News / US rail regulations: the battle for shippers' rights takes off

With broad support from shipper interest groups and unions, a bill before Congress seeks to clarify rail carrier obligation and establish criteria to assess it. It is one of several battles over US rail regulations that are currently in progress.

Two senators from the opposing sides in the house have tabled the ‘Reliable Rail Service Act’ to clarify and assess freight rail companies’ common carrier obligation in an effort to dispel ambiguity in the existing regulations and give shippers “much needed clarity”.

They commented that the current ambiguity has contributed to “insufficient rail services and exorbitant costs”.

The proposed bill expands on the current requirement to serve shippers “on reasonable request” by adding “in a manner that meets the shipper’s need for timely, efficient, and reliable rail service and fulfils the shipper’s reasonable service requirements”.

To establish criteria for the Surface Transportation Board (STB) to assess alleged violations or shortcomings on the carrier side, the bill contains a list of conditions for the regulator to consider, including frequency of service, the impact of reductions in employees, equipment or infrastructure and the transport needs of a customer based on previous service.

“Our farmers, small businesses, and manufacturers rely on rail service to get their products to market and make ends meet,” commented Senator Tammy Baldwin. “But when rail service is unreliable, it puts their livelihoods on the line, disrupts supply chains, and drives up costs.”

Railway performance has been in regulators’ crosshairs in recent years amid a flurry of complaints from cargo owners. In hearings on performance issues, former STB chair Martin Oberman suggested that shortcomings on the carrier side were likely linked to leaderships’ focus on precision scheduled railroading, putting cost reductions for the benefit of an improved operating ratio before service quality and growth.

This is not the first time that Congress has deliberated on a bill to clarify rail carriers’ service obligation. A precursor of this bill was introduced in 2022 and re-introduced the following year but failed each time to advance beyond the Senate’s Committee on Commerce, Science and Transportation.

The ambiguity of the carrier obligation has been a long-standing headache for shippers.

“Clarification of the common carrier obligation has been needed for decades and this bipartisan bill provides STB with clear oversight rules to help address our nation’s freight railroad supply chain challenges and improve rail service for agricultural shippers,” commented Mike Seyfert, president and CEO of the National Grain and Feed Association.

He was one voice of more than 40 interest groups ranging from the agriculture sector, energy producers and manufacturers to labour organisations that expressed support for the bill.

Not surprisingly the Association of American Railroads (AAR) has a different stance on the matter. It urged legislators to reject the bill.

“Railroads oppose efforts to upend the market framework in place today through sweeping re-regulatory proposals like the Reliable Rail Service Act,” it commented. It went on to argue that these “misguided reforms” would affect efficiency, “empower bureaucratic micromanagement” and reverse progress. It would result in higher costs across the economy, deter private investment, and stifle innovation.

Notwithstanding the bipartisan support, the fact that this legislative initiative failed to advance in two previous rounds raises question marks over its chance of progress this time, under a different administration with a bias to reduce regulatory oversight.

Meanwhile, battles are being waged over rail safety. Rail unions have sounded the alarm over Washington’s plans on Department of Transportation (DOT) oversight of enforcement procedures. A Notice of Proposed Rulemaking issued in May seeks to change regulations governing federal inspectors and investigators. It would allow the rail companies, during the course of an enforcement action against them, to “petition the DOT General Counsel for a determination that responsible DOT personnel violated provisions of this rule with respect to the enforcement action”.

The DOT’s general counsel could then direct the Federal Railroad Administration (FRA) to remove the enforcement team from the particular matter, eliminate certain issues, exclude certain evidence, or restart the enforcement action from the beginning or an earlier point in the proceeding.

In a filing with the DOT the Brotherhood of Locomotive Engineers and Trainmen stressed that its members rely on FRA investigators to hold railroads accountable to safety standards.

“Our members know that the railroads have a history of retaliation for reporting safety issues – something we take very seriously,” the union wrote in its submission. “We do not want rail carriers – or any regulated entity – to be able to make a simple complaint to DOT and get an investigator or inspector fired for reporting a correct violation.”

A hearing in the House of Representatives revealed a solid split along party lines among congressmen on the use of technology for safety assessment and the ramifications for manual track inspection. Republicans on the Transportation and Infrastructure Subcommittee on Railroads, Pipelines and Hazardous Materials favour increased use of technology, especially with regard to automatic track inspection, whereas Democrats on the committee voiced concern over the impact on workers and safety.

Again, this is a long-running battle. During the first Trump administration the FRA granted safety waivers to rail carriers to allow the testing of automated track inspection systems with simultaneous reductions in the frequency of visual track inspections. Such extensions were denied or not renewed under the Biden government.

The rail companies argue that automatic equipment finds more defects than visual inspections and might create more work for track workers. The Brotherhood of Maintenance of Way Employees countered that its members look for 27 specific track defects, most of which cannot be identified by current automated systems.

Union opposition has been reinforced by a proposal from the AAR to reduce the frequency of visual inspections to twice a month, down from twice a week, and by a proposal to give carriers up to 72 hours to repair a defect spotted by an automated inspection system. The union pointed out that track inspectors have to take action immediately when a defect is identified.