Cash Market Moves

STB Seeks More Information on Proposed Rules for Weekly Rail Performance Reports

Mary Kennedy
By  Mary Kennedy , DTN Basis Analyst
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A BNSF train heads east along the Mississippi River near St. Paul, Minnesota. (DTN photo by Mary Kennedy)

In an effort to collect as much information as it can on proposed rules on railroad performance data reporting, the Surface Transportation Board earlier this month announced it will waive its prohibition on ex parte communications. The move means that instead of having to submit all comments to the board through public meetings and/or written records, interested parties may schedule meetings with board staff to discuss the proposed rules.

The STB first addressed the issue of performance data reporting on Oct. 8, 2014, when the board announced it was requiring all Class 1 railroads to publicly file weekly data reports to the STB to "promote industry-wide transparency, accountability and improvements in rail service."

DTN reported in January 2015 that on Dec. 30, 2014, the STB issued two decisions in regard to rail service issues and service issues-performance data. The first proposal would require new regulations of permanent weekly reporting by all Class 1 railroads and the Chicago Transportation Coordination Office (CTCO). The board also proposed to make the weekly rail service reports permanent, saying that collection of performance data on a weekly basis would allow continuity of the current reporting and improve their ability to "identify and help resolve future regional or national service disruptions more quickly, should they occur." http://goo.gl/…

The STB required comments on both decisions to be submitted by March 2, 2015. Reply comments were due by April 29, 2015. The STB reported on their website that, "The board received 17 opening comments submitted by 35 parties and nine reply comments from 30 parties. A number of parties filed written comments requesting meetings with Board staff to discuss the proposed rail service performance metrics."

On Nov. 9, the STB announced it "will waive its general prohibition on ex parte communications and permit interested parties to schedule meetings with board staff to discuss the proposed rules on railroad performance data reporting."

"The agency has long interpreted its general ex parte communication prohibition to encompass informal rulemakings such as this one. Our predecessor agency, the Interstate Commerce Commission, stated 'that ex parte communication during a rulemaking is just as improper as it is during any other proceeding. The commission's decisions should be influenced only by statements that are a matter of public record.'"

However, the STB said it can waive its regulation on ex parte communications in appropriate proceedings. "In doing so, the board can take steps to ensure that a fair process is established, including notice, disclosure, and an opportunity for all parties to comment on information discussed during informal meetings."

"In this quasi-legislative proceeding, we find good reason to waive our prohibition on ex parte communications. It is important to make sure that any rule we adopt regarding service data results in the collection of information that will be useful to the agency and its stakeholders. As the comments submitted so far have demonstrated, the manner in which railroads collect and maintain data has a number of technical aspects and varies between carriers."

Here is the STB's complete decision on waiving its prohibition on ex parte communications and information on how the process will be expected to work: http://goo.gl/…

GRAIN SHIPPERS WEIGH IN ON LATEST DECISION

The massive transportation backlog of 2014 cost farmers and grain shippers hundreds of thousands of dollars in lost revenue because rail cars were behind in getting placed, which left elevators full and in turn left farmers with no place to sell or haul their grain.

At the end of September 2014 with a record corn harvest facing South Dakota, Tim Luken, elevator manager at Oahe Grain, Onida, South Dakota, told DTN that one of his producers asked, "How am I going to get cash to pay bills if no one will take any grain because they're full?" Oahe Grain is serviced by the Rapid City, Pierre & Eastern Railroad (RCPE) a shortline that receives cars from the Canadian Pacific, but also has trackage rights over the BNSF Railway between Yale and Watertown, South Dakota.

Fast forward to one year later and Luken has a different story to tell. "The service on the RCPE has been outstanding. I have not one bad thing to say about them."

It is important to note that during 2014 when Luken was behind on railcars, it was because the Canadian Pacific (CP) was behind in supplying them to the RCPE. However, Luken said he feels "weekly reporting is a great thing; maybe not today, but we will see a day again when it will be a viable resource of information how railroads are performing."

Luken said there are plenty of cars to go around now because "producers are having a harder time with cash values today than they did the last seven years when we had robust exports and lower U.S. dollar values. Another factor for the good performance is that I believe since the Bakken oil fields have cut back on oil production, there are less oil trains crowding the tracks."

"Remember, too, that famers have more grain storage today than they did 10 years ago," Luken said. "I am not talking 15,000- and 20,000-bushel bins, I am talking 50,000- to 100,000-bushel bins. It's the domino effect. When grain isn't moving, it affects everyone in the grain business: elevators, implement dealers, railroads, and so on."

An elevator on the Canadian Pacific mainline in North Dakota told DTN, "I think some reporting should continue. When grain movement picks up and the railroads fall behind, the STB will have some benchmark. Keep some thumb pressure on them. We never completely find out everything anyway."

He added that, "Current service is good, almost too good. Dedicated trains are turning in 10 to 14 days, which is too quick in this market environment. CP freight is trading at tariff to -$100/car and will probably go to -$300 by mid-December. One issue facing the CP is that they lack competitive destinations, in particular for corn. The BNSF takes everything straight through while the CP has to hand off to other railroads."

Things have definitely changed from the disaster of 2014. Besides the cheaper secondary freight costs on both the BNSF and CP, tariff rates have also been reduced in some corridors as the railroads are trying to generate revenue. Even still, it is likely that the STB will continue to require the railroads to provide service updates. The question remains as to how detailed and how often those reports will be.

Mary Kennedy can be reached at mary.kennedy@dtn.com

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(AG/CZ)