Regulators Propose Rule Change to Get Freight Moving

Federal regulators moved last week to make it easier for farmers, chemical companies and other shippers to get government intervention when freight railroad service is delayed, in a bid to resolve supply chain woes in the rail industry.

The Surface Transportation Board (STB) voted unanimously to propose an update of its emergency service rules, which enable the STB to compel railroads to respond when shippers say they aren’t receiving sufficient and timely service.

Among other measures, those rules enable the board to order railroads to share tracks with competitors to get freight loads moving.

The board’s proposal would compress the existing timeline under which a shipper’s petition for relief is considered, speeding up any potential intervention by regulators. And it would create a new category of “acute service emergencies, such as those involving public health or safety issues and imminent and extended potential plant shutdowns,” in which a single board member could rule on a petition within 48 hours.

“This rule is aimed at removing some of the roadblocks that have apparently kept shippers from being able to use the rules,” STB Chairman Martin Oberman said in an interview.

The industry also says that the administration’s stated goal of injecting more competition into the rail industry, including a proposal to compel railroads to share infrastructure with competitors to allow more price competition, will cause more problems and congestion than it would solve.

Oberman has criticized what he views as the rail industry’s focus on short-term profits at the expense of robust infrastructure and labor force to withstand weather and logistics-related disruptions.  

He cited reports of ethanol manufacturers pausing operations while waiting for delivery of the empty unit trains they need to load shipments for market, and of a major fertilizer producer being asked to limit its outgoing shipments due to a lack of train capacity this spring, and major livestock operations reporting delays in delivery of animal feed.

“These shortages contribute to inflation, and you have a huge company who can’t function because the railroads can’t do their job,” Oberman said. “This is a major issue for the economy.”

Railroad industry officials have said the approach from STB and the Biden administration is misguided, and criticized proposals to more aggressively regulate the industry’s operations.  s