Federal regulators gearing up for major decisions, vice chairman says

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SAN ANTONIO, Texas — Surface Transportation Board Vice Chairman Patrick Fuchs says the independent agency is ready to tackle several issues that have been languishing for years, including how reasonable rates are determined and shipper requests for reciprocal switching.

The board also is closely watching Class I railroad transitions to Precision Scheduled Railroading and wants to get to the bottom of shipper complaints about related changes to demurrage and accessorial charges.

Fuchs, who spoke at the North American Rail Shippers annual conference last week, joined the board in January.

It’s important for the board to look at history while respecting the changes brought by partial economic deregulation, Fuchs says, noting that the Staggers Act of 1980 made railroads much more profitable, productive, and safer.

“Nobody wants to turn the regulatory clock back to the pre-Staggers day,” Fuchs says.

But regulations must evolve as railroads have since Staggers, he says.

“We’re looking at some of the bigger regulatory issues, involving rate review and service and demurrage, and we’re taking a fresh look at reciprocal switching and commodity exemptions,” Fuchs says. “And we’re considering our options — one of the options is always the status quo.”

Most of the board’s efforts have been focused on reforming the way rate review cases are handled.

The board favors negotiated settlements between shippers and railroads handled through the board’s informal complaint process.

“Collaboration is better than litigation,” Fuchs says.

But the board realizes that small shippers often can’t afford to resolve disputes or effectively use the agency’s cumbersome process to challenge rates. The board’s staff last month released a report that proposed ways the board could streamline its rate review process.

In the most complex reviews, the board creates a hypothetical railroad to determine what costs should be. Board staff members spend time arguing about “hypothetical bathrooms for hypothetical employees at this hypothetical railroad,” Fuchs says, pointing to a recent case involving CSX Transportation and coal receiver Consumers Energy.

“It does make you wonder whether or not this is the most cost-effective way we can be thinking about reasonable rates,” Fuchs says. The board is likely to make changes to the process, he predicts.

The board’s hearing on demurrage and accessorial charges, which railroads levy on shippers to speed loading and unloading of freight cars, will be in the spotlight during the board’s oversight hearing on Wednesday and Thursday.

Fuchs says demurrage plays an important role in keeping railroads fluid, noting that the U.S. Railroad Administration effectively used demurrage charges to clear congestion on the East Coast during World War I.

Shipper complaints about the new policies are at a high level, Fuchs says.

“It’s something we want to get to the bottom of and make sure we’re understanding,” he says.

Fuchs says he’s data-driven and when weighing the issues, he will take into account that railroads are just one part of the transportation system.
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