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Surface Transportation Board Update

Surface Transportation Board Update. Industrial Minerals Association – North America 2011 Annual Meeting Transportation Committee Commissioner Francis P. Mulvey September 13, 2011. STB Basics. Independent economic regulatory agency for railroad industry Jurisdiction over

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Surface Transportation Board Update

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  1. Surface Transportation Board Update Industrial Minerals Association – North America 2011 Annual Meeting Transportation Committee Commissioner Francis P. Mulvey September 13, 2011

  2. STB Basics Independent economic regulatory agency for railroad industry Jurisdiction over Railroad rate and service disputes Railroad mergers and acquisitions Rail line abandonments and construction Freight/passenger rail relationships

  3. Limited Jurisdiction Over Motor Carriers • Many industrial minerals move via truck • STB has limited jurisdiction over motor carriers • Motor carrier pooling of traffic, services or resources reviewed by STB • Motor carrier rate bureaus subject to STB jurisdiction; STB disapproved all bureaus in 2007, making them subject to antitrust laws • Household goods movers subject to STB and FMCSA jurisdiction

  4. STB Structure • Comprised of 3 Board members • Ann Begeman joined STB May 2011 • Transportation backgrounds • Mulvey: House T&I staff, GAO DOT IG • Elliott: United Transportation Union • Begeman: Senate Commerce Committee

  5. STB STAFF • Highly educated professional staff - lawyers, economists, financial analysts, environmental and railroad operational specialists • Named #1 small agency - annual federal employee survey for past 2 years • “One of the most obscure corners of the federal government . . . . train geeks and experts” Washington Post

  6. Industrial Minerals Rail Shipments • Significant gross revenue contributor for Class Is (2010) • Non-metallic minerals - $1.3B • Metallic ores - $404M • Stone, clay, glass - $1.2B • Above traffic is 11% of total rail tons originated in U.S. (2010) • Crushed stone, sand, gravel carloads above 2009, but not yet at pre-recession levels

  7. Industrial Minerals Rail Shipments • Many industrial minerals shipments exempt from STB regulation due to truck competition • E.g., sand, gravel, clay, concrete, stone, hydraulic cement, salt • Non-exempt products include lime, soda ash • Many industrial minerals historically move below 180 R/VC, the rate regulation threshold • Metallic ores – 82% of non-intermodal movements < 180 • Non-metallic minerals – 54% of non-intermodal movements < 180 • Stone & Glass – 59% of non-intermodal movements < 180 • Vast majority of intermodal movements of industrial minerals < 180

  8. STB Interaction with Industrial Minerals Industry • FMC Wyoming v. UP (2000) case challenged soda ash rates • Proposed New England Transrail line would carry aggregates and industrial minerals • Minerals traffic an issue in railroad mergers, e.g., UP/SP, UP/Chicago Northwestern, RailAmerica/RailTex, CN/Great Lakes Transp. • Southwest Gulf RR obtained Board approval to build a new rail line in TX primarily to serve a limestone quarry

  9. General Rail Industry Trends • Data on rail traffic volumes is mixed • Carload and intermodal volumes down .8% and .5% respectively for week ending 8/27/11 • Strong YTD volumes result in gains compared to YTD 2010 • Traffic volume growth and weather can impact service • Dwell time has risen, train speed has fallen • Car delays and car supply issues have increased

  10. Congressional Agenda re STB issues (Senate) • Dominated by budget • STB Reauthorization bill - reintroduced Jan. 2011, no movement lately • Railroad antitrust bill – voted out of Senate Judiciary Cmte March 2011 • PTC • Senate bill would remove 10,000 miles from PTC by changing date to determine TIH movements • FRA proposed rule would reduce TIH miles • Issues re PTC cost allocation currently before STB

  11. Congressional Agenda (House) • T&I Chairman John Mica • Multi-year transportation spending bill still pending; Mica supports one final extension • FAA bill showdown over summer; extension expires 9/16 • Review DOT high speed rail grants, RRIF loans • Freight RR capital spending, tax credits • Railroad Subcommittee Chairman Bill Shuster • Focus on Amtrak, high-speed rail, reduced regulation

  12. Major recent STB decisions • BNSF coal dust tariff – found unreasonable (new challenge to revised tariff filed recently) • Entergy paper barrier case – STB denied request for alternative route but found shipper had a right to svs from alternate carrier for certain mines (reconsideration request pending at Board) • Filing fees – reduced for most types of complaints

  13. Hearing on Exemptions • Hearing held in February 2011 • Railroads • Exemptions fostered growth • Railroads face intense competition from other modes on exempt commodities • Shippers (Auto, Forest/Paper, Cement) • Changes in industry support reexamination • High rates in certain exempt commodities • Board considering testimony

  14. Hearing on Competition in the Railroad Industry • 2 days in June 2011 • Testimony from railroads, shippers, members of Congress, gov’t agencies, freight forwarders, Wall Street • Wide range of issues discussed • Competitive access, “bottleneck” issues, reciprocal switching • Alternative route prescriptions • Financial state of rail industry • Impact of policy changes • Rail rate trends • Competition for non-captive shippers • Accessibility of Board procedures • Board considering testimony now

  15. Major STB Matters Pending • Large rate cases pending • AEPCO v. BNSF/UP (coal) • DuPont v. NS (chemicals) • Total Petrochemicals v. CSXT (chemicals) • M&G Polymers v. CSXT (chemicals) • Intermountain Power v. UP (coal) • Sunbelt Chlor Alkali v. NS/UP (chemicals) • Tariff issues – e.g., fuel surcharges, tank car routing, weather-related weight charges

  16. Many pending rulemaking proceedings/requests • Demurrage liability (warehousemen) • PTC reporting requirements (UP) • Reciprocal switching (NITL) • Amtrak emergency routing • Changes to mediation/arbitration procedures • Procedures for confidential waybill data in small rate cases

  17. Recent Mediated Cases • Several large rate cases settled recently • NRG v. CSXT, three Dupont v. CSXT cases, two U.S. Magnesium v. UP cases, South Mississippi Electric Power v. NS • Mediation reduces Board and party expenses • Board seeking funding from Congress to expand mediation services

  18. STB RCPA Office • Available to resolve smaller disputes informally • Reach out to RCPA before formal complaint • Works for large and small shippers • Good resolution rates with Class I and many short line carriers

  19. Additional Announced STB Initiatives • Update to Uniform Rail Costing System • Internal evaluation continuing • Budget • Increased Transparency • Decision digests • Oral arguments/hearings • More active monitoring of industry • Increased audits • Increased reporting

  20. Future of STB • Fate of reauthorization legislation • Funding level for agency • Increased rail traffic • Opportunities for Board to address important railroad/shipper issues stemming from hearings • Stay tuned . . .

  21. Thank youAny Questions?

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