STB Announces One Year Anniversary of WH Executive Order Focused on Promoting Economic Competition

On July 9, Martin J. Oberman, chairman of the Washington, D.C.-based Surface Transportation Board (STB), an independent arbitration and economic regulatory agency appointed by Congress to resolve disputes over railroad fares and services and reviewing proposed rail mergers, hailed the White House Actions to Foster Competition in American Business, commemorating the one-year anniversary of Executive Order 14036, “Promoting Competition in the American Economy.”

As previously reported by MLone of the main drivers of this EO, according to the White House, was that in more than 75% of US-based industries, fewer large companies now control more of the activity than they do. 20 years ago, adding that a lack of competition has raised consumer prices and also lowered workers’ wages.

Moreover, the rail freight sector was at the center of the concerns of the EO. The EO encouraged the STB to require railway owners to grant rights of way to passenger rail transport and also strengthen their obligations to treat other freight companies fairly.

He added that going back to 1980 there were 33 Class I railroads, while there are now seven, with four major railroads which he said now dominate their respective geographic regions.

“Freight railways that own the tracks can prioritize their own freight traffic – making it more difficult for passengers to have on-time services – and can overload other companies’ freight cars,” he said. -he declares.

This sentiment is closely aligned with the Reciprocal Switching Bill proposed by the STB in 2016, which would allow a rail shipper to switch to another railroad if the shipper makes certain visits. According to the STB’s definition, reciprocal switching is a situation in which a railroad that has physical access to a specific shipper’s facility switches rail traffic to another railroad’s facility that does not have physical access. And the second railroad compensates that railroad that has physical access in the form of a per-car switching fee, with the shipper facility having access to an additional railroad.

STB’s Oberman said the White House’s policy of emphasizing the need for increased competition among American companies coincides with its own commitments to focus on improving rail competition, while also welcoming the fact that the White House stresses the importance of improving competition as a national policy.

And he also highlighted the various efforts undertaken by the STB, focusing on its own competition-related efforts and planned actions, including:

  • a two-day hearing in March on reciprocal commutation;
  • two proposed regulations to address rate reasonableness procedures, one focused on a simplified “final offer” process, the other on an expedited voluntary binding arbitration process; and
  • the STB is also considering and carefully studying the proposed Canadian Pacific-Kansas City Southern merger

Todd Tranausky, vice president of rail and intermodal at FTR, said ML in a previous interview that several times in Washington the bark is louder than the actual bite, observing how this EO is closer to an administrative policy statement than an actual executive order.

“The STB is an independent federal agency, so it’s not as beholden to announcements like this as, say, the DOT would be, but it’s also not immune to political winds,” did he declare. “The important thing is to focus on the exact wording of what comes out. Is he running an agency or “encouraging an agency to consider? The last wording is a suggestion and would be difficult for [STB] defend if he used that as a reason to stop a merger proceeding. In the longer term, this certainly gives more support to procedures like EP 711 [competitive or reciprocal switching] who have been languishing on the board for a decade now, especially since there is now a board with relatively fresh mandates and fresh eyes to look at disputes between rail carriers where it might sway them one way or the other other.

About the Author

Jeff Berman, Group News Editor Jeff Berman is Group News Editor for Logistics management, Modern material handlingand Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine where he covers all aspects of the supply chain, logistics, freight forwarding and material handling industries on a daily basis. Contact Jeff Berman

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