Rail Shipper Emergencies -- What Can You Do?

NOT USED 1

Over the last several years, rail service has been exceptionally poor in the US. Rail shippers have lost revenue, suffered plant shutdowns, and more as a result. Most shippers are at a loss about how to fix these problems when railroads fail them. The Surface Transportation Board does provide some remedies for these emergency situations which are seldom used.

STB emergency service orders are designed to preserve rail service where there has been a substantial rail service issue or failure that requires immediate relief. Under 49 U.S.C. § 11123, the Board may issue an emergency service order where there exists “an emergency situation of such magnitude as to have substantial adverse effects on shippers, or on rail service in a region of the United States, or that a rail carrier . . . cannot transport the traffic offered to it in a manner that properly serves the public[.]” When the Board determines that such a situation exists, it may: “(1) direct the handling, routing, and movement of the traffic of a rail carrier and its distribution over its own or other railroad lines; (2) require joint or common use of railroad facilities; (3) prescribe temporary through routes; and (4) give directions for—(A) preference or priority in transportation; (B) embargoes; or (C) movement of traffic under permits;” or, when the service failure is caused by a cessation of service by Amtrak, direct the continuation of operations and related functions. The Board may act on its own initiative or pursuant to a petition, and emergency service may be ordered summarily (i.e., without regard to the Administrative Procedure Act). Board orders under § 11123 are subject to an initial time limit of 30 days but may be extended up to an additional 240 days if the Board finds that emergency conditions continue to exist.

The current regulations at 49 C.F.R. § 1146.1(a) provide, in relevant part, that a petitioner seeking relief must show a substantial, measurable service deterioration or other demonstrated inadequacy over an identified period of time by the incumbent carrier. Any petition for relief must demonstrate that the standard contained in 49 C.F.R. § 1146.1(a) is met, provide a summary of discussions the petitioner has had with the incumbent carrier regarding the service problems and the reasons why the incumbent is unlikely to restore adequate rail service within a reasonable period of time, and include a commitment from an alternative carrier to provide service that can be performed safely without degrading service to existing customers of the alternative carrier and without unreasonably interfering with the incumbent’s overall ability to provide service.

However, the Board recently realized these procedures were not being utilized despite ongoing poor service from the railroads. As a result, it issued a Notice of Proposed Rulemaking in EP 762, on April 22, 2022, to amend its emergency service rules to provide more accessible relief for shippers in situations that require immediate relief. The Board proposed, among other things, to clarify that it may act on its own initiative to direct emergency rail service and to establish an accelerated process for acute service emergencies. While it has not issued a new rule as of this date, it has issued emergency service orders against Union Pacific Railroad to serve Foster Poultry Farms since proposing the changes, demonstrating it will act quickly if called upon to remedy a service collapse by a railroad. In that case, the Board felt compelled to remedy the “dire emergency caused by UP’s acknowledged inadequate service’ resulting in “Foster Farms’ inability to feed its chickens or to supply feed for livestock.”

Therefore, rail shippers should be aware of this effective avenue for relief in dire circumstances. It should also take advantage of the STB’s Rail Customer and Public Assistance Program which also has proven extremely capable of helping rail shippers when help is needed. While rail service issues can create devastating impacts, rail shippers should not sit idly by when impacted by these situations.