Temporary Relief for Rail Shippers

WASHINGTON — The Surface Transportation Board issued new rules to make it easier for captive rail shippers to obtain temporary alternative rail service to alleviate service “inadequacies,” but it refused requests from shippers in the Houston-Gulf Coast area for permanent access to other carriers to guard against future service problems.

The two related decisions were issued Dec. 21, less than a week after the STB heard final arguments from shipper groups, competing railroads and state officials on proposals to “restore and enhance” rail competition in Texas, which bore the brunt of a service meltdown by the Union Pacific Railroad following its 1996 merger with Southern Pacific (12-21, p. 2).

The STB retained oversight of the merged railroad for five years to ensure that the conditions imposed were effective in mitigating potential competitive harm.

In a letter to Sen. John McCain (R-Ariz.) and Sen. Kay Bailey Hutchison (R-Texas), STB Chairman Linda Morgan and Vice Chairman Gus Owen outlined changes in rules for making a determination about market dominance.

Market dominance is defined as “an absence of effective competition from other rail carriers or modes of transportation for the transportation to which a rate applies.”

Under the new rules, the STB said it will no longer require evidence of product and geographic competition — the ability of shippers to substitute product or to ship the same product to a different destination to avoid service problems — to be used in determining whether market dominance exists.

The change should make it easier for shippers to pursue complaints about rail service and “should result in more private-sector solutions to rate disputes,” the STB said.

For the full story, see the Dec. 28 print edition of Transport Topics. Subscribe today.