(The following story by Stephanie Johnson appeared on the Prairie Star website on December 29, 2009.)
GREAT FALLS, Mont. — A bill moving through the U.S. Senate would reform and improve railroad service in the United States and in South Dakota, said Sen. John Thune, R-S.D.
As a ranking member of the Surface Transportation Subcommittee of the Senate Committee on Commerce, Science and Transportation, Thune said the bill will do this partly by modifying the Surface Transportation Board (STB), the agency that regulates rail traffic in the United States.
The Surface Transportation Board Reauthorization Act of 2009 will also reform U.S. rail service by improving the way small shippers file complaints against railroad companies. The bill creates a new arbitration process, among other changes, in what Thune calls “pro-shipper” legislation.
According to Thune, small shippers currently have trouble challenging railroad companies due to the high cost of filing complaints and a complicated filing process.
“The playing field was clearly tilted in favor of the railroads in front of the Surface Transportation Board, and what this attempts to do is bring back a balance and to create some mechanisms that are more pro-shipper that would allow shippers to have a way to get their cases heard that resolves them more quickly and in a less expensive manner,” he said.
The bill would also:
• Create a new customer advocate on the STB, who would help shippers get their concerns addressed by the STB;
• Streamline the rate complaint process and lower fees;
• Modify federal guidelines to require a better policy balance between the interests of railroads and shippers;
• Require railroads to publish service standards in their tariffs;
• Reinstate the STBÕs ability to initiate investigations and studies of rail practices;
• Establish a process for the review of “paper barriers,” or agreements between railroads limiting the access of some short lines to larger companiesÕ lines;
• Increase the STB from three to five members, one of which must have an agricultural background.
“What we’re looking at is an opportunity for a more fair voice and more fairness in a pretty tightly-held industry,” said Todd Yeaton, chairman of the South Dakota Railroad Board.
According to Yeaton, a majority of South Dakota’s 1,839.5 miles of operating rail lines are owned by private companies like Burlington Northern Santa Fe (BNSF), not the state.
The bill would impact South Dakota in several ways, says Rick Vallery, executive director of South Dakota Wheat, Inc. Small shippers such as elevators, ethanol plants and coal plants would be able to challenge railroad giants like BNSF and Union Pacific.
Vallery said shippers face thousands of dollars in legal fees and one- to five-year delays after filing a dispute. The new arbitration process would make judgements faster and easier to get.
“From my standpoint, from a producer’s standpoint, the process was broken,” Vallery said.
But judgements resulting from arbitration are enforceable for two years and can provide only up to $250,000 in relief. Arbitration will help, but it won’t solve every issue, says Kathy Zander, executive director of the South Dakota Grain and Feed Association.
“From what I understand it doesn’t bring everything the industry would like, but it’s still good,” she said. “There are some things they hope they can fine-tune when it gets to the Senate floor.”
According to Doug Sombke, president of the South Dakota Farmers Union, large railroads can abuse agricultural shippers by charging higher rates in areas with no competition and using their legal clout to move legislation in their favor.
Railroad reform is long overdue, he said.
“It doesn’t have to be that way,” Sombke said. “We are in a time when our country is struggling financially and we need to find ways to get the local businesses such as farming back on their feet, not to be controlled by one entity.”
Thune said he hopes the bill will provide more effective railroad service for producers in the United States and South Dakota.
The Senate committee on Dec. 17 by voice vote approved the bill, which is viewed as the most significant freight rail legislation since the Staggers Rail Act in 1980. The bill likely will undergo additional fine-tuning before being considered in 2010 on the Senate floor.
“In South Dakota we have a real need for an effective freight rail transportation system,” he said. “And if we don’t we’re not going to be able to get our commodities to the marketplace.”