Letter to Daniel R. Elliot, III, Chairman of the Surface Transportation Borad - Energy Costs
Letter
The Honorable Daniel R. Elliott, III
Chairman
Surface Transportation Board
395 E Street SW, Suite 1220
Washington, DC 20423-0001
Dear Chairman Elliott:
Businesses, elected officials, and consumers from my district and state have brought to my attention their concern regarding sharply rising freight rail costs and the lack of competitive pricing available to shippers. Excessive rail shipping costs are most acute where shippers are limited to a single railroad for service, and where alternative transportation options are not viable. This problem is widespread throughout the United States, and it appears to be accelerating.
Captive rail stations are prevalent throughout my state of Wisconsin. More than 88 percent of Wisconsin's rail stations are captive, or only have access to one Class 1 railroad. Wisconsin's 8th District -- the district that I represent -- is 97 percent captive. Northeastern Wisconsin has a strong heavy manufacturing industry, including the timber, energy, and pulp and paper sectors. Most of these industries rely heavily on rail service to ship both raw materials into their facilities as well as finished products out of them.
Anti-competitive rates hurt rail users, and also have widespread ripple effects throughout the broader economy. In turn, shippers' downstream customers must then carry the excessive passed-down cost of moving goods, and this puts U.S. producers at a competitive disadvantage, hinders efforts to grow our national economy, and ultimately harms U.S. consumers.
I am concerned that current Surface Transportation Board (STB) policies and precedents effectively block many shippers served by a single railroad from obtaining competitive service. Furthermore, a shipper's right to challenge a carrier's rates before the STB is severely limited in practice and, in my view, desperately needs reform. Substantial costs to bring a case, the necessity of retaining expensive experts, protracted timelines in the STB rendering opinions, and likely disruption in business relationships -- especially when the shipper is served by a single carrier -- are all well-known disincentives to bring a case before the STB.
Despite STB having a full public record documenting these problems, the Board has failed to respond with decisive action to improve the handling of rate cases or to help more shippers gain access to competitive freight rail service. It also suggests STB is failing to maintain reasonable freight rail rates where effective competition is absent. Such inaction not only runs counter to our national rail policy of ensuring effective competition among rail carriers, it also harms the economies where captive rail stations are common and the consumers who buy the products and services.
Given these concerns, I respectfully urge you to take immediate action using the Board's existing authority to address the imbalance in market power between railroads and shippers.
Please provide responses to me in writing to the following questions:
Is the agency implementing changes to streamline its procedures and lower the burdens for shippers to bring legitimate competitive rate and access cases? And, if so, when will these be disclosed?
When will the agency report its findings on barriers to competition within the freight rail industry?
Is the agency's current legal authority restricting its ability to ensure effective competition among rail carriers for shippers?
Does the authority that Congress provided to the Board prevent the Board from regulating maximum rates in duopoly or concentrated markets as well as in monopoly markets?
Is the agency appropriately structured, and does it have sufficient resources to ensure it fully meets the responsibilities that Congress has delegated to it?
Thank you for your consideration of my concerns. I look forward to your response and to opening a dialogue with you on these important issues.
Sincerely,
Reid J. Ribble
Member of Congress
Cc: Hon. Ann D. Begeman
Hon. Francis P. Mulvey
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