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Weekly Transportation Update
Monday, September 22, 2014 11:49AM CDT

By Mary Kennedy
DTN Cash Grains Analyst

OMAHA (DTN) -- A bill giving the Surface Transportation Board authority to investigate unfair rail service practices without waiting for a rail customer to complain has moved out of Senate committee.

The Senate Commerce, Science and Transportation Committee approved the rail legislation introduced by U.S. Sen. John Thune, R-S.D., on Sept. 17. The STB Reauthorization Act of 2014 (S. 2777), can be found here. http://thomas.loc.gov/…

The bill gives the Surface Transportation Board new authority to investigate rail practices alleged to be unreasonable without having to wait for the filing of a formal complaint by a rail customer. Filings of shipper complaints of unreasonable rail rates would still be necessary per the current practice required by the STB.

The new bill provides for a voluntary arbitration process for disputes. Also on Sept. 17, the NGFA and 36 other agricultural producer and agribusiness organizations sent a press release commending the rail legislation.

The legislation would "make an important contribution ... by strengthening the independence of the STB, improving how it functions (including allowing much-needed ongoing dialogue amongst board members); requiring more transparency concerning the status of its proceedings and the nature and disposition of complaints brought before the agency; and providing for a voluntary arbitration process for disputes involving unreasonable rail rates, unreasonable rail practices and rail carriers' common-carrier service obligations -- with binding outcomes if utilized -- that also recognizes and provides for the existence of private-sector arbitration systems for resolving such disputes," NGFA stated in its release.


At a meeting of the North Dakota Agricultural Rail Business Council in Mandan, N.D., July 31, John Miller, BNSF group vice president for agriculture told participant's that his firm prefers changes "be driven by the marketplace and not by regulations from the Surface Transportation Board," according to Agweek. He was referring to the STB mandating weekly reporting from the BNSF and the Canadian Pacific Railroad and is concerned that further regulation would alter their service priorities.

The Association of American Railroads agrees with Miller. In a Sept. 16 press release, the AAR said if allowed to proceed as is, the legislation would harm the nation's railroads' ability to move what the economy demands and deliver the service shippers expect. "The railroad industry would not be able to continue to reinvest record amounts of private capital into the freight rail system if the STB Reauthorization Bill passes in its current form," said the AAR.

Railroads have several serious concerns with the bill, said AAR President and CEO Edward R. Hamberger. "The rail industry believes this legislation will harm the ability of the nation's railroads to invest in the network and improve service for our shippers," said Hamberger, who noted in the press release that railroads are moving the most freight in the last seven years and commodities, such as grain, are up double digits over this time last year. "These new restrictive regulations would be imposed on the nation's railroads at a time when investments in capacity, new equipment and new hires are needed." Here is a link to the press release in its entirety: http://goo.gl/…


Media headlines suggest that "Canada's Federal government may have their hands full in enforcing the terms of Bill C-30 while staving off legal attacks associated with it," said DTN Canadian Grain Analyst Cliff Jamieson. On Wednesday of last week, Transport Canada announced that CN Rail would be fined for failing to meet the mandatory minimum weekly shipping volume of 536,250 metric tons of grain. CN has argued that the shortfall is a result of a lack of orders from shippers. CN Rail CEO Claude Mongeau told the media, "We can't move what they don't deliver or what they don't order."

Mongeau had been outspoken about his disapproval of Bill C-30 prior to the passage of the legislation. The Canadian Press reported on April 9 that at a meeting with the Winnipeg Chamber of Commerce, Mongeau criticized the federal government for over-regulating railways based on an unusually cold winter and a bumper grain crop. "This is bad policy," Mongeau said at that meeting. "This is bad, bad policy made in the heat of the moment to punish the railroads for not moving a 100-year crop in a difficult winter."

The data transparency promised as a part of the legistation has yet to arrive, said DTN Canadian Grain Analyst Cliff Jamieson. "The Western Grain Elevators Association suggests that neither railway is able to move the cars ordered or is meeting the mandatory minimum volumes. CN's grain movement data suggests that an average of 5,031 cars were spotted per week in the month of August, which compares to the average demand of 4,920 cars per week and the five-year average of 3,082 cars moved per week. Not being discussed is the subject of the location of cars spotted and whether this is where they are required. There are reports of grain being trucked from southwestern Saskatchewan facilities to Alberta facilities to meet available shipping opportunities."

Meanwhile, CP Rail has turned to legal action against the federal government over Bill C-30's rules surrounding interswitching. As a means of increasing competition between railways, the allowable interswitching distance, or the right to transfer cars to a competing railroad, was increased from 30 kilometers to 160 kilometers from an interchange for all commodities. Jamieson said the "CP Rail suggests they stand to lose money in the process and the practice will only slow the movement of goods."


In their weekly filing to the STB, the BNSF reported that average past due cars in the U.S. was at 2,581, with North Dakota still owed over half of that total at 1,646 cars behind as of Sept. 18.

The BNSF reported to customers on Sept. 19, "Extreme weather across the southwestern U.S. created some challenges to our operation this week. Record rainfall and high winds across parts of Arizona, New Mexico and west Texas associated with the remnants of Hurricane Odile caused flooding and washouts across the South Region.

"We are also in the peak period for maintenance with all 55 of our capital gangs working on the railroad. One of those programs is the maintenance work being done along our main line between Chicago and Minneapolis-St. Paul where re-routing of some traffic onto alternate routes has been required. Despite these actions, trains are moving faster with increased car velocity across the system." Here is the link to the BNSF filing to the STB on Sept. 19. http://goo.gl/…

As of Sept. 14, the CP rail told the STB in their weekly service filing that past-due cars in North Dakota were at 3,023 and Minnesota was at 306. CP shippers in North Dakota and South Dakota have reported that some of their past-due orders still date back to May. The CP commented to the STB that, "We anticipate that the number of open requests will continue to come down over the coming weeks." Here is the link to the CP filing to the STB on Sept. 19. http://goo.gl/…

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary Kennedy on Twitter @MaryCKenn


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