WASHINGTON, D.C. – U.S. Senator Tammy Baldwin (D-WI) called on the Surface Transportation Board (STB) to review existing exemptions of certain commodities – like paper and forest products, manufactured goods, and food products – and act to ensure companies that ship these goods have an avenue to address harmful service and pricing issues.
These outdated exemptions prohibit rail shippers from seeking recourse at the STB. Revoking the exemptions would also provide greater access to a newly finalized rule that will begin to address unreliable rail service and the high costs of rail shipping for Wisconsin businesses by increasing competition in the freight rail industry. In a letter to the STB, Senator Baldwin asked the board to revisit their decades old exemptions on these critical commodities that were put in place before the rail industry consolidated – reducing competition, raising costs, and hurting Made in Wisconsin businesses.
“Commercial rail is essential infrastructure for countless Made in Wisconsin businesses, from agriculture and paper to the critical raw materials that will rebuild our roads, bridges and water infrastructure,” said Senator Baldwin. “For too long, Wisconsin businesses have relied on fewer and fewer rail carriers, reducing competition and forcing our businesses to deal with unreliable and expensive service. I was proud to push for greater access to reciprocal switching to increase competition, but we need to ensure that more businesses can petition for better service when these big rail carriers are not meeting their customers’ needs.”
In May, the STB announced the finalized rule on reciprocal switching, allowing certain shippers and receivers to petition the STB and switch carriers when they receive inadequate rail service. While the rule was a major step forward, it requires shippers of exempt commodities to pursue costly and time-consuming litigation to revoke the exemptions before filing a reciprocal switching petition.
Commodities that are “exempt” include critical raw materials and finished goods, including steel, metal scrap, paper and forest products, automobiles, hydraulic cement, stone, coke, glass, and food products. These elements are critically needed to build our nation’s infrastructure, feed our communities, and power our homes and businesses. Since the 1970s, the STB has had broad authority to exempt rail carriers from regulation if it was not needed to protect shippers against abuses of market power, while maintaining the authority to revoke exemptions when restoring oversight is necessary to meet the nation’s freight transportation needs for adequate and competitive rail service.
Despite significant market developments during these decades, including rail carrier consolidation, operational changes from precision-scheduled railroading, and geographical changes as to where products are sourced, fabricated, or manufactured, there have been few modifications to the exemptions established decades ago. In her letter, Senator Baldwin urged the STB to revoke certain exemptions to allow Wisconsin shippers to access better service.
“AF&PA applauds Senator Tammy Baldwin (D-WI) for her leadership in encouraging the Surface Transportation Board (STB) to expand its recent rule regarding Reciprocal Switching to address exempt traffic and asking the STB to reopen Ex Parte 704, Review of Commodity, Boxcar, and TOFC/COFC exemptions,” said Julie Landry, Vice President of Government Affairs at American Forest & Paper Association (AF&PA). “AF&PA has long supported proposals that provide more freight rail options and maximize the efficiency of the existing rail network, while increasing access to competitive freight rail service and modernizing the STB – that includes reinstating the STB’s authority over paper and forest products exemptions.”
Senator Baldwin has long pushed to allow greater access to reciprocal switching to increase competition. Last year, she introduced the Reliable Rail Service Act with widespread support; bipartisan legislation to ensure the largest freight railroads meet their obligations of providing reliable service to American businesses.
A full version of this letter is available here.