[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
OVERSIGHT OF THE SURFACE TRANSPORTATION BOARD REAUTHORIZATION ACT OF
2015
=======================================================================
(115-43)
HEARING
BEFORE THE
SUBCOMMITTEE ON RAILROADS, PIPELINES,
AND HAZARDOUS MATERIALS
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
APRIL 17, 2018
__________
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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska PETER A. DeFAZIO, Oregon
JOHN J. DUNCAN, Jr., Tennessee, ELEANOR HOLMES NORTON, District of
Vice Chair Columbia
FRANK A. LoBIONDO, New Jersey EDDIE BERNICE JOHNSON, Texas
SAM GRAVES, Missouri ELIJAH E. CUMMINGS, Maryland
DUNCAN HUNTER, California RICK LARSEN, Washington
ERIC A. ``RICK'' CRAWFORD, Arkansas MICHAEL E. CAPUANO, Massachusetts
LOU BARLETTA, Pennsylvania GRACE F. NAPOLITANO, California
BOB GIBBS, Ohio DANIEL LIPINSKI, Illinois
DANIEL WEBSTER, Florida STEVE COHEN, Tennessee
JEFF DENHAM, California ALBIO SIRES, New Jersey
THOMAS MASSIE, Kentucky JOHN GARAMENDI, California
MARK MEADOWS, North Carolina HENRY C. ``HANK'' JOHNSON, Jr.,
SCOTT PERRY, Pennsylvania Georgia
RODNEY DAVIS, Illinois ANDRE CARSON, Indiana
MARK SANFORD, South Carolina RICHARD M. NOLAN, Minnesota
ROB WOODALL, Georgia DINA TITUS, Nevada
TODD ROKITA, Indiana SEAN PATRICK MALONEY, New York
JOHN KATKO, New York ELIZABETH H. ESTY, Connecticut,
BRIAN BABIN, Texas Vice Ranking Member
GARRET GRAVES, Louisiana LOIS FRANKEL, Florida
BARBARA COMSTOCK, Virginia CHERI BUSTOS, Illinois
DAVID ROUZER, North Carolina JARED HUFFMAN, California
MIKE BOST, Illinois JULIA BROWNLEY, California
RANDY K. WEBER, Sr., Texas FREDERICA S. WILSON, Florida
DOUG LaMALFA, California DONALD M. PAYNE, Jr., New Jersey
BRUCE WESTERMAN, Arkansas ALAN S. LOWENTHAL, California
LLOYD SMUCKER, Pennsylvania BRENDA L. LAWRENCE, Michigan
PAUL MITCHELL, Michigan MARK DeSAULNIER, California
JOHN J. FASO, New York STACEY E. PLASKETT, Virgin Islands
A. DREW FERGUSON IV, Georgia
BRIAN J. MAST, Florida
JASON LEWIS, Minnesota
VACANCY
(ii)
Subcommittee on Railroads, Pipelines, and Hazardous Materials
JEFF DENHAM, California, Chairman
JOHN J. DUNCAN, Jr., Tennessee MICHAEL E. CAPUANO, Massachusetts
SAM GRAVES, Missouri DONALD M. PAYNE, Jr., New Jersey
LOU BARLETTA, Pennsylvania ELIJAH E. CUMMINGS, Maryland
DANIEL WEBSTER, Florida STEVE COHEN, Tennessee
MARK MEADOWS, North Carolina ALBIO SIRES, New Jersey
SCOTT PERRY, Pennsylvania JOHN GARAMENDI, California
MARK SANFORD, South Carolina ANDRE CARSON, Indiana
TODD ROKITA, Indiana RICHARD M. NOLAN, Minnesota
JOHN KATKO, New York ELIZABETH H. ESTY, Connecticut
BRIAN BABIN, Texas CHERI BUSTOS, Illinois
RANDY K. WEBER, Sr., Texas FREDERICA S. WILSON, Florida
BRUCE WESTERMAN, Arkansas MARK DeSAULNIER, California
LLOYD SMUCKER, Pennsylvania DANIEL LIPINSKI, Illinois
PAUL MITCHELL, Michigan GRACE F. NAPOLITANO, California
JOHN J. FASO, New York, Vice Chair PETER A. DeFAZIO, Oregon (Ex
JASON LEWIS, Minnesota Officio)
BILL SHUSTER, Pennsylvania (Ex
Officio)
VACANCY
(iii)
CONTENTS
Page
Summary of Subject Matter........................................ vi
TESTIMONY
Hon. Ann Begeman, Chairman, Surface Transportation Board......... 3
Hon. Deb Miller, Vice Chairman, Surface Transportation Board..... 3
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Hon. Ann Begeman and Hon. Deb Miller, joint statement............ 22
SUBMISSIONS FOR THE RECORD
Letter of April 17, 2018, from Chris Jahn, President, The
Fertilizer Institute, to Hon. Jeff Denham, Chairman,
Subcommittee on Railroads, Pipelines, and Hazardous Materials,
et al.......................................................... 31
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
OVERSIGHT OF THE SURFACE TRANSPORTATION BOARD REAUTHORIZATION ACT OF
2015
----------
TUESDAY, APRIL 17, 2018
House of Representatives,
Subcommittee on Railroads, Pipelines, and Hazardous
Materials,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to notice, at 10 a.m., in
room 2167, Rayburn House Office Building, Hon. Jeff Denham
(Chairman of the subcommittee) presiding.
Mr. Denham. The subcommittee will come to order.
Without objection, the Chair is authorized to declare a
recess at any time.
Good morning. Today we meet to oversee the implementation
of the Surface Transportation Board Reauthorization Act of
2015. This is an important law that will reform the Surface
Transportation Board to work more efficiently to better
regulate the railroads.
This year is the 38th anniversary of the passage of the
Staggers Act, which saved the railroad industry from bankruptcy
and played a major role in railroad deregulation. This
deregulatory effort culminated in the creation of the STB
[Surface Transportation Board] in the Interstate Commerce
Commission Termination Act of 1995.
The STB is a small but significant agency that conducts the
economic regulation of our railroads, and its 2015
reauthorization was the very first since its creation. The STB
Reauthorization Act streamlined and simplified Government
regulatory activities.
While the STB has successfully overseen a stronger railroad
industry, the act has helped the rail industry better serve its
customers. It has streamlined dispute resolution procedures and
set hard deadlines for completion of rate cases to reduce
litigation costs.
The act provided greater transparency into complaints
received by the STB and required enhanced reporting by the
agency. It rejected big Government reregulatory action that has
been proposed in the past. The act made necessary reforms to
the agency to improve its processes and procedures.
Finally, the act had broad support from not only railroads
and the STB, but also from shippers throughout the country,
including the National Grain and Feed Association, the American
Chemistry Council, The Fertilizer Institute, and the American
Farm Bureau Federation.
I am pleased at the content of the STB Reauthorization Act
and the bipartisan nature in which it was enacted. Today we
turn to the STB to evaluate their progress in enacting the STB
Reauthorization Act.
I look forward to hearing your testimony. I now recognize
Mr. Capuano for any comments he may have.
Mr. Capuano. I agree with everything the chairman just
said. Thank you.
Mr. Denham. I now recognize the full committee chairman,
Mr. Shuster, for any comments he may have.
Mr. Shuster. I thank the chairman. And, again, just to echo
what Chairman Denham said, today we are exploring as to whether
the reauthorization has been helpful, and being able to do the
things like enhancing procedures in arbitration, timeline
completion, rate cases, and reducing all of the burdens that
the timing puts on the industry. So I will be happy to hear
today what it looks like and if we need to address different
issues as we move forward or if things are going in the right
direction.
So, again, thanks for being here today. We appreciate it.
Thanks for holding the hearing, Mr. Chairman.
Mr. Denham. I now recognize the ranking member of the full
committee, Mr. DeFazio.
Mr. DeFazio. Thanks, Mr. Chairman. Obviously, the rail
network for freight and passenger is critical to this Nation,
and that is why we gave STB enhanced authority in 2015, so that
we could deal with service issues and efficiency issues on the
network.
I want to hear more about the letter that the Board wrote
in March to all of the Class I railroads. And we all know that
CSX, because of a radical management change, which hopefully--
well, which is now history, was degraded dramatically by a
particular individual who took over before he died.
So CSX has been a major focus, but I was surprised to see
that you are finding basically nationwide a deterioration in
service and would like to know what the STB believes is the
root cause and what actions the STB would recommend or is going
to recommend to deal with that.
And then, secondly, we have the whole issue of Amtrak
delays. We have seen--because Congress mandated that we have
preference for Amtrak, yet the railroads went to court and got
a rather confusing decision because of the way the statute was
worded. You know, basically, the regulations were thrown out.
And since that time, we have seen a huge deterioration in
on-time performance for Amtrak, and that ultimately is going to
impact the revenues, if it already hasn't, for Amtrak when you
look at, you know, the Coast Starlight down to 57 percent on-
time. You know, that is just a huge deterioration; Empire
Builder, from 90 to 59 percent.
A lot of people are very much less likely to take rail if
they are going to be infinitely delayed and they don't have any
idea when they are going to get there. So I would like to hear
recommendations from the Board. Seems to me the simplest thing
we could do, although I don't know that this Congress can do
anything, would be to rewrite that statute in a form that would
withhold scrutiny from the courts.
But absent that, we need to see some sort of effort by the
railroads, the freight railroads, to better facilitate the
movement of passenger rail.
So I look forward to hearing about all those critical
subjects today. Thanks for being here.
Mr. Denham. Thank you, Mr. DeFazio.
I now welcome our panel today, the Honorable Ann Begeman,
Chair of the STB, and the Honorable Debra Miller, Vice Chair of
the STB.
I ask unanimous consent that our witnesses' full statements
be included in the record. Without objection, so ordered.
Since your written testimony has been made part of the
record, the subcommittee requests that you limit your summary
to 5 minutes. Welcome back to the Committee on Transportation
and Infrastructure's Subcommittee on Railroads, Pipelines, and
Hazardous Materials.
Ms. Begeman?
TESTIMONY OF HON. ANN BEGEMAN, CHAIRMAN, SURFACE TRANSPORTATION
BOARD; AND HON. DEB MILLER, VICE CHAIRMAN, SURFACE
TRANSPORTATION BOARD
Ms. Begeman. Good morning, Chairman Denham, Ranking Member
Capuano, and members of the subcommittee. Thank you for holding
today's oversight hearing on the Surface Transportation Board
Reauthorization Act of 2015 and for inviting Vice Chairman
Miller and me to provide an update on the Board's efforts to
implement the act.
I want to begin by first thanking Chairman Denham and
Chairman Shuster for inviting Katherine Bourdon of our staff to
serve as the detail to your subcommittee during the past few
months. We know it has been a wonderful learning experience for
her, and we hope that her service has been helpful to you as
well.
The STB Reauthorization Act was the Board's first
reauthorization since it was created over two decades ago. It
established the Board as a fully independent agency, enhanced
our authority, and created new responsibilities. The Board
members and staff have been fully committed to implementing the
mandates of the act, and we have been accomplishing its
directives.
Today we will highlight the actions the Board has taken to
implement the act and discuss some of the remaining challenges.
Because of the STB Reauthorization Act, the Board has achieved
greater efficiency, accountability, and transparency. For
example, the Board prepares quarterly reports about its rate
review cases, its formal and informal service complaints, and
unfinished regulatory proceedings as directed by the act.
We submit copies of these reports to our oversight
committees, along with transmittal letters that track our
implementation progress and also provide important Board
updates. These reports and letters are also publicly available
on the Board's website.
Section 13 of the Reauthorization Act required the Board to
revise its arbitration program. After notice and comment
rulemaking, we issued rules in September of 2016 to conform to
the new statutory requirements. Among other things, we expanded
the program to encompass rate disputes and establish caps on
damages as directed by the act. We also maintain a roster of
arbitrators, which is updated annually.
Although no parties have chosen to participate in the
Board's program, we believe it would be a very viable
alternative for resolving disputes. The Board also offers
mediation services, which have been used successfully.
Section 12 of the act gave the Board new authority to
investigate issues of national or regional significance. After
moving through notice and comment rulemaking, we issued rules
in December of 2016. The rules contemplate a three-stage
process, including preliminary fact-finding, Board-initiated
investigation, and formal Board proceeding.
In developing these rules, we wanted to ensure that
appropriate protections for due process, separation of fact-
finding and decisionmaking, and timely resolution of
investigations were incorporated. This new authority provides
the Board an important additional tool to aid in carrying out
its mission.
Finally, with respect to the act's provisions regarding
rail rate review procedures, Vice Chairman Miller and I have a
shared interest in improving our current processes. Since
coming to the Board, we have both expressed concerns about the
costly, time-consuming, stand-alone cost methodology known as
SAC, which is used in larger cases.
The Reauthorization Act addresses some of these concerns.
It shortened the timeline to process SAC cases. It directed us
to initiate a proceeding to assess procedures used in court
litigation that might be used to expedite our rate cases.
It required the Board to maintain one or more streamlined
processes for cases in which the SAC test is too costly, and it
required us to submit a report on rate case methodologies. The
Board has complied with these directives as detailed in our
written testimony.
Although the Board currently maintains a streamlined
process for rate review for smaller cases, we believe
additional work is needed to provide a more accessible and
affordable rate review process.
The Board issued an advance notice of proposed rulemaking
to explore a new rate process for smaller shippers. Based on
the comments we have received, more work is needed.
To that end, the Board has recently established an internal
Rate Reform Task Force, which is working to develop
recommendations to streamline the Board's rate methodology for
large cases and to improve rate options for smaller cases. The
task force is comprised of eight Board staff, bringing together
considerable economic and legal expertise and experience in
this very difficult, challenging undertaking.
The task force is going to be reaching out to stakeholders,
including your offices, to obtain input and ideas on these
issues. This is a very difficult assignment, but one that we
simply must keep working on to address.
I will now turn to my colleague, Vice Chairman Miller, to
continue our testimony.
Thank you.
Mr. Denham. Vice Chairman Miller, you are recognized for 5
minutes.
Ms. Miller. Thank you, Chairman Denham and Ranking Member
Capuano, members of the subcommittee. Chairman Begeman has
clearly explained what steps the Board has taken to implement
many of the Reauthorization Acts. I will pick up the narrative
and address the two things the Board--the act has done to
improve collaboration and to help us become an independent
agency.
So, first, on collaboration, which a very important and
much-appreciated goal of the act was to allow for greater
collaboration between the Board members. The first way that was
done was through section 4 of the act, which increased the
Board's membership from three to five.
By having more than three members, the members will be able
to talk with another member about pending proceedings in a
nonpublic forum without running afoul of the Sunshine Act,
which prohibits a majority of the Board from discussing pending
matters in a closed setting. Because there are currently three
vacancies on the Board, we have not yet been able to have any
of these one-on-one conversations.
However, the President has recently submitted two nominees
to the Senate for consideration, and the Senate Committee on
Commerce, Science, and Transportation held a hearing last week
on their nominations, and one of the nominees is with us today,
Patrick Fuchs.
We look forward to the confirmation of the nominees and the
chance to work more collaboratively with each of our member
colleagues as envisioned under the Reauthorization Act.
The Reauthorization Act also gave the Board another tool to
allow for more collaborative discussions. Section 5 permits a
majority of the Board members to hold nonpublic discussions
regarding agency matters, which we refer to as section 5
meetings.
While the act still prohibits the Board members from
agreeing on an outcome in these meetings, we are permitted to
discuss ideas with one another. To ensure transparency, the
Board's general counsel must be in attendance and is required
to prepare a meeting summary of the matters discussed. The
summary is then made public after the meeting.
Since the act's passage, we have already had a number of
section 5 meetings, and we would consider them very useful.
The final significant change made by the Reauthorization
Act was the conversion of the Board to a wholly independent
Federal agency. Prior to the act, the Board was decisionally
independent but administratively housed under the U.S.
Department of Transportation, which meant that DOT performed a
number of the Board's administrative and information technology
functions.
Since passage of the act, the Board has assumed these
functions. This clearly has been the most challenging part of
the act for us to implement. While we are pleased to report
that we have made significant progress on adopting processes
and systems necessary for the successful functioning of an
independent Federal agency, there are clearly still areas where
we have work to do, particularly in information security.
In the Board's most recent Federal Information Security
Management Act, or FISMA, audit, DOT's inspector general
identified a number of areas where improvements need to be
made.
In addition, just last week, the full House passed H.R.
4921, the STB Information Security Improvement Act, which was
reported by your full committee and requires the Board to
implement an improvement plan for its information security
system.
We appreciate your support of the Board's work to make
needed improvements in this area. Improving our information
security is a top priority of the Board. The Board has
established a remediation plan in response to the IG's report,
which we have shared with the IG's office. We have hired an
information security system manager, who has already
implemented corrective measures.
In conclusion, I think it is fair to say that Chairman
Begeman and I agree that the Board has successfully implemented
the act's requirements and that has, in turn, led to
improvements in the Board's operation, just as was envisioned
by Congress.
Before finishing my remarks, Chairman Begeman and I both
felt that we should briefly address recent reports about
service issues in the railroad industry. Several shipper
organizations have indeed alerted us to concerns regarding
service on certain carriers, and there has been a noticeable
drop in service metrics for some carriers.
Last month we sent letters to all Class I railroads asking
for their service outlook for the remainder of 2018. We have
also asked certain railroads to participate in individual
weekly calls with staff from our customer assistance office to
help us monitor these carriers' service levels and progress.
At the moment, these service issues do not appear to have
as severe an impact as those that occurred in the winter of
2013 and 2014, and the affected railroads generally appear to
be taking aggressive measures to address their service and get
it back to normal. But we will continue to monitor this
situation very closely, and we will be happy to keep the full
committee apprised of our actions, particularly if additional
steps are needed.
Again, I want to thank the subcommittee for holding today's
hearing, and I look forward to answering your questions.
Mr. Denham. Well, thank you, both. I know it is a difficult
job with some of the controversies that you deal with on a
regular basis. As a Member of Congress, normally shippers will
contact us as a last resort when they are getting frustrated
with any type of implementation.
But I would also say that, you know, as we have talked to
leaders from other countries about transportation and
logistics, the number one thing that they point to is our
freight network that we have for goods movement across the
entire country.
We have an amazing system with all of our freight rails,
but that does also create a challenge with captive shippers. So
when a lot of cars are being used for oil, sometimes you see
shortages of cars being used for grain. That ends up with a
call to a Member, and ultimately a call to the STB for you to
work out some of these challenges as well. We deal with
hazardous materials in this subcommittee, so a variety of
different hazardous materials that must go by rail can be stuck
captive as well.
And one of the questions and concerns that has come up is
currently you are the Board, with only two members. One of the
big changes that we made was actually increasing the three
members to five. I wonder if you both could give us your
thoughts on whether that will create efficiencies and create
greater opportunities to solve some of these challenges that we
have with captive shippers across the country.
Ms. Begeman?
Ms. Begeman. Thank you for the question. I do think when we
have additional members, more than three, that will really be a
great help to us. Because of the Sunshine Act, we are not
allowed to actually talk to each other one on one about issues,
although as my colleague mentioned, because of the section 5
meetings--we call them section 5 because that is the section 5
of the Reauthorization Act that allows us to have meetings as
long as the general counsel is in attendance, and that we have
a summary that is posted on our website after a meeting. Or if
it is about a particular decision we are working on, it is
posted along with that decision.
But it certainly would be--I think it will be a game
changer for me to actually be able to walk into Deb's office
and talk to her about a particular issue. I mean, imagine what
your workload would be like if none of you could talk to each
other. So I am really looking forward to it. I think it could
only be a benefit.
Mr. Capuano. It might be an improvement.
[Laughter.]
Ms. Begeman. I am looking forward to it.
Mr. Denham. Thank you.
Ms. Miller?
Ms. Miller. I would echo what Ann said. I think of all of
the changes in the Reauthorization Act, I think this is the
most important one. I have been on the Board for about 4 years
now, and I was really surprised when I got here by, I mean,
honestly, how isolated I felt.
For me, I have always felt that I learn a lot by working
with colleagues, hearing their questions, having a better
understanding about how they read a situation and how it might
be different from the way I read it, or perhaps I just
misunderstood something. And I have often felt that we could
and would arrive at better decisions if we had more robust
dialogue among the members of the Board.
And, quite frankly, I think it would enhance the
collegiality of the Board, which is certainly--I don't mean in
any way to imply that there aren't, you know, good working
relationships, but, you know, when you just aren't in contact
with each other as frequently, I think it does have an impact.
So, no, I am very enthusiastic about this change in the
law. I think it will absolutely--I don't know that you could
say it will lead to efficiency. I think with five members, you
know, there might be some things that might feel a little less
efficient, just the reality of that, but I think it will
absolutely lead to better outcomes and that is what is
important.
Mr. Denham. Thank you. And how has designating the STB as
an independent agency benefitted the STB?
Ms. Begeman. Prior to the Reauthorization Act, while we
have always been decisionally independent, we were
administratively aligned with the DOT. I will say this has been
our biggest challenge, such as establishing a number of our own
processes with respect to IT and IT security.
We need our own separate servers. We need our own lines
that we use with our financial services. We have our own HR
Department. But we are now more set up to be responsible for
our own destiny, if you will.
So it has been very challenging, although it has also been
rewarding in its own way. As many of you know, we had a very
difficult FISMA audit that we received last year from the DOT
IG. They conducted the FISMA audit at our request. But that
also has been an opportunity for us to improve problems that we
didn't even necessarily know that we had.
It is a long-term process. It is one that this committee
has recognized as long term. You have passed legislation out of
your committee. It passed the full House last week. And I can
assure you that with or without legislation, we are fully
committed to addressing our cybersecurity vulnerabilities, and
we are making progress.
So thank you for your interest in that area. But, again, I
will say independence is a challenge.
Mr. Denham. Thank you.
Mr. Capuano.
Mr. Capuano. Thanks, Mr. Chairman. And I thank the ladies
for being here.
I want to kind of get beyond some of the specifics. First
of all, I am glad you like the changes because I agree with
you. I am looking forward to it as well. I don't think the
President will listen to me, though, when it comes to filling
that fifth slot. Maybe I will give him a call, and maybe he
will react, but I wouldn't hold my breath.
For me, the biggest issue you deal with it, it all ties
into it. As I see the freight rail industry, it is a de facto
monopoly, which is in and of itself acceptable. It is a de
facto monopoly. And like all monopolies, therefore, they are
subject to certain regulations. That is the balance you have.
When there is no competition, you get more regulation. It works
well for the most part.
What has changed in the last couple of years is that some
of--and, again, not all people on Wall Street are bad people.
Not all of--but some of the vultures of Wall Street have
decided to come into the rail industry.
And when they do, they start doing to the rail industry
what they have done to other industries, which is to strip it
down, you know, kind of ruin it for all the other people that
try and do the right thing, and just make a quick buck without
any consequences whatsoever, without any concern what happens
to the people who have to rely on this monopoly, or, as far as
I am concerned, for America as a whole.
I think America absolutely needs a good, solid,
functioning, and growing rail industry in freight. And when you
get investors who only look at the immediate bottom line, it is
a problem.
Up until recently, in the return for regulation and a
certain degree of monopoly, the rail industry has been pretty
much guaranteed a reasonable rate of return and a reasonable
profit to split amongst thoughtful investors and their
employees and their leaders.
When greed takes over, which it has done in other
industries--it hasn't happened in the rail industry yet, but it
has creeped into it starting just a few years ago with the
attempt to get into Norfolk Southern. That was stopped, and
then they--some of the things that CSX did, when you have a
limited opportunity, and you intentionally reduce the number of
locomotives, the number of rail, the number of employees, you
intentionally stop making investments in your equipment and
your people, in order to simply raise the price, therefore
driving higher profits, if you have a pariah, eventually, if
you let that system go, everybody else has to react to it.
In my mind, that is kind of what has happened already,
which is why--I am not even asking, but why you had to write a
letter that says, ``Due to increased concerns over
deteriorating service.'' The service isn't deteriorating on the
good lines. It is deteriorating on the few lines that have
seemed to have been taken over by Wall Street, why the National
Grain and Feed Association, the Alliance of Automobile
Manufacturers are concerned about it, and everybody else I hear
from.
And it was good to me to see the rest of the freight
industry stand up against the aggressive attempt to overtake
Norfolk Southern. They saw it as a bad thing. I think they were
right, and I was glad to stand with them. I am glad they stood
with us.
The question is: Does the STB have the tools to deal with
these kinds of investors, to ensure that America has, and
continues to have, a reasonably priced, effective freight rail
system? And, again, I understand you can't have competition
every rail.
We are going to have--we have de facto monopolies. It is
acceptable. But that makes regulation essential--essential to
keep the system going. And I am just curious, Madam Chair,
whether you think you have the tools to ensure that that
continues.
Ms. Begeman. Thank you very much. I certainly appreciate
what you have stated. While the Board doesn't have jurisdiction
per se over Wall Street, you know, we have limited
jurisdiction, but part of our jurisdiction that Congress has
given us is that rail carriers have a common carrier obligation
to provide service.
Mr. Capuano. Right.
Ms. Begeman. So while--you know, let's take CSX as the
example. During the past year, you know, we spent quite a bit
of time shining a spotlight on their operations, having weekly
phone calls with staff and senior executives. We required them
to provide additional metrics on their service. We have been a
real pain in the neck to them.
Mr. Capuano. Madam Chair, my time is limited. I don't mean
to jump in, but do you have the authority to deny them or to
change their rates if they take bad actions? If there is no--if
they can't increase their profits, they are not going to do
these bad actions. Do you think you have the authority to take
action on that one item?
Because that is really--when everything is said and done,
after all the good cajoling and discussions, if they can't make
that extra profit, that that is what they are driven by,
because you won't allow the rates to fluctuate that way, or you
take action, that is your one cudgel. Is it effective enough?
Is it strong enough for you to be able to react?
Ms. Begeman. I believe the Board has really large
untethered authority should it need to go that route. A carrier
has a common carrier obligation to provide service on
reasonable request.
You can't get rid of all of your labor, all of your
locomotives, all of your cars, just so you can show profits for
a year. You have an obligation to serve your customers, and
that is what we will make sure they do.
Mr. Capuano. Thank you.
Ms. Begeman. And if you don't, we will find another carrier
who would be happy to do it.
Mr. Capuano. That is what I wanted to hear. And, again, I
want to be real clear. I think that all of the rail carriers
want to do the right thing and have been doing the right thing
for hundreds of years. I don't want it to change, and I don't
want it to change because there is a couple of sharks coming in
only looking at their own profit and without concern whatsoever
to the American manufacturer.
Thank you.
Mr. Denham. Mr. Shuster.
Mr. Shuster. Thank you.
In your testimony, you talked about the various areas--
arbitration, investigative authority, and the rate cases, that
you have increased the efficiency that you are able to--and the
time--reduced the time, but you didn't quantify it.
Either today, or at some point, can you give me an idea of
how much have you reduced the time it takes to go through these
different jurisdictions that you have? Because in Washington
that is one of the biggest problems is it takes forever to go
through these different processes. Can you quantify that?
Ms. Begeman. Well, with respect to the stand-alone cost
methodology, which is the process that is used for larger
cases, you directed us to reduce our timeline by 5 months to
complete those cases.
Now, since the Reauthorization Act, we have not had a new
case brought to us. I will tell you, the directive you have
given us is nearly impossible for the Board to meet, and that
is why we have this internal reform task force to try to find a
better approach, whether it is to have an entirely different
process or to even just streamline the process that we have, so
there could be more standardized approaches, because we don't
have a choice but to--you know, we need to meet what you told
us to do. But I don't want you to think it is going to be easy.
Mr. Shuster. Right.
Ms. Begeman. We also established the changes to our
arbitration program, as you directed. We have had an
arbitration program on our books for over 20 years. It has
never been used. Before the Reauthorization Act, about a few
years before that, we actually tried to reform the program, so
that people would use it. Unfortunately, it still isn't used.
We do have success with our mediation program.
Mr. Shuster. So the answer is you are working on it, but it
is difficult. Will the five members, will that assist you in
doing that, so you are able to have conversations sort of
offline with other members to try to move things forward
faster?
Ms. Begeman. Yes.
Mr. Shuster. And how does--the way you are set up there are
three of you. If you have five, and even when you had three,
does somebody sort of take a lead on an issue on a case, or how
do you divvy up the work?
Ms. Begeman. That is a great question. There has never been
more than three members since I have been on the Board, and my
colleague has been on the Board. We are now two. I hope that we
don't get down to one, because that would just be me.
But I am really--I can use all the help I can get. Being in
charge after 6 years, it is a whole new experience. There is a
lot of work to be done, and I am looking forward to having the
help.
One of the nice things about these section 5 meetings, for
example, where we can get together with our general counsel and
others--again, we do it in a transparent way--it is not just
the Chairman deciding when to do such a meeting.
But if my colleague thinks that she would benefit, or we
would benefit, in addressing an issue by having a conversation,
she will say, ``Let's have a section 5 meeting,'' and we will
do it. Again, there are only two of us. Even when there are
five of us, it is not like a committee your size. We should be
able to do efficient and effective work.
Mr. Shuster. But do you divvy up the work? You will take
the lead on something versus--or is that not the way it works?
Ms. Begeman. We haven't, but I am thinking that that would
be an approach I would like to take, particularly on some of
our pending regulatory proceedings. I am looking to sort of
have some new brain power on that, and maybe we will see things
in a new light.
Mr. Shuster. Maybe 5 years ago, I heard a lot more about
rate cases and captive shippers. I haven't heard too much of
that going on out there. I mean, I am sure there is a couple--
--
Ms. Begeman. Oh, it is still there.
Mr. Shuster. It is still there? Because I--well, these
captive shippers, I mean, some--you know, you can only grow
wheat in some parts of the country, but I know over the years
many of these folks that are captive shippers actually build a
plant on a single line, and they create themselves to be
captive shippers and then they complain about it.
Again, we haven't heard a lot of people complaining to us.
So, again, I just wondered, is it because you are doing a
better job, the railroads are doing a better job, the captive
shippers are happier?
Ms. Begeman. I would like to say it is because we are doing
a better job, but I do want to be completely candid with all of
you. You know, captive shippers have struggles. As you
mentioned, yes, there are times when people locate on a captive
line, and they choose to do that. Perhaps that is where their
best labor pool will come from.
But I am a farmer's daughter. I grew up in South Dakota. I
know what it is like to have captive service. I am not
satisfied with the rate methods that the Board currently has,
particularly for grain shippers, really smaller shippers. They
can't afford multimillion-dollar cases and lawyers for 5 years
to bring a case that they may or may not win.
That is one of the reasons that we have put out an ANPRM
[advance notice of proposed rulemaking] to try to establish a
case for really small, small shippers. Unfortunately, our good
intentions were not warmly received by either the industry or
the shippers that we are trying to address, but we are not
giving up.
And, again, we have established a task force that is
trying--going to really try to help us find a better solution.
Mr. Shuster. All right. Thank you very much.
I yield back.
Mr. Denham. Mr. DeFazio.
Mr. DeFazio. Thank you, Mr. Chairman.
I was intrigued by something you said just previous to that
in response to Mr. Capuano, which was that if someone were to
shed themselves or strip the assets from a railroad, the power,
the crews, and all that, and they weren't going to deliver
adequate service, then you would find someone else who would.
How would that work? I mean, at what point can you
intervene when someone like, you know, we had essentially an
attempt to destroy CSX by Mr. Harrison, and he was brought in
by some Wall Street investor. We had a previous attempt by the
Children's Fund to take over and destroy CSX, a benignly named
hedge fund out of Europe who was also a master at stripping
assets and extracting value, they call it, as they destroy the
capability of the railroad.
So what did you mean when you said that? How could you say
you are going to find someone else who will? I mean, you don't
have that authority.
Ms. Begeman. Well, we do have emergency service authority,
which has rarely been used. It really hasn't been used since
the UP-SP merger back in the 1990s, the ``mess in the West''
after that particular merger.
Mr. DeFazio. Yes, I lived through that.
Ms. Begeman. Yes. Me, too. And I would like to never live
through another mess.
And so we do have authorities that we could direct another
carrier to operate and provide service over another line. You
know, I don't look forward to using that authority, but we do
have it if we need to use it.
Mr. DeFazio. That would be fairly----
Ms. Begeman. I will also say that we certainly recognize
that our regulations may need to be altered. When there is a
degradation of service, a carrier and a shipper can come in and
petition the Board to provide service over another line. That
regulation has not been used, and so we have started some
informal discussions with stakeholders and the Board staff to
try to determine whether there are some changes that we could
make to these regulations to make them more usable. We want to
try to explore whether or not there is something we could do to
improve the regulations, so that they could be used, if they
needed to be.
Mr. DeFazio. But at this point, since you lack a quorum,
you couldn't take any definitive action.
Ms. Begeman. We don't have quorum requirements.
Mr. DeFazio. Oh, you don't.
Ms. Begeman. However, you know, we also have not been
challenged in court, whether or not there are two of us doing
our work, whether that is an issue. There was a time when there
was only one member for about a year, about 10 years ago. So we
are--you know, we would like to not have to determine that
answer.
But, again, we are not not doing our jobs because there are
only two of us. We are trying to do as much as we possibly can.
Mr. DeFazio. OK. Yes. I mean, I wonder, and I am not
exactly sure how I would approach it, but, you know, we finally
did get rid of Frank Lorenzo. You know, Congress had standards,
fitness standards, for operating airlines, and maybe we need
something similar for railroads to try and keep out those
people who would just come in and strip the assets and don't
care about the vital service that is being provided after and
disappear after they profit. So it is something to think about.
Thank you, Mr. Chairman. I appreciate it.
Mr. Denham. Thank you, Mr. DeFazio.
Mr. Westerman, you are recognized for 5 minutes.
Mr. Westerman. Thank you, Mr. Chairman.
I have a large number of fertilizer and chemical
manufacturers located throughout my district, and the majority
of the fertilizer shipments moved by rail due to rail's ability
to move it securely and safely and economically.
These shippers are vastly affected by the current rate
review standards. These rate and service cases can take up to 3
years and the costs can run in the millions, hurting these
companies' bottom lines, which trickle down and hurt workers
and constituents in my district.
So I greatly appreciate the work that has been done since
the implementation of the reauthorization of 2015 and working
to expedite many of these cases. Could you give examples of
improvements you have seen, as well as positive feedback you
may have received in the first month of 2018, since the rule
has been implemented? And that is for both of you.
Ms. Begeman. I am sorry. You are asking what the positive
impacts of the act have been? Is that what you are asking?
Mr. Westerman. Yes. And maybe feedback you are getting from
folks that have been affected by the rule.
Ms. Begeman. Well, as I had mentioned in my testimony, we
provide quarterly reports to Congress that we also post on our
website that address our rate cases. They give an overview of
our quarterly pending proceedings, regulatory proceedings, and
they also provide information on our formal and informal
service complaints during that time.
I think it has been really helpful for not just the Board
but also for interested stakeholders to know what kinds of
calls we are receiving, because, again, informal means there
hasn't been a written filing. It is more like what our Rail
Customer and Public Assistance office--what kind of phone calls
they have been getting.
One of the things that my colleague and I have done as a
result of the directive on the regulatory proceedings is we
have been working to establish an internal process to set
deadlines for our other cases, not just regulatory cases but
actually our day-to-day caseload. We have been doing this for
the past year.
One of the benefits I have found, because I have not always
been the Chairman or Acting Chairman, is it lets all of us
know, and the staff know, what our priorities are for the next
3 months, what cases we plan to get done once the record is
closed, and how to kind of prioritize our workload, and so that
all of the different burdens we put on staff, they can help to
better juggle.
So we are really trying to, you know, just be as productive
and efficient as possible for the stakeholders.
Mr. Westerman. Would you like to add to that?
Ms. Miller. Yes. Thank you very much, Mr. Westerman. Well,
first, I would say, since you brought up the fertilizer
industry, they have, since I have been on the Board, gotten
much more proactive. And I have found them to be very helpful
partners to work with.
They visit us fairly regularly and provide very good and
helpful information, and I think just their proactive approach
has been I think good for their industry. It has certainly been
good for me as a member of the Board to have a better
understanding of the challenges they face and how we might
impact them.
In terms of positive improvements, I think that the issue
of transparency is extremely important and have in my
Government service always championed it. I think that, one, we
are doing the work of the public, so the public has a right to
know what we are doing and when we are doing it. And, secondly,
I think for those who are impacted by the decisions we make,
the more information they have about what we are doing, when we
are doing it, how we are doing it, helps them both understand
and, you know, quite frankly, then interact with us in a way
that is useful.
So I think one of the most beneficial consequences of the
Reauthorization Act has been the collaboration, the
transparency requirements. When it comes to transparency, one
can always do more, and I do think there are other things the
Board could do to continue to refine its processes that would
be helpful.
But I think the fact that there is more information
available to those stakeholders who engage with us has made a
difference, and I think in the service challenges that is one
of the places we can be helpful. The metrics that we require
railroads to submit, the information we then provide to
stakeholders, helps them to adjust their activity.
Mr. Westerman. OK. And I have got more questions, but I
will submit them for answers, unless we get another round.
I yield back, Mr. Chairman.
Mr. Denham. Thank you, Mr. Westerman.
Mr. Carson? Mr. Carson, you are recognized for 5 minutes.
Mr. Carson. Thank you, Chairman.
I am very concerned about the growing problems of freight
trains blocking grade crossings in urban and suburban
communities across our country, particularly Indianapolis. The
trains have gotten longer, especially downtown, and I think it
is important that this subcommittee, and our regulatory
partners quite frankly, take steps to better understand what is
happening and how the problem can be essentially fixed.
Are investigations being conducted as we speak, and what
have you learned so far, and beyond what you can tell me today,
we would appreciate more information and detail in writing. I
know we have limited time, and a separate briefing would be
very helpful.
Ms. Begeman. Well, one thing I would like to ask of you or
your staff, if you would follow up with us after this. We have
a Rail Customer and Public Assistance office. You know, there
are times when blocked crossings are occurring and the carrier
needs a phone call and a nudge, like, ``what can you do to try
to address this''--ASAP kind of a matter. So please don't
hesitate.
I will leave the phone number for our office, so that we
can try to be as responsive and timely--occasionally, that
could be almost an emergency situation. You know, hospitals
can't be blocked. Please, you know, we want to be helpful to
you.
With respect to our new investigative powers, we did
implement regulations to establish regulations on our
investigations. We have not currently--we have not conducted a
formal investigation at this point. That is not to say that it
is not a very helpful tool.
It is actually a very big stick of authority that you have
given us. What our first preference is is to exhaust our
informal approaches. You know, we want the railroads to work
with us and with their shippers and other carriers--in an
appropriate way--to try to address issues. And a formal
investigation, as you can imagine, will have a bit of a
chilling effect on the person or the entity perhaps being
investigated.
So I am not saying that, you know, we--there may be the
right time and place for that, but to the extent we can exhaust
our work in an informal way, that is the way we would like to
do it, particularly because it also is a transparent process.
It is not done confidentially.
Mr. Carson. You know, we are seeing delays up to 3 hours
now, which has become extremely problematic, especially for
folks trying to get to work and emergency vehicles. So if we
could have a separate briefing, that would be tremendously
helpful.
Ms. Begeman. Absolutely.
Mr. Carson. Thank you. Secondly, your written testimony
mentions some adjustments from your previous affiliation with
the DOT and now your status as an independent agency. Can you
describe some of the outstanding cybersecurity and information
technology challenges that should be addressed? And what are
your top priorities in this area?
Ms. Begeman. When we became independent, we actually
suddenly became responsible for everything we do, and that
included all of our IT network, our financial network, et
cetera. Some of the answers I would like to give to you in
private.
Mr. Carson. Sure.
Ms. Begeman. If you don't--and I am sure you can appreciate
why. But I will say that it is a top priority of my colleague
and me, and the Board staff frankly. They are working very hard
to address some of our vulnerabilities. I will also say that
much of it is about paperwork.
Mr. Carson. All right. Thank you.
I yield back, Mr. Chairman.
Mr. Denham. Thank you, Mr. Carson.
Mr. Katko, you are recognized for 5 minutes.
Mr. Katko. Thank you, Mr. Chairman, and thank you, both,
for testifying today. We appreciate you being here.
A quick question to start off with. The Rate Reform Task
Force, where are we with that process? And at what point can we
expect it to reach some conclusions as to that task force?
Ms. Begeman. It is a new undertaking. It was established in
January. It is comprised of eight members of our staff that are
attorneys or economists. They all have, you know, personal
experience processing rate cases. All except one I think has
finally come to the conclusion that the SAC process is just
more than we can really bear, and we need a new way.
What they have been doing is they have been doing a lot of
different research. They have been exploring various ideas that
they have had, you know, over the past several years. Shortly,
they plan to be going out to various stakeholder communities.
Again, as I said, we would be happy to meet with any of you or
your staff.
But also, they are going to different association meetings.
The National Grain and Feed Association is having a meeting in
a few months. And so they are going to travel around a bit and
to try to really get a best sort of--just the best ideas that
they can put forward.
I am not interested in the rail industry telling us that
the status quo is perfect or that we should be content with it,
because we are not going to be content with it. We need to
change.
Mr. Katko. That I understand. Is there some sort of a
timeframe you have put on this endeavor, or is this going to be
kind of an open-ended thing?
Ms. Begeman. You know, saying it is open-ended probably is
not the approach I want you to think that we are taking. But it
is a long, difficult process, and I----
Mr. Katko. Everything is in the rail industry.
Ms. Begeman. Everything is, and I don't want to say I want
it next month.
Mr. Katko. Yes.
Ms. Begeman. But we want to see it brought to a conclusion
as quickly as it can be.
Mr. Katko. OK. And I take it stakeholders have the
opportunity to provide input, even----
Ms. Begeman. They will. Yes, they will be.
Mr. Katko. OK. All right. Wonderful. I want to switch gears
a bit. I am also on the Committee on Homeland Security, and I
just don't know if I understand the breadth of your
jurisdiction.
One of the things I am very concerned about is the shipment
of volatile crude on the trains through urban areas. In
Syracuse, New York, my jurisdiction, for example, we have
multiple shipments sometimes a day of 100-car trains of
volatile crude going through urban areas. And they are subject,
really, to a lot of concern that, you know, a disaster in an
urban area with volatile crude train shipments is a very
serious thing.
And I just wonder, are you involved at all in the safety
aspects of the shipment of that crude, or is that outside your
jurisdiction?
Ms. Begeman. That is primarily FRA.
Mr. Katko. Pardon me?
Ms. Begeman. It is primarily the Federal Railroad
Administration.
Mr. Katko. OK. All right. Under section 6, the Board has
established and maintained a database of complaints. Could you
tell me, are you gathering complaints?
Ms. Begeman. Yes.
Mr. Katko. OK. And how many formal complaints have been
filed with the STB since the Reauthorization Act?
Ms. Begeman. Formal, I think there were approximately 20.
There are currently five pending.
Mr. Katko. OK. And how do you deal with those when you get
those formal complaints? And we will talk about informal in a
minute.
Ms. Begeman. Sure. Well, formal complaints, you know, are
in writing. It is basically--it is a case. A party will make
their formal filing. The entity that they are filing against
will then reply to that. Depending on what the situation is,
they may get to a point where they want to have discovery,
which can be a long process in its own way. But ultimately, you
know, the record will be closed, and then we will work to issue
a final decision as quickly as possible.
Mr. Katko. OK. Great. And now let's talk about the informal
complaints. I take it there is probably more of those than----
Ms. Begeman. There are, yes.
Mr. Katko. OK. And how is that process different than the
formal complaint process?
Ms. Begeman. For the informal complaint process, our Rail
Customer and Public Assistance office fields phone calls from
shippers, sometimes from other railroads, sometimes from short
line railroads.
And it is a small group, but it is comprised of some
attorneys, some former shippers, some former railroad folks,
and they will then, assuming that the--sometimes the shipper
does not want to be outed. You know, they just maybe want to
have an ear and try to get some informal recommendations as to
sort of what--you know, is there anything that the Board could
do or what--you know, what is the law. So sometimes they just
want to get information.
But there are times when a shipper will say, ``I need you
to help me, please. Yes, let the railroad know that if they
don't provide service to me, you know, if I can't get a
shipment by midnight tomorrow, I am shutting down.'' And our
staff will then get on the phone and they have been extremely
successful. I am so proud of them. I mean, they are probably
the--they can get things done.
Mr. Katko. Well, that is exactly what we want to hear, and
I appreciate that very much.
With that, Mr. Chairman, I see I am out of time, so I will
yield back. Thank you.
Mr. Denham. Thank you, Mr. Katko.
Mrs. Napolitano.
Mrs. Napolitano. Thank you very much, and good morning,
ladies. I am just wondering, who is your new Board member?
Would you have him stand up?
Ms. Begeman. Well, he is not currently a Board member, but
he is our nominee.
Mrs. Napolitano. Nominee?
Ms. Begeman. Patrick Fuchs is our nominee.
Mrs. Napolitano. Very good. And do you expect a fourth one?
Ms. Begeman. We also have a fourth nominee, who is not here
today, but they had their confirmation hearing last week. And
then we are waiting for one more to be nominated.
Mrs. Napolitano. Good. Well, it is about time.
Ms. Begeman. Yes.
Mrs. Napolitano. I am sorry. But there are several
questions I have in regard to the status of the law passed in
2015 by the Federal courts giving Amtrak preference on-time
service over freight railroads. How does STB see this issue
moving forward?
Ms. Begeman. As you know, the reauthorization--I am sorry--
PRIIA [Passenger Rail Investment and Improvement Act of 2008]
directed FRA and Amtrak to establish metrics. Those metrics
would then be used by the Board in order to process on-time
performance complaints.
Mrs. Napolitano. OK. That was 3 years ago.
Ms. Begeman. Yes.
Mrs. Napolitano. How is it moving?
Ms. Begeman. It is still in court. In the meantime, the
Board tried to step in and establish our own standards. The
U.S. Court of Appeals for the Eighth Circuit vacated our
attempt last year. So at this point, we have authority but we
don't actually have standards. So, again, it is back in court,
and until the court rules there is----
Mrs. Napolitano. Back in court as in appeal?
Ms. Begeman. Yes, it is being--DOT--they are back trying to
say that the FRA metrics and Amtrak metrics, that they should
not be invalid.
Mrs. Napolitano. OK. That same act provided STB with
authority to investigate nationally or regionally significant
issues on its own initiative rather than on complaint. Do you
believe you have staff capacity to initiate such
investigations? How do you determine when it is time to launch
an investigation?
Ms. Begeman. I do believe we have staff capacity. Of
course, we would always benefit from having more employees than
we have. I think we are a very fortunate agency in that the
Congress and also the administration have provided us a bit of
an increase in our funding since the previous years. Hiring
people is a lengthy process in the Federal Government. It is
surprising how frustrating of a lengthy process it can be.
But again, I mean, we--whatever we need to do, we will do,
but we are trying to hire up. So if you know of any good
people, please send them our way.
Mrs. Napolitano. Well, we need to know that because we are
facing an issue where a lot of our agencies are experiencing
diminishing capacity to hire people, qualified people.
Other questions are the--you talked about--Mr. Carson
indicated that grade crossings sometimes is a public problem,
and you directed him to the Rail Customer and Public Assistance
office. But I also want to know, to what extent are you
involved with the length of the trains and the Positive Train
Control?
Ms. Begeman. I am----
Ms. Miller. Positive Train Control, length.
Mrs. Napolitano. And the length of trains, because
sometimes the crossings are held up with trains moving back and
forth in half an hour, and you have traffic, you have rage, and
you have problems because there are not quad gates or the like.
I am a new member on this subcommittee, so I am digging.
Ms. Begeman. When we had our listening session with CSX
last October, one of the witnesses who appeared did indicate--
told us about his concerns--it was actually a representative of
rail labor--about the length of trains and how much they are--
how they sort of are growing quite a bit, not just with CSX but
other carriers as well.
You know, there is a tradeoff with the length. You know,
longer trains means fewer trains. But as you mentioned, one of
the results also could be impacting a crossing that wouldn't
have been otherwise.
Mrs. Napolitano. And also, they don't--the receiving end is
not capable of receiving that length of a train either.
Ms. Begeman. And that is really more of an FRA issue than
it is an STB issue. But, yes, certainly, you know, this--we
want a fluid network. But we also don't want--you know, it is
not just about rail service impact. We don't want them to
impact, you know, drivers sitting at crossings. I certainly
have----
Mrs. Napolitano. And Positive Train Control?
Ms. Begeman. You know, Positive Train Control is not our
jurisdiction. It is the Federal Railroad's jurisdiction.
Mrs. Napolitano. Are you involved in it in any way?
Ms. Begeman. Absolutely. Because ultimately it is about
service.
Mrs. Napolitano. Thank you very much, Ms. Begeman.
Mr. Denham. Mr. DeSaulnier, you are recognized for 5
minutes.
Mr. DeSaulnier. Thank you, Mr. Chairman. I am sorry I was
distracted. I am still looking up the--I am trying to figure
out what a shock is, but I will leave that to the ranking
member to translate it for me. Shock.
I wanted to ask you--and I appreciate the comments by the
ranking member and Mr. DeFazio in terms of a changing private
environment where you have investors who expect really
sometimes an unfair rate of return. So I appreciate your
historic responsibilities in protecting this valuable national
capital infrastructure.
But I want to question a little bit--and it goes to some of
the other comments about changing environments and anticipating
that and working jurisdictionally, cross-jurisdictionally, with
FRA and with State agencies.
I used to be on the California Air Resources Board. The
rail companies would complain about our idling rules and some
of our issues getting into the Port of Long Beach and L.A. and
the Port of Oakland.
So just maybe in terms of reauthorization, how you feel you
could better work with your sister agencies, both at the
Federal and State level, so that you can keep rates as low as
possible and still consistently meet your mandate about
efficiency in regard to public health and other issues, and the
FRA issues with hazardous materials going through urban areas.
So this goes to a little bit about the other comments,
understanding the jurisdictional constraints, but the
communication with sister agencies in this regard, anticipating
your mandate, effects on your mandate.
Ms. Begeman. That is a very good question. Thank you so
much. One of the things that the Board has been doing over the
past several years is Board staff meets with staff of the FRA
on a routine basis. Now that the FRA Administrator is
confirmed, I have been a bit negligent in reaching out and
trying to set up a dialogue with him, although I will be doing
that.
I think it would actually be helpful for all of the members
to--so that we know each other and we know their staff, so that
we have a good understanding, because what we do is all
interrelated. It is not to say we have jurisdiction over--you
know, we don't share jurisdiction, but it certainly is
interrelated.
We have a Rail Shipper Transportation Advisory Council that
meets four times a year, and they are going to meet in early
May, and we have invited FRA staff to come and give us an
update on PTC [Positive Train Control] implementation. So that
way we will, you know, have a new update relative to shippers
that are affected by PTC, and there are carriers that also are
on that council, and so we will also get a sense of the
progress at that point.
Mr. DeSaulnier. And on another external pressure on your
mandate, west coast we are concerned about trade wars and the
impact on our economy, and certainly in northern California the
ability to transport agricultural goods, as the Chairman is
aware of, in and out of the Port of Oakland.
Do you look at those things to try to anticipate, again,
that what the effect on those kind of external things, trade
implications of a trade war, in this case in the Pacific Rim,
which is certainly the focus of the administration right now,
how that might affect your mandate in terms of rates and
efficiency of the system?
Ms. Begeman. Well, certainly, if products become less
desirable from other countries, there probably will be less
movement to those ports.
Mr. DeSaulnier. Understood. But do you do any kind of
analysis in anticipation of that? Or is it just sort of----
Ms. Begeman. No.
Mr. DeSaulnier [continuing]. We wait and react--we are
somewhat reactive, and then the shippers will come to you and
say, ``We need a rate reduction,'' or ``We are moving some of
our assets because of this.''
Ms. Begeman. Well, rate--our rate reform, our rate review I
should say, is--it is on complaint. So we don't just
proactively or go out on our own and say your rates are too
high; you can't do X. So that is not the approach that we take.
It is actually a shipper needs to come to the Board to
establish that----
Mr. DeSaulnier. But that is my point. If you anticipate,
certainly, intellectually on your own, you might anticipate
when you read news articles that one of your shippers may come
to you and say, ``Our model has changed dramatically. Do we
do''--and this is hopefully part of our review in Congress is
letting you--being mindful.
We don't want mission creep, and we want to keep the
jurisdictions focused, but still anticipating these changes,
you know, in a world that changes quite dramatically quickly.
You don't have a vehicle to do that is what I am getting from
your response.
Ms. Begeman. I think that is right. And also, the majority
of movements are--I shouldn't say a majority, but many are
under contract.
Mr. DeSaulnier. Right.
Ms. Begeman. So that is individually dealt with between the
shipper and the carrier.
Mr. DeSaulnier. Would it be helpful to have more assets or
jurisdictional responsibility to anticipate those changes, or,
no, you--it is fairly predictive, the contracts are constrained
and your jurisdiction is----
Ms. Begeman. You know, I think that the more we know, the
more helpful it is for--not just for the Board to be effective
and efficient, but so that--and, again, we try to be very
transparent. So the more that we can share with interested
stakeholders, we certainly want to do.
Mr. DeSaulnier. OK. Thank you.
I yield back, Mr. Chairman.
Mr. Denham. Thank you, Mr. DeSaulnier.
Ms. Begeman, Ms. Miller, thank you very much for joining us
on this hearing about STB. We are looking forward to the full
implementation as well.
I ask unanimous consent that the record of today's hearing
remain open until such time as our witnesses have provided
answers to any questions that may be submitted to them in
writing, and unanimous consent that the record remain open for
15 days for additional comments and information submitted by
Members or witnesses to be included in the record of today's
hearing.
Without objection, so ordered.
If no more Members have any other questions, this
subcommittee stands adjourned.
[Whereupon, at 11:08 a.m., the subcommittee was adjourned.]
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