Wisconsin Senator’s freight railroad bill addresses challenges cited by shippers

Even though legislation introduced by Sen. Tammy Baldwin (D-Wisc.) may have a keen focus on her home state, it essentially also doubles as a wish list of sorts for rail shippers throughout the country.

Entitled the “Rail Shipper Fairness Act,” the legislation is geared towards challenges rail shippers face along the lines of a need to reduce costs and improving rail service.

Some of the key aspects of the legislation include:

• requiring rail service to be efficient and reliable; clarifying STB authority to address service emergencies for shipments moving under contract; and expanding fines and equitable damages that railroads can be forced to pay for poor service.
•  allowing competitive switching for interchanges within 100 miles; removing the presumption that market dominance cannot exist when a shipper is served by two carriers; and revising rail transportation policy to reflect shipper priorities in addition to railroad priorities;
• suspending collection of rate increase while a rate case is pending; requiring use of market-based revenue methodology in stand-alone rate cases; shifting the burden of proof to railroads in stand-alone cost cases; and eliminating the qualitative market dominance test;
•  prohibiting railroads from charging customers for fuel in a way that does not correlate with actual fuel costs; and
• removing the revenue adequacy test and cap railroad cost of equity at a reasonable level

This legislation is the most recent example of rail shippers’ collective efforts to re-regulate the freight railroad sector to a large degree.

Speaking from a Wisconsin perspective Senator Baldwin said in a statement that Wisconsin businesses need a quality and responsive railroad system to effectively get their goods to market.

“In order to continue building a strong Made in Wisconsin economy that is fair to farmers, manufacturers, and consumers, we need to give these shippers a seat at the table,” she said. “This legislation will address the challenges faced by local businesses and help drive our Wisconsin economy forward.”

In some regards, this bill resembles and leverages the Surface Transportation Board Reauthorization Act of 2015, which was signed into law by Congress.

Baldwin’s bill was warmly embraced by Ann Warner, executive director of the Freight Rail Customers Alliance, whom noted that the legislation would also positively reinforce current proceedings before the STB on rate reasonableness, expediting rate cases, and competitive switching.

As for the freight railroads, they have been consistent in saying for years that the existing regulatory railroad environment has produced—for North American railroad shippers—a freight railroad system that is the envy of the world, adding that while it is not perfect, to deprive the industry of its ability to earn its cost of capital could have a chilling effect on capital investments to support traffic growth and it could begin to reverse the great strides freight rail has made after Staggers in the areas of rail safety and service reliability.