U.S. Senator John Thune (R-South Dakota), Ranking Member of the Senate Committee on Commerce, Science, and Transportation, delivered the following prepared remarks at today’s “Freight Rail Service: Improving the Performance of America’s Rail System” hearing:
I appreciate the chairman agreeing to hold this hearing to elevate the profile of various rail service challenges that shippers, and agriculture producers in particular, continue to face.
I also would like to thank all of the witnesses for testifying today, especially Jerry Cope, from Dakota Mill and Grain in Rapid City, South Dakota, who will be testifying on behalf of the National and South Dakota Grain and Feed Associations.
Since the beginning of this year, South Dakota and many other states have been particularly challenged by rail service delays, network congestion, and locomotive and railcar shortages, which have affected a wide range of shippers, including the agricultural community.
From farmers and grain elevators, to auto manufacturers, energy providers, and retailers of all kinds, rail transportation challenges have affected the economy nationwide. Higher transportation costs can also increase the cost of products at market and at the point of export, decreasing our global competitiveness.
As the former South Dakota rail director under the late governor George S. Mickelson in the early 1990s, I know first-hand the importance of effective rail access for not only agriculture producers but other shippers. In all my years of working on rail matters, I have never seen producers more concerned than they are now regarding their restricted capability to move grain to market. It is my hope that this hearing will continue to bring attention to the rail service backlogs that South Dakota shippers, and shippers nationwide, are currently facing, and encourage continued discussion about both short-term and long-term solutions to address these issues. I also want to note that not all of the blame should be placed on the rail carriers because some events have been outside of their control. That being said, these issues did not arise overnight and some railroads have been better than others at addressing the challenge head-on.
In South Dakota alone, this year’s harvest and what remains of last year’s is expected to exceed the statewide grain storage capacity by as much as eighteen percent. Grain has already been stored on the ground, posing a significant risk of spoilage and loss.
Projections from the U.S. Department of Agriculture estimate South Dakota’s 2014 wheat harvest at 108 million bushels, a 14 percent increase over the three-year average, and soybean and corn crops are also expected to be unusually large and potentially record-setting. Even with these high yields, the increased negative basis due to inadequate transportation and the inability to timely move these crops from grain handlers could result in more than $300 million in lost value to South Dakota corn, wheat, and soybean producers.
As winter approaches, ethanol plants will also become vulnerable to rail delays. Because of the nature of ethanol production, plants cannot simply be shut down during winter months. South Dakota ethanol producers like Glacial Lakes and Redfield rely upon adequate service to prevent pipes from freezing, and major structural damage to their operations.
In addition, South Dakota’s Big Stone Power plant has indicated that they’re running below capacity because they simply can’t get enough coal to fuel the most efficient operation. Coal stockpiles are alarmingly low, and rail service simply hasn’t provided adequate coal supplies.
The Surface Transportation Board (STB) has taken several steps to address these rail service challenges, including issuing a number of orders designed to increase transparency. On June 20th, the board issued a grain order to provide additional transparency and ensure both Canadian Pacific and Burlington Northern Santa Fe railroads had plans for reducing their grain car backlogs.
While the STB has been working to address the current rail service issues facing South Dakota, and other states in the northern tier of the U.S., this crisis has highlighted some of the inefficiencies that currently exist at the STB.
On Monday, Chairman Rockefeller and I introduced S.2777, The Surface Transportation Board Reauthorization Act, which is a first step in addressing these inefficiencies so that the STB can better assist shippers and railroads when problems arise.
This hearing marks a continuation of my ongoing efforts to work not only with the STB but also with railroads and shippers directly to address the challenges that agricultural producers and other businesses have experienced beginning last winter – when the harsh cold snarled the movement of trains and caused the significant delays that shippers and railroads are still working to remedy.
Again, thank you to the witnesses for testifying and to the chairman for agreeing to hold this important hearing.