are free to provide any 
service level at any costs. To improve railroad financials, the 
railroads are even reducing capacity by limiting equipment 
availability.
    A lack of railroad-to-railroad competition with the strong 
probability of continued rail industry consolidation moving forward, 
profit-driven operational decisions (such as PSR) benefiting Wall 
Street and rail carrier shareholders, and the financial strength of the 
railroads all impact shipper service. Some PRFBA member companies are 
experiencing record poor service levels ranging from missed switches, 
reduced switching service days, bunching caused by longer trains, 
bottlenecks primarily driven from a reduction of serving yards and 
crews to the reduction of cars and locomotives, which all have led to 
longer transit times and irregular service.
    When there is reduced capacity, rates increase, service suffers, 
and railroad margins rise. When there is a lack of competition in a 
free market economy, it is incumbent upon the government, in this case 
STB per the Staggers Rail Act of 1980, to intervene. The Board's 
proposed changes, again announced in 2016, to the existing reciprocal 
switching rules is one venue for the STB to instill competition in the 
marketplace.
    It has been decades since the STB has granted a reciprocal 
switching request because it is nearly impossible for a shipper to meet 
the current requirements. Due to railroads' effective stalling tactics, 
this proceeding has stalled for about a decade, or stalled for 40 years 
if you consider that the Staggers Rail Act of 1980 provides for 
competitive switching.
    The Board proposal would allow PRFBA members and other shippers 
with access to only a single rail carrier to request before the Board 
that the carrier provide a switch for freight to be moved by a nearby 
rail carrier. This proposal would provide two paths for shippers to use 
when making the request before the Board: 1) switching must be 
practicable and in the public interest or 2) be necessary to provide 
competitive rail service. Both options would instill competition in the 
marketplace for a free-market economy can only function when there is 
competition.
    Again, PRFBA appreciates this opportunity to respond to the 
presented QFRs and looks forward to this important dialogue continuing.