The Surface Transportation Board has determined that five of the “Big 7” U.S. Class I railroads achieved revenue adequacy in 2019: BNSF, CSX, Norfolk Southern, Soo Line (the U.S. affiliate of Canadian Pacific) and Union Pacific. STB determined that those Class I’s achieved a rate of return on investment (ROI) equal to or greater than the Board’s calculation of the average cost of capital for the freight rail industry, which for 2019 is 9.34%.
The Surface Transportation Board and Federal Railroad Administration on Aug. 24 sent joint, identical letters to the CEOs of the seven North American Class I’s—Carl Ice (BNSF), Keith Creel (Canadian Pacific), JJ Ruest (CN), Jim Foote (CSX), Pat Ottensmeyer (Kansas City Southern), Jim Squires (Norfolk Southern) and Lance Fritz (Union Pacific)—citing service problems and “increased communication and transparency with rail shippers.”
Career Democratic congressional staffer Robert Primus, 49, has been nominated by President Trump to fill one of two vacant seats on the five-member Surface Transportation Board (STB). Primus’s nomination followed a mid-2019 written recommendation to the White House by Senate Minority Leader Charles E. (Chuck) Schumer (D-N.Y.). He is now paired with Republican nominee Michelle A. Schultz, whose earlier Senate confirmation has been stalled nearly three years pending nomination of a Democrat.
WATCHING WASHINGTON, JUNE 2020 ISSUE: This question should be at the forefront of the Surface Transportation Board’s agenda: What is the future of rail freight transportation? The STB should put all its other discretionary regulatory work to the side and call in the railroads and key stakeholders and facilitate a discussion of how the industry can recover to serve the future American economy. All internecine sniping and conflict should be pushed aside.
WATCHING WASHINGTON, RAILWAY AGE APRIL 2020 ISSUE: Although shippers lacking effective transportation alternatives to rail are relatively few, the Surface Transportation Board (STB) exists to protect them from market-power abuse, as railroads earn substantial margins from the traffic.
“When the facts change, I change my mind. What do you do, sir?” — John Maynard Keynes
The Clean Water Act (CWA) imposes permitting obligations on “point sources.” Should those obligations apply to railroad cars, which move freely from state to state? The U.S. railroad industry, through the Association of American Railroads, has asked the Surface Transportation Board to take up the question and to rule that any CWA permitting obligations are preempted by the Interstate Commerce Commission Termination Act.
On 74 acres in central Virginia, there graze for commercial production some two-dozen Himalayan yaks—a largely fat-free, shaggy, handlebar-horned and oft cantankerous animal first imported to North America during the 19th century. If the connection of yak and its fat to transportation economic regulation is not obvious, blame your youth, as more than half a century has passed since the Great Yak Fat Caper of 1965 entered railroad lore—a dirty-trickster’s fraud now indelibly stained on the Interstate Commerce Commission’s (ICC) reputation, and, by association, its Surface Transportation Board (STB) successor.
Dr. William Huneke, Consulting Economist, offered his opinion in the Railway Age report STB “Whack a Mole.” As he pointed out, the Surface Transportation Board in the past rarely had time or staff to do more than react to the latest rate case, stakeholder petition or Congressional request. He described a sense of Whack a Mole in the flurry of STB regulatory reform proposals, particularly STB’s tinkering with the industry cost of capital calculation.
When I was working at the Surface Transportation Board, I often felt trapped in a game of “Whack a Mole.” That was because STB rarely had time or staff to do more than react to the latest rate case, stakeholder petition or Congressional request. There is a sense of Whack a Mole in some of the flurry of STB regulatory reform proposals, particularly STB’s tinkering with the industry Cost of Capital calculation.