Rail

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Scott Jensen
(202) 249-6511

Safe, reliable, and affordable rail transportation is critical to the business of chemistry. Nearly one quarter of U.S. shipments of chemical products travel by rail, and these shipments are essential to safe drinking water, a plentiful food supply, life-saving medicines, and more.

COMPETITION

The chemical industry is one of the largest customers of freight rail. We rely on the railroads to provide reliable and affordable service to deliver our products. Unfortunately, our members are being subjected to skyrocketing rates, poor service and antiquated policies.

Policy Background

In 1980, Congress passed the Staggers Rail Act of 1980 to reform the nation’s railroads. Since then a series of mergers has reduced the number of Class I railroads from 26 to just seven. This consolidation, along with policies designed to protect the economic health of the rail industry, has driven freight rail rates steadily higher. In fact, economic analysis of public data found that freight rail rates have doubled since 2001—increasing at roughly three times the rate of inflation and far outpacing increases in the highly-competitive trucking market. Defying the basic principles of supply and demand, rates have risen even though the volume of freight carried by the railroads has barely increased in the past decade.

The Staggers Rail Act of 1980 was also intended to prevent railroads from abusing their market power over their customers. To accomplish these two important goals, Congress created the Surface Transportation Board (STB) to ensure that railroads earn adequate returns and to promote access to competitive and efficient rail service.

While the financial health of the railroads has improved significantly, the STB suffers from persistent administrative and policy problems that disadvantage freight rail customers. For instance, the STB estimates that it takes an average of three and a half years and costs a shipper more than $5 million to complete a rate challenge. Some cases take longer and cost much more.

Policy Position

  • ACC supports practical reforms at the STB that would allow greater access to competitive freight rail service and that would make the Board operate more effectively for all stakeholders.

  • The STB should allow for “competitive switching,” which would allow a rail customer that is served by a single major railroad to request to have its traffic switched to a different carrier at a nearby interchange, allowing the shipper to seek competing bids for rail service.

  • The Board should take a more proactive role to address rate and service issues and allow direct communication between the STB Commissioners. Congress should ensure the Board has adequate resources and staff to fulfill its statutory mission.

  • Railroads should be prohibited from “bundling” rates in a way that effectively prevents an STB challenge. The STB should actively review whether or not the “bundling” of contract proposals for multiple rates is being used to undermine a shipper’s ability to obtain reasonable rates.

  • The STB should implement a more efficient, workable method to review and determine the reasonableness of freight rail rates that accounts for the dramatic changes in the railroad industry. The Board should recognize that railroads are financially sound and adopt a simpler and more realistic standard for reviewing rates. 

  • The Board should allow for an alternative means to resolve rate disputes through a third party arbitrator. The STB should create a process that would allow shippers and the railroads to each present a final proposal to an arbitrator to make a final decision for settling rate disputes.

SAFETY

ACC and its members are committed to the safe transportation of chemicals. Our member companies devote significant resources toward emergency response training and tank car safety. By working with railroads and the federal government, we have been able to help reduce the number of accidents and their impacts. 

Policy Background

By working together, shippers and rail carriers along with the federal government have been able to greatly reduce the number of accidents and their impacts. According to the Association of American Railroads, rail hazmat accident rates have declined 91 percent since 1980, and more than 99.99 percent of rail hazmat shipments reach their destination without a release caused by a train accident. 

Through ACC's Responsible Care® initiative, member companies and our partners are committed to enhancing every aspect of rail safety. Collectively, our member companies have invested billions of dollars in training, technology and tank car safety and will continue to do so in the future. In addition, ACC helps first responders prepare for emergencies through programs like CHEMTREC® and TRANSCAER®.

Policy Position

  • Policymakers need to pursue a comprehensive approach to safety that starts with policies that prevent rail accidents and then work cooperatively with stakeholders to reduce potential impacts.  

  • Congress must pass legislation that will allow for a reasonable and workable timeframe for implementing technologies like Positive Train Control (PTC) to reduce rail accidents, while allowing essential products to be shipped where they are needed. 

  • Efforts to upgrade tank cars should be driven by science-based performance standards developed through collaboration between federal agencies, railroads, shippers and tank car manufacturers.  

Related Resources

Coalition
Safety
Report