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Shippers Rail Against the Railroads at House Subcommittee Roundtable

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TheHouse Subcommittee on Railroads, Pipelines, and Hazardous Materials of the Transportation & Infrastructure Committee held a Railroad Shippers Roundtable July 25 to provide oversight on the impacts of Precision-Scheduled Railroading. Witnesses at the hearing included Josh Etzel, Vice President Operations for Kinder Morgan Energy Partners and a member of the ILTA Board of Directors, along with a group of other rail customers and industry associations. 

The discussion centered around the service failures and additional costs that rail customers have suffered since 2017 when six of the seven Class 1 railroads began adopting PSR. Although the reduction in employees, redeployment of rail assets and dramatic increases in storage fees have been profitable for the railroads, the resulting costs and service delays have left rail customers disgruntled. Complaints about these same overcharges were the subject of a two-day hearing in May 2019 before the U.S. Surface Transportation Board, at which Etzel also testified along with ILTA President Kathryn Clay.

A focus of the Subcommittee Roundtable was a discussion of demurrage fees. Railroads charge those fees when customers do not meet the schedule for loading and unloading railcars, even when the railroads are the cause of the delay. Etzel noted that the railroads bill Kinder Morgan for demurrage charges even though his company is not a party to the contract between the railroad and the shipper, or responsible for the delay. "Kinder Morgan doesn't argue or contest the purpose or concept of demurrage,” Etzel told the subcommittee. “Our concern lies in a one-sided and monopolistic methodology by which the railroads assess, bill and attempt to collect these charges.”

Etzel also noted that the demurrage fees have forced Kinder Morgan into multiple lawsuits with railroads and customers. He argued, as he did before the STB in May, that the issue of who is liable for the fees warrants review by the STB and oversight by Congress. 

There were no calls during the Roundtable to reopen the Staggers Act that deregulated the railroads in the 1980s. Nonetheless, several panelists urged Congress to work to make the STB a more effective regulator of the railroads.


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