U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

1 

49–010 

" ! SENATE 113TH CONGRESS

2d Session 

REPORT

2014

113–321 

Calendar No. 624 

SURFACE TRANSPORTATION BOARD 

REAUTHORIZATION ACT OF 2014 

R E P O R T 

OF THE

COMMITTEE ON COMMERCE, SCIENCE, AND 

TRANSPORTATION 

ON

S. 2777 

December 12, 2014.—Ordered to be printed 


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(II) 

SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION 

ONE HUNDRED THIRTEENTH CONGRESS

SECOND SESSION

JOHN D. ROCKEFELLER IV, West Virginia, Chairman 

BARBARA BOXER, California JOHN THUNE, South Dakota 

BILL NELSON, Florida ROGER F. WICKER, Mississippi 

MARIA CANTWELL, Washington ROY BLUNT, Missouri 

MARK PRYOR, Arkansas MARCO RUBIO, Florida 

CLAIRE MCCASKILL, Missouri KELLY AYOTTE, New Hampshire 

AMY KLOBUCHAR, Minnesota DEAN HELLER, Nevada 

MARK BEGICH, Alaska DANIEL COATS, Indiana 

RICHARD BLUMENTHAL, Connecticut TIM SCOTT, South Carolina 

BRIAN SCHATZ, Hawaii TED CRUZ, Texas 

ED MARKEY, Massachusetts DEB FISCHER, Nebraska 

CORY BOOKER, New Jersey RON JOHNSON, Wisconsin 

JOHN WALSH, Montana 

ELLEN DONESKI, Staff Director 

JOHN WILLIAMS, General Counsel 

DAVID SCHWIETERT, Republican Staff Director 

NICK ROSSI, Republican Deputy Staff Director 

REBECCA SEIDEL, Republican General Counsel 


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Calendar No. 624 

113TH CONGRESS REPORT " ! SENATE 2d Session 113–321 

SURFACE TRANSPORTATION BOARD REAUTHORIZATION 

ACT OF 2014 

DECEMBER 12, 2014.—Ordered to be printed 

Mr. ROCKEFELLER, from the Committee on Commerce, Science, and 

Transportation, submitted the following 

R E P O R T 

[To accompany S. 2777] 

The Committee on Commerce, Science, and Transportation, to 

which was referred the bill (S. 2777) to establish the Surface 

Transportation Board as an independent establishment, and for 

other purposes, having considered the same, reports favorably 

thereon with an amendment (in the nature of a substitute) and recommends that the bill (as amended) do pass. 

PURPOSE OF THE BILL

The purpose of this legislation is to reauthorize the Surface 

Transportation Board for fiscal years (FYs) 2015 through 2019, and 

for other purposes. 

BACKGROUND AND NEEDS

The U.S. freight railroad industry has undergone a remarkable 

transformation since the enactment of the Staggers Rail Act of 

1980 (Staggers Act; P.L. 96–448, 94 Stat. 1895). In the decades preceding the enactment of the Staggers Act, railroads experienced 

traffic losses due in part to regulatory policies and procedures that 

prevented railroads from easily adjusting their rates to reflect 

changing market or cost environments, which led to financial 

strain in the industry, ultimately resulting in the bankruptcy of 

many railroads by the 1970s. The Staggers Act permitted railroads 

to have more freedom to set rates for rail service. More specifically, 

it permitted the railroads to charge lower rates to their customers 

who operate in a competitive environment and higher rates to customers who are ‘‘captive’’ to one railroad carrier for transportation 


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1See e.g., Senate Committee on Commerce, Science and Transportation, Oversight and Investigations Majority Staff Report, Update on the Financial State of the Class I Freight Rail Industry (Nov. 21, 2013), available at http://www.commerce.senate.gov/public/?a=Files.Serve&File— 

id=3cf1b5f2-9487-4c9c-9cea-efb9eb5499d7 2 Association of American Railroads, Overview of America’s Freight Railroads, at 1, July 2014, 

available at http://www.aar.org/keyissues/Documents/Background-Papers/Overview.pdf. 3 Association of American Railroads, AAR’s Hamberger: America’s Rail Industry Taking on 

Changing Economy, Nov. 20, 2014, available at https://www.aar.org/newsandevents/Press-Releases/Pages/AARs-Hamberger-Americas-Rail-Industry-Taking-on-Changing-Economy.aspx. 

service (i.e., demand-based differential pricing). The Staggers Act 

also lowered many regulatory barriers to help the railroads more 

easily rationalize their networks, such as decreasing the difficulty 

for railroads to abandon unprofitable lines. Despite these extensive 

regulatory changes, the Staggers Act still envisioned a role for the 

Federal Government to ensure that captive shippers were not subject to unreasonable rates or poor service and invested the Interstate Commerce Commission, and later the Surface Transportation 

Board, with the authority to oversee the railroad industry. 

Since the Staggers Act was enacted, the industry has evolved 

and the railroads’ financial viability has drastically improved.1

There have been numerous acquisitions and consolidations among 

the larger railroads and a proliferation of shortline railroads. There 

are currently seven Class I railroads (BNSF Railway Company, Canadian National Railway Company, Canadian Pacific, CSX Transportation Inc., Kansas City Southern Railway Company, Norfolk 

Southern Corporation, and Union Pacific Railroad). In 2013, Class 

I railroads were those with operating annual revenue of $467 million or more. Today, Class I railroads account for 69 percent of 

freight rail mileage, 90 percent of employees, and 94 percent of revenue. In 2012, the 7 Class I railroads reported approximately $68 

billion in freight revenues.2 In addition to the Class I railroads, 

there are approximately 550 Class II and Class III railroads. 

The U.S. freight rail industry continues to be integral to the Nation’s economy and global competitiveness. In the first 10 months 

of 2014, the Association of American Railroads (AAR) reported that 

rail carload plus intermodal traffic volume was 24.3 million units, 

which represents a 4.5 percent increase over the same period the 

prior year and the highest year-to-date total since 2007. According 

to the AAR, October 2014 was the best month in history for U.S. 

rail intermodal traffic.3

Surface Transportation Board 

The Federal agency charged with economic oversight of the Nation’s freight rail system is the Surface Transportation Board (STB 

or Board). The three-member, bipartisan Board has regulatory jurisdiction over railroad rate reasonableness, mergers, line acquisitions, new rail-line construction, abandonments of existing rail 

lines, and the conversion of rail rights-of-way into hiking and 

biking trails. 

The Board is decisionally independent, although it is administratively housed within the U.S. Department of Transportation (DOT). 

Since the economies of freight rail regulation are so important to 

the national economy and involve a national network, Congress 

gave the STB sole jurisdiction over rail mergers and consolidations, 

regulating everything from Federal antitrust laws to State and muVerDate Sep 11 2014 06:14 Jan 06, 2015 Jkt 049010 PO 00000 Frm 00004 Fmt 6659 Sfmt 6602 E:\HR\OC\SR321.XXX SR321

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4Surface Transportation Board, Budget Request for FY 2014, Overview, pg. 1, Apr. 2013, 

available at http://www.dot.gov/sites/dot.dev/files/docs/STBlFY2014lBudgetlEstimates.pdf. 5 Id. at 2. 6 U.S Department of Transportation, Budget Highlights, at 53, Fiscal Year 2015, available at 

http://www.dot.gov/sites/dot.gov/files/docs/BudgetHighlightsFY2015.pdf. 7Surface Transportation Board, STB Overview, available at http://www.stb.dot.gov/stb/about/ 

overview. 8 Id. 9 Anna Louie Sussman, REUTERS, Analysis: As Alabama Derailment Flames Fade, New Oilby-Rail Questions Arise, Nov. 12, 2013, available at http://www.reuters.com/article/2013/11/13/usoil-train-risks-analysis-idUSBRE9AC02U20131113; see also Association of American Railroads, 

Moving Crude Oil by Rail, Dec. 2013, available at https://www.aar.org/keyissues/Documents/ 

Background-Papers/Crude-oil-by-rail.pdf. 

nicipal laws. The STB also has exclusive authority to determine 

whether railroad rates and services are reasonable.4

The STB’s authorization expired in 1998, and the agency has remained unauthorized since that time, each year submitting a budget request directly to Congress for necessary appropriations. It has 

approximately 170 employees and receives a modest annual appropriation that is partially offset with collections from filing fees.5 In 

FY 2012, the Board received appropriations of $29.3 million for operations and staffing. As part of the FY 2014 Omnibus bill, the 

STB received $31 million for its operations and staffing.6

The STB’s major responsibilities related to railroads include: 

overseeing and monitoring railroad commercial practices nationally; enforcing the railroads’ common-carrier obligation; ensuring 

that rates charged to captive shippers (those with no other transportation options) are reasonable; monitoring rail carriers to ensure 

they are able to earn adequate returns necessary for the health of 

the rail system; calculating the rail carriers’ cost of capital; and approving construction and abandonments of rail lines. 

In addition to formal cases brought by shippers, the STB has several other programs to help resolve shipper and carrier disputes. 

The vast majority of the complaints lodged against the railroads 

are for service inadequacies, followed by rate and car supply concerns.7 The STB’s Rail Consumer Assistance Program (RCAP) 

helps address these concerns through a more informal process. The 

STB sees this program as beneficial to both shippers and carriers, 

because it places shipper concerns immediately before the involved 

railroad, which can facilitate a prompt response and is less burdensome for both parties than a formal proceeding. With this program, 

the parties have an opportunity to resolve their issues in an environment that can produce a timely and cost-effective result.8

Rail service issues 

Freight rail is an integral component of the recent U.S. energy 

boom. The rapid growth of U.S. shale output, particularly in the 

Bakken region of North Dakota has made crude-by-rail an attractive shipping option. Four years ago, railroads hauled almost no 

crude oil. Today, railroads transport approximately 800,000 barrels 

a day, 640,000 of which come out of North Dakota.9 The exponential increase in the movement of crude-by-rail has led to serious 

rail service issues across the country. In addition, a historically 

harsh winter last year caused significant delays and shutdowns of 

the rail system. Coupled with increases in rail traffic and the improving economy, service has been impacted throughout the country. 


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10Mark Szakonyi, THE JOURNAL OF COMMERCE, Pain on the Train, Aug. 18, 2014, at 10. 11 See Letters from Daniel R. Elliott III, Chairman, and Ann D. Begeman, Vice Chairman, 

STB, to Carl Ice, President and Chief Executive Officer, BNSF Ry. Co. (Feb. 5, 2014) and E. 

Hunter Harrison, Chief Executive Officer and Director Canadian Pacific Ry Co. (Mar. 6, 2014), 

available at http://stb.dot.gov. 12Surface Transportation Board, NEWS RELEASE, Surface Transportation Board to Hold Hearing on Rail Service Issues, Apr. 1, 2014, available at http://www.stb.dot.gov/newsrels.nsf.html. 13PROGRESSIVE RAILROADING, STB Schedules September Hearing in North Dakota to Address 

Rail Service Issues, Aug. 19, 2014, available at http://www.progressiverailroading.com/ 

bnsflrailway/STB-schedules-September-hearing-to-address-rail-service. 14Surface Transportation Board, Notice: United States Rail Service Issues-Grain, Docket No. 

EP 724 (Sub-No.2), Aug. 18, 2014, at 3. 15 Id. 16 U.S. Rail Serv. Issues, EP 724 (Sub-No. 1), slip op. at 1 (STB served Apr. 15, 2014). 17 Id. 

Agricultural commodities in the Northern and Central plains 

have been hit especially hard by rail service issues. Farmers have 

seen delays of weeks, and in some cases months, in getting their 

crops shipped. Many feel that without improved rail service they 

will not be able to get their commodities to market and shipping 

will be more expensive. The situation is especially dire because 

American farmers have traditionally had a competitive advantage 

over foreign producers—such as Brazil and Argentina—due to the 

reliability and cost-effectiveness of the U.S. freight network.10 With 

significant delays and increased costs, importers of U.S. grains may 

turn to producers in other countries. 

In March of 2014, the STB’s board members wrote to Canadian 

Pacific and BNSF Railway Company representatives to express 

their concerns that poor rail service was negatively affecting agricultural, coal, passenger, and other traffic.11 On April 10, 2014, in 

response to a significant decline in reliable rail service for shippers 

over the preceding months, the STB held a public hearing in Washington, D.C. to address service problems affecting the U.S. freight 

rail network. Given that service problems have been particularly 

acute on the systems of Canadian Pacific and BNSF Railway Company, representatives from those two companies testified at the 

hearing.12 During the hearing, railroad representatives described 

several factors that contributed to the deterioration of rail service, 

including strained track capacity, unexpected volume growth, crew 

shortages, lack of locomotives, severe weather, and congestion at 

major corridors, particularly Chicago.13

At the hearing, farmers and agricultural producers expressed 

concern about delayed fertilizer deliveries, backlogged grain car orders, and delayed shipments of loaded grain cars. There were a 

number of impacts as a result, including: little to no storage capacity at many grain elevators; stored grain spoiling; lost sales; penalties incurred by grain shippers for products not delivered on time; 

and buyers shifting to foreign suppliers.14 Also at the hearing, representatives from other industries, such as coal, chemicals, feed, 

sugar, and paper expressed similar supply chain disruptions.15

Subsequent to the hearing, on April 15, 2014, the STB directed 

Canadian Pacific and BNSF Railway Company to provide plans to 

ensure delivery of fertilizer shipments, as well as provide status reports of the fertilizer shipments over a six-week period.16 In response, BNSF Railway Company added rail cars to the existing fertilizer service fleet and allowed locomotives to remain with fertilizer cars during loading and unloading in an effort to reduce potential delays and expedite turn-around times.17


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18 U.S. Rail Serv. Issues-Grain, EP 724 (Sub-No.2), slip op. at 3 (STB served June 20, 2014). 19 BNSF Status Report, Attachment C, U.S. Rail Serv. Issues-Grain, EP 724 (Sub-No. 2) (filed 

Aug. 8, 2014), noting that most of BNSF’s remaining backlogged orders are now less than 20 

days late, and the majority of those orders are less than 10 days late; see also JOC article. 20 BNSF Hr’G Ex. 19, U.S. Rail Serv. Issues-Grain, EP 724 (Sub-No.2) (filed Apr. 10, 2014). 21Szakonyi, supra note 10, at 10. 22 Id. 23 See e.g., Xcel Energy Comments, U.S. Rail Serv. Issues, EP 724 (filed July 31, 2014) (expressing concern over BNSF’s ability to deliver sufficient coal to Xcel Energy’s electric generating stations). 

Since their guidance in April, the STB has closely monitored Canadian Pacific’s and BNSF Railway Company’s progress in moving 

the 2013 crop. On June 20, 2014, in recognition of the limited 

amount of time until next harvest and the large quantities of grain 

that still needs to be moved, the Board again directed Canadian 

Pacific and BNSF Railway Company to provide and/or update their 

plans to reduce unfilled grain car orders, to resolve grain car 

delays, and to provide weekly status reports on the movement of 

grain on their networks.18 According to the STB, BNSF Railway 

Company has made considerable progress in reducing not only the 

number of backlogged orders, but also the average number of days 

late for these orders.19 BNSF Railway Company has also committed to substantial infrastructure improvements and the reallocation of resources to improve service.20

Without improved rail service, shippers are concerned that they 

will not be able to get their commodities to market, and prices, 

which are already low due to above average harvests, will fall further. Shortages of rail equipment are also forcing farmers to the 

secondary market for grain hopper cars, adding in some instances 

thousands of dollars per shipment.21 If agricultural shippers are 

not able to move their product, the risk is that U.S. grain importers, such as Japan, South Korea, and China, may turn to agricultural producers in Brazil and Argentina at lower prices.22

The agricultural sector is not the only industry experiencing rail 

service issues. Coal-fired utilities, ethanol manufacturers, propane 

shippers, and others in the energy industry have voiced concerns 

throughout 2014 about unreliable service and growing wait times 

for rail cars.23 The auto industry has also alleged that rail service 

delays have cost manufacturers millions of dollars in storage fees, 

alternate transport costs, and vehicle shortages at dealerships. 

While a particularly severe winter has been responsible for some 

rail service delays, the auto industry contends that additional factors have exacerbated the service disruptions, including a shortage 

of railcars and an inadequate response to ameliorate this shortage, 

the annual month-over-month growth in auto production and auto 

exports, and the boom in crude oil shipped by rail. Amtrak’s passenger service between Chicago and Seattle and Portland on the 

Empire Builder has also been greatly affected by freight rail congestion in the Northern Plains. These delays are beginning to adversely affect Amtrak’s ridership on that line. 

In response, the AAR, on behalf of its freight rail members has 

acknowledged that a series of events, including a harsh winter, a 

record grain harvest, unexpected demand for grain exports, and 

higher coal usage by utility providers, have affected rail service 

across the country. Despite these challenges, the AAR contends 

that freight railroads continue to move vast volumes of goods safely 

and efficiently. 


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SUMMARY OF PROVISIONS

S. 2777, the Surface Transportation Board Reauthorization Act of 

2014, would establish the Board as an independent agency outside 

of the DOT. The bill would give the Inspector General (IG) of the 

DOT authority to review the financial management, property management, and business operations of the Board. The bill would expand the membership of the Board from three to five members and 

eliminate a current one-year holdover limitation for a Board member when a successor is not immediately appointed. The bill would 

provide for limited instances in which a majority of Board members 

can communicate without the requirement of a full public meeting, 

but still with public disclosure. 

Currently, the STB has limited investigative authority. This bill 

allows the STB to initiate investigations, except for rate proceedings which would still require a formal complaint. This bill 

would also codify recent work of the STB to streamline the process 

for rate cases and ensure that simple reviews are accompanied by 

expedited handling. The bill also codifies a number of timelines for 

stand-alone cost rate cases, including discovery (150 days), development of evidentiary record (155 days), closing brief (60 days), and 

final Board decision (180 days). The bill would require the STB to 

initiate a proceeding on whether contract bundling has had an adverse impact on the ability of shippers, especially captive shippers, 

to bring rate cases. The legislation would also require the STB to 

issue a report which analyzes whether current large rate case 

methodologies are sufficient, not unduly complex, and cost effective, 

and a discussion of alternative methodologies. 

The bill would require the STB to promulgate regulations establishing a voluntary, but binding, arbitration process for rates, demurrage, accessorial charges, misrouting, and disputes on rules 

and practices. Arbitration for rate cases would only be available if 

the rail carrier has market dominance. Arbitration would not apply 

to license disputes, industry-wide regulation disputes, or disputes 

solely between carriers. The arbitration process would cap relief at 

$2 million for service and practice disputes and $25 million for rate 

dispute damages. The bill would allow the STB to review an arbitration decision only if a clear abuse of arbitral authority or discretion occurred, the decision directly contravenes statute, or the 

award limitation was violated. 

The bill would require the STB to establish a database of the formal and informal service complaints it receives. The database 

would include the type, geographic origin, and resolution of each 

complaint. The STB would be required to provide quarterly reports 

to the Committee on Commerce, Science, and Transportation of the 

Senate and the Committee on Transportation and Infrastructure of 

the House of Representatives about the complaints it receives. The 

bill would require the STB to submit quarterly reports to both of 

the Committees on the Board’s progress towards unfinished regulatory proceedings. 

The bill would establish a sense of Congress that the STB 

should: consider the costs and benefits of revenue adequacy determinations for Class I railroads; review the methodology for determinations of revenue adequacy; determine the need for a proVerDate Sep 11 2014 06:14 Jan 06, 2015 Jkt 049010 PO 00000 Frm 00008 Fmt 6659 Sfmt 6602 E:\HR\OC\SR321.XXX SR321

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ceeding on competitive switching; and determine whether a timely 

rulemaking for competitive switching is needed. 

LEGISLATIVE HISTORY

Senators Rockefeller and Thune introduced S. 2777 on September 8, 2014. On September 17, 2014, the Committee met in Executive Session during which S. 2777 was considered. One amendment, in the nature of a substitute, was offered by Senators Rockefeller and Thune. The bill, as amended, was reported favorably by 

voice vote. 

ESTIMATED COSTS

In accordance with paragraph 11(a) of rule XXVI of the Standing 

Rules of the Senate and section 403 of the Congressional Budget 

Act of 1974, the Committee provides the following cost estimate, 

prepared by the Congressional Budget Office: 

S. 2777—Surface Transportation Board Reauthorization Act of 

2014 

Summary: S. 2777 would authorize the programs of the Surface 

Transportation Board (STB), establish the STB as an independent 

government agency outside the auspices of the Department of 

Transportation (DOT), and authorize other changes in the agency’s 

operations. Based on information from the DOT, CBO estimates 

that implementing the bill would cost $164 million over the 2015– 

2019 period, assuming the appropriation of the amounts authorized 

and estimated to be necessary. 

Enacting S. 2777 would not affect direct spending or revenues; 

therefore, pay-as-you-go procedures do not apply. 

S. 2777 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA) 

and would not affect the budgets of state, local, or tribal governments. 

Estimated cost to the Federal Government: The estimated budgetary effect of S. 2777 is shown in the following table. The costs 

of this legislation fall within budget function 400 (transportation). 

By fiscal year, in millions of dollars— 

2015 2016 2017 2018 2019 2015- 

2019 

CHANGES IN SPENDING SUBJECT TO APPROPRIATION 

Surface Transportation Board: 

Authorization Level a ............................................................ 3 35 36 36 36 146 

Estimated Outlays ............................................................... 2 33 36 36 36 143 

Additional Activities by Surface Transportation Board and DOT 

Inspector General: 

Estimated Authorization Level ............................................. 2 5 5 5 5 22 

Estimated Outlays ............................................................... 1 5 5 5 5 21 

Total Changes: 

Estimated Authorization Level .................................... 5 40 41 41 41 168 

Estimated Outlays ...................................................... 3 38 41 41 41 164 

Note: DOT = Department of Transportation. 

a The legislation would authorize the appropriation of $33 million in 2015, but $30 million (on an annualized basis) has already been appropriated for the agency in 2015. 

Basis of estimate: For this estimate, CBO assumes the bill will 

be enacted by the end of calendar year 2014 and that the amounts 

authorized and estimated to be necessary will be appropriated. 


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S. 2777 would specifically authorize the appropriation of an additional $176 million for the operation of the STB over the 2015–2019 

period. The STB received an appropriation of $30 million in fiscal 

year 2014 and the same amount (on an annualized basis) in the 

Continuing Appropriations Resolution, 2015 (Public Law 113–164). 

According to the board, the requirements in the bill to expand 

the number of board members and their associated staff, to allow 

it to initiate proceedings against companies, and to make it independent of the Department of Transportation (DOT) would impose 

additional costs on the board. S. 2777 also would authorize the appropriation of such sums as necessary for DOT’s Inspector General 

to investigate certain aspects of the STB’s operations. CBO estimates those additional responsibilities would cost $5 million a year 

in addition to the amounts specifically authorized in the bill. Those 

additional amounts would be primarily for salaries and benefits for 

additional employees hired over the 2015–2016 period. In total, 

CBO estimates implementing S. 2777 would cost $164 million over 

the 2015–2019 period. 

Pay-As-You-Go considerations: None. 

Intergovernmental and private-sector impact: S. 2777 contains no 

intergovernmental or private-sector mandates as defined in UMRA 

and would not affect the budgets of state, local, or tribal governments. 

Estimate prepared by: Federal costs: Sarah Puro; Impact on 

state, local, and tribal governments: Melissa Merrell; Impact on the 

private sector: Amy Petz. 

Estimate approved by: Theresa Gullo, Deputy Assistant Director 

for Budget Analysis. 

REGULATORY IMPACT

In accordance with paragraph 11(b) of rule XXVI of the Standing 

Rules of the Senate, the Committee provides the following evaluation of the regulatory impact of the legislation, as reported: 

NUMBER OF PERSONS COVERED

S. 2777 is intended to improve the efficiency of the STB by making modifications to the STB’s existing statutory authority. The bill 

would codify actions already undertaken by the STB, improve the 

process for rate cases, and expedite review timelines, which will 

have no effect on the number of individuals regulated. For railroads and shippers, the efficiencies at the STB may reduce the cost 

of compliance. S. 2777 also would give the STB the authority to initiate investigations; however, the investigations would still need to 

be within the scope of their existing authority, which would not expand the persons covered. Finally, S. 2777 would require the STB 

to initiate a proceeding on rate bundling, and would include a 

sense of Congress that the STB should consider additional proceedings. These provisions do not mandate that the STB complete 

the proceeding, and in fact, it may determine that no regulatory 

changes are necessary, which would not expand the scope of covered persons. 


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ECONOMIC IMPACT

S. 2777 is expected to have a positive impact on the U.S. economy. The bill would improve inefficiencies at the STB and speed 

time delays in the case review process. The bill would allow for the 

STB to better assist shippers and railroads, helping to ensure rail 

service problems are addressed in a balanced and timely manner. 

These improvements would have helpful economic benefits, such as 

helping businesses to get goods to market more efficiently. 

PRIVACY

The reported bill is not expected to have any impact on the privacy rights of individuals. 

PAPERWORK

It is not anticipated that there would be a major increase in paperwork burdens resulting from the enactment of S. 2777. 

CONGRESSIONALLY DIRECTED SPENDING

In compliance with paragraph 4(b) of rule XLIV of the Standing 

Rules of the Senate, the Committee provides that no provisions 

contained in the bill, as reported, meet the definition of congressionally directed spending items under the rule. 

SECTION-BY-SECTION ANALYSIS

Section 1. Short title. 

The bill would be titled the ‘‘Surface Transportation Board Reauthorization Act of 2014.’’ 

Section 2. References to title 49, United States Code. 

Changes made in this bill, except where expressly provided otherwise, would be made to title 49 of the United States Code. 

Section 3. Establishment of Surface Transportation Board as an 

independent establishment. 

This section would amend administrative provisions to clarify the 

STB’s role as an independent body and would specify that submissions or transmissions of budgetary or legislative matters be submitted concurrently to the President/Office of Management and 

Budget and the Committee on Commerce, Science, and Transportation of the Senate and the Committee on Transportation and Infrastructure of the House of Representatives. Also, this section 

would repeal a section requiring the DOT to provide administrative 

support, which should save the STB approximately $300,000 annually. This section would give the IG of the DOT authority to review 

the financial management, property management, and business operations of the Board. 

Section 4. Surface Transportation Board membership. 

This section would expand membership of the STB from three 

members to five in order to address inefficient quorum requirements. Also, this section would eliminate the one-year holdover 


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limitation for continuing service by a Board member when a successor is not immediately appointed. 

Section 5. Nonpublic collaborative discussions. 

This section would provide for limited instances where a majority 

of Board members can communicate without requiring a full public 

meeting, similar to what the Federal Communications Commission 

enjoys. Such instances would require that no vote be taken and the 

general counsel’s presence, and would include only Board members 

or staff. Also, this section would require disclosure of meeting topics and participants within two business days of the meeting, unless the discussion relates to an ongoing proceeding, in which case 

the disclosure would be made on the date of the final Board decision. 

Section 6. Investigative authority. 

This section would allow the STB to initiate investigations; current policy only allows investigations upon complaint. This new authority would be prohibited for rate proceedings, which would still 

require a complaint. 

Section 7. Procedures for rate cases. 

This section would codify work the STB has already been doing 

to streamline its processes for rate cases and ensure that the simplified reviews are accompanied by expedited handling. 

Section 8. Rate review timelines. 

This section would codify timelines for stand-alone cost rate challenges, including discovery (150 days), development of evidentiary 

record (155 days), closing brief (60 days), and final Board decision 

(180 days) while providing an option for a Board-granted extension 

upon request or in the interest of due process. The timelines are 

currently set through regulation. 

Section 9. Effect of rate bundling. 

This section would require the STB to initiate a proceeding on 

whether contract bundling has had an adverse impact on the ability of shippers, especially captive shippers, to bring rate cases. 

Section 10. Report on rate case methodology. 

This section would require a report, within one year, analyzing 

whether current large rate case methodologies are sufficient, not 

unduly complex, and cost effective, and a discussion of possible alternative methodologies. 

Section 11. Arbitration of certain rail rates, practices, and common 

carrier service expectation disputes. 

This section would continue work the STB has already begun in 

encouraging and providing arbitration and mediation for dispute 

resolution. The section would require the STB to promulgate regulations establishing a voluntary arbitration process for rates, demurrage, accessorial charges, misrouting, and disputes on rules 

and practices. Either party would be able to trigger the voluntary 

arbitration process after a complaint has been filed or after the 

conclusion of any informal dispute resolution process provided by 


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the STB. While partaking in the arbitration process would be voluntary, arbitration decisions would be binding. 

Arbitration for rate disputes would be available only if the rail 

carrier has market dominance. Arbitration would not apply to license disputes, industry-wide regulation disputes, or disputes solely between rail carriers. 

This section would set forth terms that require any arbitration 

decision to be in writing, contain findings of fact and conclusions, 

and bind the parties. In addition, the statute would specify 

timelines for arbitrator selection (14 days after initiation), evidentiary process (90 days), and decision (30 days after evidentiary 

record closes), subject to discretionary extensions. Relief would be capped at $2 million for service and practice dis- putes and $25 million for rate dispute damages. Any rate prescription from arbitration would be limited to not longer than five years 

from the date of the decision. The Board would be able to review 

an arbitration only if a clear abuse of arbitral authority or discretion occurred, the decision directly contravenes statute, or the 

award limitation was violated. 

Section 12. Compilation of complaints at Surface Transportation 

Board. 

This section would require the STB to establish a database of the 

formal and informal service complaints it receives. The database 

would be required to include the type, geographic origin, and resolution of each complaint. The STB would be also required to begin 

providing quarterly reports to the Committee on Commerce, 

Science, and Transportation of the Senate and the Committee on 

Transportation and Infrastructure of the House of Representatives 

within 60 days of this Act’s enactment. The report would then be 

posted on the Board’s website, but identifying information of a complainant could only be included if written consent is obtained. 

Section 13. Quarterly reports. 

The STB would also be required to begin providing quarterly reports to the Committee on Commerce, Science, and Transportation 

of the Senate and the Committee on Transportation and Infrastructure of the House of Representatives within 60 days of this Act’s 

enactment regarding the Board’s progress toward addressing unfinished regulatory proceedings. 

Section 14. Sense of Congress. 

This section would provide the sense of Congress that the STB 

should: consider the costs and benefits of revenue adequacy determinations for Class I railroads; review the methodology for determinations of revenue adequacy; determine the need for a proceeding on competitive switching; and determine whether a timely 

rulemaking for competitive switching is needed. This section would 

be limited to a sense of Congress, because the STB already has ongoing proceeding regarding these matters and any new statutory 

mandates could require the STB to begin their work anew. 

Section 15. Authorization of appropriations. 

This section would authorize appropriations for FY 2015 through 

FY 2019 for the STB. Authorization levels are based on appropriate 


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12 

funding levels to carry out the new responsibilities, powers, and requirements of this bill. 

Section 16. Repeal of expired and obsolete provisions. 

This section would allow for a rail carrier’s agent to be located 

outside of Washington, DC. 

Section 17. Construction. 

This section would make clear that nothing in the bill would affect any cases being considered by the STB at the time of enactment. 

CHANGES IN EXISTING LAW

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, changes in existing law made by the bill, as 

reported, are shown as follows (existing law proposed to be omitted 

is enclosed in black brackets, new material is printed in italic, existing law in which no change is proposed is shown in roman): 

TITLE 49. TRANSPORTATION 

SUBTITLE I. DEPARTMENT OF TRANSPORTATION

CHAPTER 7. SURFACE TRANSPORTATION BOARD

SUBCHAPTER I. ESTABLISHMENT

§ 701. Establishment of Board 

ø(a) ESTABLISHMENT.—There is hereby established within the 

Department of Transportation the Surface Transportation Board.¿ 

(a) ESTABLISHMENT.—The Surface Transportation Board is an 

independent establishment of the United States Government. 

(b) MEMBERSHIP.— (1) The Board shall consist of ø3 members¿ 5 members, to be 

appointed by the President, by and with the advice and consent of the Senate. Not more than ø2 members¿ 3 members 

may be appointed from the same political party. 

ø(2) At any given time, at least 2 members of the Board shall 

be individuals with professional standing and demonstrated 

knowledge in the fields of transportation or transportation regulation, and at least one member shall be an individual with 

professional or business experience (including agriculture) in 

the private sector.¿ 

(2) At any given time, at least 3 members of the Board shall 

be individuals with professional standing and demonstrated 

knowledge in the fields of transportation, transportation regulation, or economic regulation, and at least 2 members shall be 

individuals with professional or business experience (including 

agriculture or other rail customers) in the private sector. 

(3) The term of each member of the Board shall be 5 years 

and shall begin when the term of the predecessor of that member ends. An individual appointed to fill a vacancy occurring 

before the expiration of the term for which the predecessor of 

that individual was appointed, shall be appointed for the remainder of that term. When the term of office of a member 

ends, the member may continue to serve until a successor is 


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appointed and øqualified, but for a period not to exceed one 

year¿ qualified. The President may remove a member for inefficiency, neglect of duty, or malfeasance in office. 

ø(4) On January 1, 1996, the members of the Interstate 

Commerce Commission serving unexpired terms on December 

29, 1995, shall become members of the Board, to serve for a period of time equal to the remainder of the term for which they 

were originally appointed to the Interstate Commerce Commission. Any member of the Interstate Commerce Commission 

whose term expires on December 31, 1995, shall become a 

member of the Board, subject to paragraph (3).¿ 

ø(5)¿(4) No individual may serve as a member of the Board 

for more than 2 terms. øIn the case of an individual who becomes a member of the Board pursuant to paragraph (4), or an 

individual¿ In the case of an individual appointed to fill a vacancy occurring before the expiration of the term for which the 

predecessor of that individual was appointed, such individual 

may not be appointed for more than one additional term. 

ø(6)¿(5) A member of the Board may not have a pecuniary 

interest in, hold an official relation to, or own stock in or bonds 

of, a carrier providing transportation by any mode and may not 

engage in another business, vocation, or employment. 

ø(7)¿(6) A vacancy in the membership of the Board does not 

impair the right of the remaining members to exercise all of 

the powers of the Board. The Board may designate a member 

to act as Chairman during any period in which there is no 

Chairman designated by the President. 

(c) CHAIRMAN.— 

(1) There shall be at the head of the Board a Chairman, who 

shall be designated by the President from among the members 

of the Board. The Chairman shall receive compensation at the 

rate prescribed for level III of the Executive Schedule under 

section 5314 of title 5. 

(2) Subject to the general policies, decisions, findings, and 

determinations of the Board, the Chairman shall be responsible for administering the Board. The Chairman may delegate 

the powers granted under this paragraph to an officer, employee, or office of the Board. The Chairman shall— 

(A) appoint and supervise, other than regular and fulltime employees in the immediate offices of another member, the officers and employees of the Board, including attorneys to provide legal aid and service to the Board and 

its members, and to represent the Board in any case in 

court; 

(B) appoint the heads of offices with the approval of the 

Board; 

(C) distribute Board business among officers and employees and offices of the Board; 

(D) prepare requests for appropriations for the Board 

and submit those requests to the President and Congress 

with the prior approval of the Board; and 

(E) supervise the expenditure of funds allocated by the 

Board for major programs and purposes. 


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§ 703. Administrative provisions 

ø(a) EXECUTIVE REORGANIZATION.—Chapter 9 of title 5, United 

States Code, shall apply to the Board in the same manner as it 

does to an independent regulatory agency, and the Board shall be 

an establishment of the United States Government.¿ 

ø(b) OPEN MEETINGS.—For purposes of section 552b of title 5, 

United States Code, the Board shall be deemed to be an agency.¿ 

(a) OPEN MEETINGS.— 

(1) IN GENERAL.—The Board shall be deemed to be an agency 

for purposes of section 552b of title 5. 

(2) NONPUBLIC COLLABORATIVE DISCUSSIONS.— 

(A) IN GENERAL.—Notwithstanding section 552b of title 5, 

a majority of the members may hold a meeting that is not 

open to public observation to discuss official agency business if— 

(i) no vote or other disposition of official agency business is taken at the meeting; 

(ii) each individual present at the meeting is a member or an employee of the Board; and 

(iii) the General Counsel of the Board is present at 

the meeting. 

(B) DISCLOSURE OF NONPUBLIC COLLABORATIVE DISCUSSIONS.—Except as provided under subparagraph (C), not 

later than 2 business days after the conclusion of a meeting 

under subparagraph (A), the Board shall make available to 

the public, in a place easily accessible to the public— 

(i) a list of the individuals present at the meeting; 

and 

(ii) a summary of the matters discussed at the meeting, except for any matters the Board properly determines may be withheld from the public under section 

552b(c) of title 5. 

(C) ONGOING PROCEEDINGS.—If a discussion under subparagraph (A) relates, directly or indirectly, to an ongoing 

proceeding before the Board, the Board shall make the disclosure under subparagraph (B) on the date of the final 

Board decision. 

(D) PRESERVATION OF OPEN MEETINGS REQUIREMENTS

FOR AGENCY ACTION.—Nothing in this paragraph shall 

limit the applicability of section 552b of title 5 with respect 

to a meeting of the members other than that described in 

this paragraph. 

(E) STATUTORY CONSTRUCTION.—Nothing in this paragraph— 

(i) shall limit the applicability of section 552b of title 

5 with respect to any information which is proposed to 

be withheld from the public under subparagraph 

(B)(ii); and 

(ii) authorizes the Board to withhold from any individual any record that is accessible to that individual 

under section 552a of title 5, United States Code. 

ø(c) INDEPENDENCE.—In the performance of their functions, the 

members, employees, and other personnel of the Board shall not be 

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cer, employee, or agent of any other part of the Department of 

Transportation.¿ 

ø(d)¿(b) REPRESENTATION BY ATTORNEYS.—Attorneys designated 

by the Chairman of the Board may appear for, and represent the 

Board in, any civil action brought in connection with any function 

carried out by the Board pursuant to this chapter or subtitle IV or 

as otherwise authorized by law. 

ø(e)¿(c) ADMISSION TO PRACTICE.—Subject to section 500 of title 

5, the Board may regulate the admission of individuals to practice 

before it and may impose a reasonable admission fee. 

ø(f) BUDGET REQUESTS.—In each annual request for appropriations by the President, the Secretary of Transportation shall identify the portion thereof intended for the support of the Board and 

include a statement by the Board— 

ø(1) showing the amount requested by the Board in its budgetary presentation to the Secretary and the Office of Management and Budget; and 

ø(2) an assessment of the budgetary needs of the Board. 

ø(g) DIRECT TRANSMITTAL TO CONGRESS.—The Board shall transmit to Congress copies of budget estimates, requests, and information (including personnel needs), legislative recommendations, prepared testimony for congressional hearings, and comments on legislation at the same time they are sent to the Secretary of Transportation. An officer of an agency may not impose conditions on or impair communications by the Board with Congress, or a committee 

or Member of Congress, about the information.¿ 

(d) SUBMISSIONS AND TRANSMITTALS.—Whenever the Board submits or transmits any budget estimate, budget request, supplemental budget estimate, or other budget information, legislative recommendation, prepared testimony for a congressional hearing, or 

comment on legislation to the President or to the Office of Management and Budget, it shall concurrently transmit a copy thereof to 

the Committee on Commerce, Science, and Transportation of the 

Senate and the Committee on Transportation and Infrastructure of 

the House of Representatives. No officer or agency of the United 

States shall have any authority to require the Board to submit its 

budget estimates or requests, legislative recommendations, prepared 

testimony for congressional hearings, or comments on legislation to 

any officer or agency of the United States for approval, comments, 

or review, prior to the submission of the recommendations, testimony, or comments to Congress. 

§ 704. øAnnual report¿ Reports 

(a) ANNUAL REPORT.—The Board shall annually transmit to the 

Congress a report øon its activities.¿ on its activities, including 

each instance in which the Board has initiated an investigation on 

its own initiative under this chapter or subtitle IV. 

(b) COMPLAINTS.— 

(1) IN GENERAL.—The Board shall establish and maintain a 

database of complaints received by the Board. 

(2) QUARTERLY REPORTS.—The Board shall post a quarterly 

report of formal and informal service complaints received by the 

Board during the previous quarter that includes— 

(A) a list of the type of each complaint; 

(B) the geographic region of each complaint; and 


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16 

(C) the resolution of each complaint, if appropriate. 

(3) WRITTEN CONSENT.—The quarterly report may identify a 

complainant that submitted an informal complaint only upon 

the written consent of the complainant. 

(4) WEBSITE POSTING.—Each quarterly report shall be posted 

on the Board’s public website. 

§ 705. Authorization of appropriations 

There are authorized to be appropriated for the activities of the 

Board— 

ø(1) $ 8,421,000 for fiscal year 1996; 

ø(2) $ 12,000,000 for fiscal year 1997; and 

ø(3) $ 12,000,000 for fiscal year 1998.¿ 

(1) $33,000,000 for fiscal year 2015; 

(2) $35,000,000 for fiscal year 2016; 

(3) $35,500,000 for fiscal year 2017; 

(4) $35,500,000 for fiscal year 2018; and 

(5) $36,000,000 for fiscal year 2019. 

SUBTITLE I. DEPARTMENT OF TRANSPORTATION

CHAPTER 7. SURFACE TRANSPORTATION BOARD

SUBCHAPTER II. ADMINISTRATIVE

§ 723. Service of notice in Board proceedings 

(a) DESIGNATION OF AGENT.—A carrier providing transportation 

subject to the jurisdiction of the Board under subtitle IV shall designate an agent øin the District of Columbia,¿ on whom service of 

notices in a proceeding before, and of actions of, the Board may be 

made. 

(b) FILING AND CHANGING DESIGNATIONS.—A designation under 

subsection (a) shall be in writing and filed with the Board. The designation may be changed at any time in the same manner as originally made. 

(c) SERVICE OF NOTICE.—Except as otherwise provided, notices of 

the Board shall be served on its designated agent at the office or 

usual place of residence øin the District of Columbia¿ of that agent. 

A notice of action of the Board shall be served immediately on the 

agent or in another manner provided by law. If that carrier does 

not have a designated agent, service may be made by posting the 

notice in the office of the Board. 

(d) SPECIAL RULE FOR RAIL CARRIERS.—In a proceeding involving 

the lawfulness of classifications, rates, or practices of a rail carrier 

that has not designated an agent under this section, service of notice of the Board on an attorney in fact for the carrier constitutes 

service of notice on the carrier. 

§ 724. Service of process in court proceedings 

(a) DESIGNATION OF AGENT.—A carrier providing transportation 

subject to the jurisdiction of the Board under subtitle IV shall designate an agent øin the District of Columbia¿ on whom service of 

process in an action before a district court may be made. Except 

as otherwise provided, process in an action before a district court 

shall be served on the designated agent of that carrier at the office 

or usual place of residence øin the District of Columbia¿ of that 


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agent. If the carrier does not have a designated agent, service may 

be made by posting the notice in the office of the Board. 

(b) CHANGING DESIGNATION.—A designation under this section 

may be changed at any time in the same manner as originally 

made. 

ø§ 725. Administrative support 

øThe Secretary of Transportation shall provide administrative 

support for the Board.¿ 

§ 727. AUTHORITY OF THE INSPECTOR GENERAL.— 

(a) IN GENERAL.—The Inspector General of the Department of 

Transportation, in accordance with the mission of the Inspector 

General to prevent and detect fraud and abuse, shall have authority 

to review only the financial management, property management, 

and business operations of the Surface Transportation Board, including internal accounting and administrative control systems, to 

determine compliance with applicable Federal laws, rules, and regulations. 

(b) DUTIES.—In carrying out this section, the Inspector General 

shall— 

(1) keep the Chairman of the Board and the Committee on 

Commerce, Science, and Transportation of the Senate and the 

Committee on Transportation and Infrastructure of the House 

of Representatives fully and currently informed about problems 

relating to administration of the internal accounting and administrative control systems of the Board; 

(2) issue findings and recommendations for actions to address 

such problems; and 

(3) report periodically to the Committee on Commerce, 

Science, and Transportation of the Senate and the Committee 

on Transportation and Infrastructure of the House of Representatives on any progress made in implementing actions to address 

such problems. 

(c) ACCESS TO INFORMATION.—In carrying out this section, the Inspector General may exercise authorities granted to the Inspector 

General under subsections (a) and (b) of section 6 of the Inspector 

General Act of 1978 (5 U.S.C. App.). 

(d) AUTHORIZATION OF APPROPRIATIONS.— 

(1) FUNDING.—There are authorized to be appropriated to the 

Secretary of Transportation for use by the Inspector General of 

the Department of Transportation such sums as may be necessary to cover expenses associated with activities pursuant to 

the authority exercised under this section. 

(2) REIMBURSABLE AGREEMENT.—In the absence of an appropriation under this subsection for an expense referred to in 

paragraph (1), the Inspector General and the Board shall have 

a reimbursable agreement to cover such expense. 

§ ø727¿728. Definitions 

All terms used in this chapter that are defined in subtitle IV 

shall have the meaning given those terms in that subtitle. 


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SUBTITLE IV. INTERSTATE TRANSPORTATION

PART A. RAIL

CHAPTER 107. RATES

SUBCHAPTER I. GENERAL AUTHORITY

§ 10701. Standards for rates, classifications, through routes, 

rules, and practices 

(a) A through route established by a rail carrier must be reasonable. Divisions of joint rates by rail carriers must be made without 

unreasonable discrimination against a participating carrier and 

must be reasonable. 

(b) A rail carrier providing transportation subject to the jurisdiction of the Board under this part may not discriminate in its rates 

against a connecting line of another rail carrier providing transportation subject to the jurisdiction of the Board under this part or unreasonably discriminate against that line in the distribution of traffic that is not routed specifically by the shipper. 

(c) Except as provided in subsection (d) of this section and unless 

a rate is prohibited by a provision of this part, a rail carrier providing transportation subject to the jurisdiction of the Board under 

this part may establish any rate for transportation or other service 

provided by the rail carrier. 

(d)(1) If the Board determines, under section 10707 of this title, 

that a rail carrier has market dominance over the transportation 

to which a particular rate applies, the rate established by such carrier for such transportation must be reasonable. 

(2) In determining whether a rate established by a rail carrier is reasonable for purposes of this section, the Board shall 

give due consideration to— 

(A) the amount of traffic which is transported at revenues which do not contribute to going concern value and 

the efforts made to minimize such traffic; 

(B) the amount of traffic which contributes only marginally to fixed costs and the extent to which, if any, rates on 

such traffic can be changed to maximize the revenues from 

such traffic; and 

(C) the carrier’s mix of rail traffic to determine whether 

one commodity is paying an unreasonable share of the carrier’s overall revenues, 

recognizing the policy of this part that rail carriers shall earn 

adequate revenues, as established by the Board under section 

10704(a)(2) of this title. 

ø(3) The Board shall, within one year after January 1, 1996, 

complete the pending Interstate Commerce Commission noncoal rate guidelines proceeding to establish a simplified and expedited method for determining the reasonableness of challenged rail rates in those cases in which a full stand-alone cost 

presentation is too costly, given the value of the case.¿ 

(3) The Board shall maintain a simplified and expedited 

method for determining the reasonableness of challenged rates 

in those cases in which a full stand-alone cost presentation is 

too costly, given the value of the case. 


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19 

§ 10704. Authority and criteria: rates, classifications, rules, 

and practices prescribed by board 

(a)(1) When the Board, after a full hearing, decides that a rate 

charged or collected by a rail carrier for transportation subject to 

the jurisdiction of the Board under this part, or that a classification, rule, or practice of that carrier, does or will violate this part, 

the Board may prescribe the maximum rate, classification, rule, or 

practice to be followed. The Board may order the carrier to stop the 

violation. When a rate, classification, rule, or practice is prescribed 

under this subsection, the affected carrier may not publish, charge, 

or collect a different rate and shall adopt the classification and observe the rule or practice prescribed by the Board. 

(2) The Board shall maintain and revise as necessary standards and procedures for establishing revenue levels for rail carriers providing transportation subject to its jurisdiction under 

this part that are adequate, under honest, economical, and efficient management, to cover total operating expenses, including 

depreciation and obsolescence, plus a reasonable and economic 

profit or return (or both) on capital employed in the business. 

The Board shall make an adequate and continuing effort to assist those carriers in attaining revenue levels prescribed under 

this paragraph. Revenue levels established under this paragraph should— 

(A) provide a flow of net income plus depreciation adequate to support prudent capital outlays, assure the repayment of a reasonable level of debt, permit the raising of 

needed equity capital, and cover the effects of inflation; 

and 

(B) attract and retain capital in amounts adequate to 

provide a sound transportation system in the United 

States. 

(3) On the basis of the standards and procedures described 

in paragraph (2), the Board shall annually determine which 

rail carriers are earning adequate revenues. 

(b) øThe Board may begin a proceeding under this section only 

on complaint.¿ The Board may begin a proceeding under subsection 

(a)(1) on its own initiative or upon complaint, except that a proceeding to determine the reasonableness of the level of a rate 

charged by a carrier may only be initiated upon complaint. A complaint under subsection (a) of this section must be made under section 11701 of this title, but the proceeding may also be in extension 

of a complaint pending before the Board. 

(c) In a proceeding to challenge the reasonableness of a rate, the 

Board shall make its determination as to the reasonableness of the 

challenged rate— 

(1) within 9 months after the close of the administrative 

record if the determination is based upon a stand-alone cost 

presentation; or 

(2) within 6 months after the close of the administrative 

record if the determination is based upon the methodology 

adopted by the Board pursuant to section 10701(d)(3). 

(d) øWithin 9 months after January 1, 1996, the Board shall establish procedures to ensure expeditious handling of challenges to 

the reasonableness of railroad rates.¿ ƒThe≈(1) The Board shall 

maintain procedures to ensure expeditious handling of challenges to 


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20 

the reasonableness of railroad rates. The procedures shall include 

appropriate measures for avoiding delay in the discovery and evidentiary phases of such proceedings and exemption or revocation 

proceedings, including appropriate sanctions for such delay, and for 

ensuring prompt disposition of motions and interlocutory administrative appeals. 

(2)(A) Except as provided under subparagraph (B), in a 

stand-alone cost rate challenge, the Board shall comply with the 

following timeline: 

(i) For discovery, completion not later than 150 days 

after the date that the challenge is initiated. 

(ii) For development of the evidentiary record, completion not later than 155 days after the date that discovery is complete under clause (i). 

(iii) For submission of a closing brief, submission not 

later than 60 days after the date that development of 

the evidentiary record is complete under clause (ii). 

(iv) For a final Board decision, issuance not later 

than 180 days after the date that the evidentiary record 

is complete under clause (ii). 

(B) The Board may extend a timeline under subparagraph (A) after a request from any party or in the interest 

of due process. 

§ 10709. Contracts 

(a) One or more rail carriers providing transportation subject to 

the jurisdiction of the Board under this part may enter into a contract with one or more purchasers of rail services to provide specified services under specified rates and conditions. 

(b) A party to a contract entered into under this section shall 

have no duty in connection with services provided under such contract other than those duties specified by the terms of the contract. 

(c)(1) A contract that is authorized by this section, and transportation under such contract, shall not be subject to this part, and 

may not be subsequently challenged before the Board or in any 

court on the grounds that such contract violates a provision of this 

part. 

(2) The exclusive remedy for any alleged breach of a contract 

entered into under this section shall be an action in an appropriate State court or United States district court, unless the 

parties otherwise agree. This section does not confer original 

jurisdiction on the district courts of the United States based on 

section 1331 or 1337 of title 28, United States Code. 

(d)(1) A summary of each contract for the transportation of agricultural products (including grain, as defined in section 3 of the 

United States Grain Standards Act (7 U.S.C. 75) and products 

thereof) entered into under this section shall be filed with the 

Board, containing such nonconfidential information as the Board 

prescribes. The Board shall publish special rules for such contracts 

in order to ensure that the essential terms of the contract are 

available to the general public. 

(2) Documents, papers, and records (and any copies thereof) 

relating to a contract described in subsection (a) shall not be 

subject to the mandatory disclosure requirements of section 

552 of title 5. 


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(e) Any lawful contract between a rail carrier and one or more 

purchasers of rail service that was in effect on October 1, 1980, 

shall be considered a contract authorized by this section. 

(f) A rail carrier that enters into a contract as authorized by this 

section remains subject to the common carrier obligation set forth 

in section 11101, with respect to rail transportation not provided 

under such a contract. 

(g)(1) No later than 30 days after the date of filing of a summary 

of a contract under this section, the Board may, on complaint, 

begin a proceeding to review such contract on the grounds described in this subsection. 

(2)(A) A complaint may be filed under this subsection— 

(i) by a shipper on the grounds that such shipper individually will be harmed because the proposed contract unduly impairs the ability of the contracting rail 

carrier or carriers to meet their common carrier obligations to the complainant under section 11101 of this 

title; or 

(ii) by a port only on the grounds that such port individually will be harmed because the proposed contract will result in unreasonable discrimination 

against such port. 

(B) In addition to the grounds for a complaint described 

in subparagraph (A) of this paragraph, a complaint may be 

filed by a shipper of agricultural commodities on the 

grounds that such shipper individually will be harmed because— 

(i) the rail carrier has unreasonably discriminated 

by refusing to enter into a contract with such shipper 

for rates and services for the transportation of the 

same type of commodity under similar conditions to 

the contract at issue, and that shipper was ready, willing, and able to enter into such a contract at a time 

essentially contemporaneous with the period during 

which the contract at issue was offered; or 

(ii) the proposed contract constitutes a destructive 

competitive practice under this part. 

(1) In making a determination under clause (ii) of this subparagraph, the Board shall consider the difference between 

contract rates and published single car rates. 

(C) For purposes of this paragraph, the term ‘‘unreasonable discrimination’’ has the same meaning as such term 

has under section 10741 of this title. 

(3)(A) Within 30 days after the date a proceeding is commenced under paragraph (1) of this subsection, or within such 

shorter time period after such date as the Board may establish, 

the Board shall determine whether the contract that is the 

subject of such proceeding is in violation of this section. 

(B) If the Board determines, on the basis of a complaint 

filed under paragraph (2)(B)(i) of this subsection, that the 

grounds for a complaint described in such paragraph have 

been established with respect to a rail carrier, the Board 

shall, subject to the provisions of this section, order such 

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lar to the contract at issue with such differentials in terms 

and conditions as are justified by the evidence. 

ø(h)(1) Any rail carrier may, in accordance with the terms of this 

section, enter into contracts for the transportation of agricultural 

commodities (including forest products, but not including wood 

pulp, wood chips, pulpwood or paper) involving the utilization of 

carrier owned or leased equipment not in excess of 40 percent of 

the capacity of such carrier’s owned or leased equipment by major 

car type (plain boxcars, covered hopper cars, gondolas and open top 

hoppers, coal cars, bulkhead flatcars, pulpwood rackcars, and flatbed equipment, including TOFC/COFC). 

ø(2) The Board may, on request of a rail carrier or other 

party or on its own initiative, grant such relief from the limitations of paragraph (1) of this subsection as the Board considers 

appropriate, if it appears that additional equipment may be 

made available without impairing the rail carrier’s ability to 

meet its common carrier obligations under section 11101 of this 

title. 

ø(3)(A) This subsection shall cease to be effective after September 30, 1998. 

ø(B) Before October 1, 1997, the National Grain Car 

Council and the Railroad-Shipper Transportation Advisory 

Council shall make recommendations to Congress on 

whether to extend the effectiveness of or otherwise modify 

this subsection.¿ 

SUBTITLE IV. INTERSTATE TRANSPORTATION

PART A. RAIL

CHAPTER 117. ENFORCEMENT: INVESTIGATIONS, RIGHTS, AND

REMEDIES

§ 11701. General authority 

(a) Except as otherwise provided in this part, the Board may 

begin an investigation under this part øonly on complaint¿ on the 

Board’s own initiative or on complaint. If the Board finds that a 

rail carrier is violating this part, the Board shall take appropriate 

action to compel compliance with this part. 

(b) A person, including a governmental authority, may file with 

the Board a complaint about a violation of this part by a rail carrier providing transportation or service subject to the jurisdiction 

of the Board under this part. The complaint must state the facts 

that are the subject of the violation. The Board may dismiss a complaint it determines does not state reasonable grounds for investigation and action. However, the Board may not dismiss a complaint made against a rail carrier providing transportation subject 

to the jurisdiction of the Board under this part because of the absence of direct damage to the complainant. 

(c) A formal investigative proceeding begun by the Board under 

subsection (a) of this section is dismissed automatically unless it is 

concluded by the Board with administrative finality by the end of 

the third year after the date on which it was begun. 


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§ 11708. Voluntary arbitration of certain rail rates, practices, 

and common carrier service disputes 

(a) IN GENERAL.—Not later than 1 year after the date of enactment of the Surface Transportation Board Reauthorization Act of 

2014, the Board shall promulgate regulations to establish a voluntary, but binding, arbitration process to resolve rail rate, practice, 

and common carrier service expectation complaints subject to the jurisdiction of the Board. 

(b) COVERED DISPUTES.—The binding arbitration process— 

(1) shall apply to disputes involving rates, demurrage, accessorial charges, misrouting or mishandling of rail cars, and disputes involving a carrier’s published rules and practices as applied to particular rail transportation; 

(2) shall not apply to— 

(A) disputes to obtain the grant, denial, stay, or revocation of any license, authorization, or exemption, or to prescribe for the future any conduct, rules, or results of general, industry-wide applicability, or to enforce a labor protective condition; and 

(B) disputes solely between 2 or more rail carriers; and 

(3) shall not prevent parties from independently seeking or 

utilizing private arbitration services to resolve any disputes they 

may have. 

(c) ARBITRATION PROCEDURES.— (1) IN GENERAL.—The Board— 

(A) may make the voluntary, but binding, arbitration 

process available only to the relevant parties— 

(i) after the filing of a formal complaint; 

(ii) upon petition by all parties at the conclusion of 

any informal dispute resolution process provided by the 

Board for a complaint subject to this section; or 

(iii) through current or future procedures adopted by 

the Board to facilitate voluntary, but binding, arbitration; 

(B) with respect to rate disputes, may make the binding 

arbitration process available only to the relevant parties if 

the rail carrier has market dominance, as determined 

under section 10707 of this title; and 

(C) shall determine whether to pursue the binding arbitration process not later than 30 days after the date that 

a petition or formal complaint is filed. 

(2) LIMITATION.—Initiation of the binding arbitration process 

shall preclude the Board from separately reviewing a complaint 

or dispute related to the same rail rate, practice, or common 

carrier service expectation in a covered dispute involving the 

same parties. 

(3) RATES.—In resolving a covered dispute involving the reasonableness of a rail carrier’s rates, the arbitrator or panel of 

arbitrators, as applicable, shall consider the Board’s methodologies for setting maximum lawful rates, giving due consideration 

to the need for differential pricing to permit a rail carrier to collect adequate revenues within the meaning of section 

10704(a)(2). 

(4) SERVICE EXPECTATIONS.—In resolving a dispute involving 

common carrier service expectations, the arbitrator or panel of 


SSpencer on DSK4SPTVN1PROD with REPORTS
24 

arbitrators, as applicable, shall consider the rates and service 

terms, and any changes thereto, as published or otherwise made 

available under subsection (b), (c), or (d) of section 11101. 

(d) ARBITRATION DECISIONS.—Any decision reached in an arbitration process under this section— 

(1) shall— 

(A) be in writing; 

(B) contain findings of fact and conclusions; and 

(C) be binding upon the parties; and 

(2) shall not have any precedential effect in any other or subsequent arbitration dispute. 

(e) TIMELINES.— 

(1) SELECTION.—An arbitrator or panel of arbitrators shall be 

selected not later than 14 days after the date of the Board’s decision to initiate arbitration. 

(2) EVIDENTIARY PROCESS.—The evidentiary process of the 

binding arbitration process shall be completed not later than 90 

days after the date that the arbitration process is initiated, unless a party requests an extension and the arbitrator or panel 

of arbitrators, as applicable, grants it. 

(3) DECISION.—The arbitrator or panel of arbitrators, as applicable, shall issue a decision not later than 30 days after the 

date that the evidentiary record is closed. 

(4) EXTENSIONS.—The Board may extend any of the timelines 

in this subsection upon the agreement of all parties in the dispute. 

(f) ARBITRATORS.— (1) IN GENERAL.—Unless otherwise agreed by all of the parties, an arbitration under this section shall be conducted by a 

panel of arbitrators, selected from a roster, maintained by the 

Board, of persons with rail transportation, economic regulation, 

professional or business experience, including agriculture, in 

the private sector. 

(2) SELECTION.— 

(A) IN GENERAL.—If the parties cannot mutually agree on 

an arbitrator, or the lead arbitrator of a panel of arbitrators, the parties shall select the arbitrator or lead arbitrator 

from the roster by alternately striking names from the roster until only 1 name remains. 

(B) PANEL OF ARBITRATORS.—For purposes of this section, a panel of arbitrators shall be selected as follows: 

(i) The parties to a dispute may mutually select 1 arbitrator from the roster to serve as the lead arbitrator 

of the panel of arbitrators. 

(ii) If the parties cannot mutually agree on a lead arbitrator, the parties shall select a lead arbitrator using 

the process described in subparagraph (A). 

(iii) In addition to the lead arbitrator selected under 

this subparagraph, each party to a dispute shall select 

1 additional arbitrator from the roster. 

(3) COST.—The parties shall share the costs of the arbitration 

equally. 

(g) RELIEF.—An arbitral decision under this section may award 

the payment of damages or rate prescriptive relief, but the value of 

the award shall be limited as follows: 


SSpencer on DSK4SPTVN1PROD with REPORTS
25 

(1) For common carrier service and practice disputes, the damage award may not exceed $2,000,000. 

(2) For rate disputes, the damage award, including any rate prescription, may not exceed $25,000,000, and any rate prescription shall be limited to not longer than 5 years from the 

date of the arbitral decision. 

(h) BOARD REVIEW.—If a party appeals a decision under this section to the Board, the Board may review the decision under this section to determine if— 

(1) a clear abuse of arbitral authority or discretion occurred; 

(2) the decision directly contravenes statutory authority; or 

(3) the award limitation under subsection (g) was violated. 

Æ 


SSpencer on DSK4SPTVN1PROD with REPORTS