U.S. lawmakers fault rail sector for slow service: Heitkamp calls for more federal power for Surface Transportation Board

WASHINGTON -- U.S. rail operators must put investment ahead of profits to clear the way for grain, automotive and chemical shipments now clogging the tracks, lawmakers said at a congressional hearing Wednesday about the health of the rail grid.

WASHINGTON - U.S. rail operators must put investment ahead of profits to clear the way for grain, automotive and chemical shipments now clogging the tracks, lawmakers said at a congressional hearing Wednesday about the health of the rail grid.
Rail backups in the Midwest, including in North Dakota, are particularly acute with farmers expected to harvest record-large corn and soybean crops over the next two months and move much of that grain to market.
“The railroad shipment delays that farmers and grain elevator operators in this country have faced are simply staggering,” Sen. Heidi Heitkamp, D-N.D., said in a statement Wednesday. “North Dakotans deserve better than this new norm from some railroad companies of delay, unclear numbers, and uncertainty as to whether their hard-earned product will get to market, or if it will simply sit by the side of the road.”
Heitkamp specifically spoke to the Senate Committee on Commerce, Science and Transportation about the impact of agriculture shipment delays at North Dakota elevators. The delays, which have been going on since last winter, have had economic consequences for producers.
Heitkamp called on the committee to reauthorize and strengthen the power of the U.S. Surface Transportation Board, which oversees and investigates railway operations.
The rail sector has promised to spend $26 billion this year to improve service but Sen. Jay Rockefeller, D-W.Va., chairman of the Senate Commerce Committee, was not placated.
“You pretty much get what you want and stop what you want around here,” said Rockefeller, who is in his final months in office.
He accused the rail industry of having undue influence with Washington regulators and lawmakers.
“You are doing a great job for your shareholders. What about these folks?” Rockefeller said, referring to officials from the farm, auto and chemical industries who also testified at the hearing.
The Senate Commerce Committee is expected to consider legislation to grant several new authorities to the transportation board, which would allow it to initiate its own investigations as opposed to waiting for formal complaints to be filed. The bill would also increase the board’s commissioners from three to five and would revise the body’s ability to rate cases and reviews.
Heitkamp said the board would be allowed to address delays more quickly.
“I’ll keep pressing on the Surface Transportation Board to help hold the railroads accountable - one of many reasons why we need to make sure this agency has the authority to do its job,” Heitkamp said in the statement. “We must work together to get our trains moving, which will reduce the severe economic impact this shortage is having on our farmers and communities.”

By the numbers

Automakers are spending tens of millions of dollars a month to avoid snarls on the tracks for their cargoes, said Shane Karr of the Alliance of Automobile Manufacturers.
About two weeks ago, some grain elevators using Canadian Pacific Railway reported past-due cars ranging anywhere from 200 to 2,000 cars. But after about a week, under the company’s new system, those delays range from zero to 50 cars, despite Canadian Pacific moving far fewer cars than necessary to meet the shippers’ needs.
BNSF Railway has made much-needed investments in order to alleviate delays, Heitkamp said. It reported 936 past-due cars on Sept. 5, down from 1,016 past due cars the week before, though Heitkamp says the company still needs to improve.
Meanwhile, the massive grain harvest could exceed permanent storage bins by about 694 million bushels this harvest season, or about 3.5 percent of expected totals, said Arthur Neal, who analyzes market and transportation issues for the U.S. Department of Agriculture.
That glut could fill roughly 174,000 jumbo hopper rail cars with South Dakota, Indiana, Missouri and Illinois, among the states most impacted, he said, adding that much of last year’s crop is still lying around.
“It is critical to move as much of the 2013 grain crop as quickly and efficiently as possible,” Neal said.
The grain glut is causing snarls along train lines controlled by BNSF and Canadian Pacific and driving up other transportation costs.
Higher costs for agriculture deliveries could push some foreign buyers to turn away from United States producers, warned Sen. Amy Klobuchar, D-Minn.
“We have to find a way out of this,” she said.
Ed Hamberger, president of the Association of American Railroads, said operators aim to strike a balance between delivering good service and satisfying investors.
When Rockefeller accused the rail sector of profiteering, Hamburger said operators deliver a return on invested capital about half the average for Fortune 500 companies.
If the railroads were financially weaker it would be more difficult for them to draw investment used to improve service, he said, while acknowledging that service can be improved.
“For a not insignificant group of rail customers, rail service in recent months has not been of the quality they have come to expect,” Hamberger told the committee. “Rest assured, railroads are working tirelessly to remedy these challenges.”

Dickinson Press Assistant Editor April Baumgarten contributed to this report.

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