The hearing will focus on implementation of the recently enacted Surface Transportation Board Reauthorization Act, the first reauthorization of the Surface Transportation Board (STB) since its creation two decades ago. Sen. Thune introduced this legislation to make the STB more efficient and effective. The hearing continues the Committee’s oversight work to help ensure a competitive, efficient, and reliable national rail system.
- Mr. Michael Skuodas, Vice President of Distribution and Business Development, POET
- Mr. Troy Knecht, Vice President, South Dakota Corn Growers Association
- Mr. Tom Heller, Chief Executive Officer, Missouri River Energy Services
- Mr. Dan Mack, Vice President of Transportation and Terminal Operations, CHS, Inc.
- The Honorable Daniel R. Elliott III, Chairman, Surface Transportation Board
- The Honorable Deb Miller, Vice Chairman, Surface Transportation Board
- The Honorable Ann D. Begeman, Board Member, Surface Transportation Board
* Witness list subject to change
Thursday, August 11, 2016
1:30 p.m. CT / 2:30 p.m. ET
Full Committee Hearing
Carnegie Town Hall
235 West 10th Street
Sioux Falls, SD 57104
Witness testimony and Sen. Thune’s opening statement will be available on www.commerce.senate.gov.
Chairman John Thune
"From the farmers who help put food on our tables to the energy suppliers who help power our homes and fuel our cars, businesses and households in South Dakota and across the nation depend on efficient and reliable freight rail. About 40 percent of our nation’s freight ton-miles moves by rail, including about 15 million tons that originate in South Dakota. In fact, about three times as many rail carloads originate in the state compared to the number that end up here, meaning South Dakotans disproportionately depend on rail to get our products to market, create jobs, and grow incomes.
"That’s why it’s so important that, when problems arise in our nation’s rail system, we have efficient and effective oversight.
"Despite concerns from businesses about the burdensome processes at the Surface Transportation Board, or STB, the Federal government agency responsible for overseeing the efficiency of the freight rail network, Congress had not reformed or reauthorized the agency since its creation in 1996.
"Needless to say, Congress did not get it right on the first try. The STB did not have the authority to proactively investigate issues of regional or national significance, hindering its ability to examine emerging issues. In addition, rate disputes before the Board have taken more than $5 million and more than three years to litigate, and changes to rate reviews had not yielded sufficient results. And because the STB had three members, and two members could form a quorum, members could not talk to one another about important regulatory and managerial issues without encountering procedural hurdles.
"This Committee took action to address these issues. Last year, following intensive oversight activity, I introduced the Surface Transportation Board Reauthorization Act of 2015 to make the STB a more efficient and effective agency. After working on a bipartisan basis with cosponsor Ranking Member Bill Nelson, and working with my colleagues in the House of Representatives, I was pleased to see it signed into law last December.
"This hearing marks about eight months since the enactment of my legislation, and it is an opportunity to examine completed and on-going implementation work at the STB and hear about ways to maximize the law’s benefits for the businesses that depend on rail. These benefits can be thought of in three categories.
"First, the law improves the way rate cases are handled. It expedites rate review timelines, and it expands voluntary arbitration to better serve as an alternative to lawsuits. The Board has already set those new timelines, and it has issued a proposal to implement the new arbitration procedures, which I expect to be finalized well ahead of the end-of-the-year deadline. The law also requires the STB to look at simpler ways to do rate reviews, and I understand this important study is on-going. I encourage the Board to expansively survey possible alternatives to identify rate review options that make economic sense, particularly for small businesses.
"Second, the law increases proactive problem-solving and accountability. It provides the STB with the authority to launch investigations based on its own initiative, and the Board has published a proposed rule to implement this authority. It also requires the STB to submit quarterly reports on complaints and unfinished regulatory proceedings, and the Board has sent two versions of these quarterly reports that have greatly increased transparency and enhanced Congressional and public oversight of its work.
"Third, the law creates a more functional and collaborative Board. It expands the Board from three to five members. I am hopeful that the next President will quickly nominate, and the Senate quickly confirm, these additional members. The bill also allows Board members to talk to one another about important policy issues. The Board has already used this new authority to hold group discussions, and I am eager to see further increased collaboration – on regulatory proceedings and agency management – between the Board members. The law also grants the Board administrative independence and authorizes the agency for the first time since its creation.
"While many of the most important provisions of the law are still in-progress, thus far the Board has met or is on track to meet each deadline in the legislation, a feat most other Federal agencies regularly fail to do, and I greatly appreciate their efforts. This activity comes as the Board makes progress on several other important regulatory proceedings, including a rule to make permanent certain rail performance metrics – with fertilizer included. I hope the Board will continue the good progress since enactment of the legislation, and I expect this Committee to continue its active oversight to maximize the benefits of the law.
"This legislation is another example of the Senate getting back to work for the American people. That work includes the five-year, $305 billion highway bill, FAA reauthorization and aviation security bill, and the pipeline safety bill as significant Committee achievements within the past year to improve our nation’s transportation and infrastructure.
"With that said, I am eager to hear the perspectives of our first distinguished panel. I’d like to welcome Mr. Skudos, Vice President for Distribution and Business Development at POET, a South Dakota company and one of the nation’s leading biorefineries; Mr. Troy Knect, Vice President of the South Dakota Corn Growers, who runs an outstanding diversified farming operating near Houghton, South Dakota; Mr. Tom Heller, CEO of Missouri River Energy Services, a critical energy supplier with 12 municipal members in South Dakota; and Dan Mack, Vice President of Transportation and Terminal Operations, CHS, Inc., one of the nation’s largest rail shippers with over 900 employees in the state.
"South Dakota is consistently one of the top five states for the export by rail of farm products and ethanol to other states, and coal is the number one commodity imported into the state by rail, so we have a great panel that is representative of shippers in the state who depend on strong rail service.
"After testimony and questions of this panel, I will convene a second panel with all of the STB board members. I am pleased to welcome Chairman Dan Elliott, Vice Chairman Deb Miller, and Board Member Ann Begeman, all of whom have been working hard to implement the law day in and day out. Ann was born and raised on a farm near Humboldt, South Dakota, which means she not only understands agriculture and the importance of reliable rail service, but also can help the board members find a good place to eat later today.
"Thank you all for being here today and I look forward to your testimony."
Witness Panel 1
Mr. Michael SkuodasVice President of Distribution and Business DevelopmentPOET
Mr. Troy KnechtVice PresidentSouth Dakota Corn Growers Association
Mr. Tom HellerChief Executive OfficerMissouri River Energy Services
Mr. Dan MackVice President of Transportation and Terminal OperationsCHS, Inc.
Witness Panel 2
The Honorable Daniel R. Elliott IIIChairmanSurface Transportation Board
The Honorable Deb MillerVice ChairmanSurface Transportation Board
The Honorable Ann D. BegemanBoard MemberSurface Transportation Board