Ethanol groups call on STB to resolve rail service disruptions

By Erin Voegele | April 27, 2022

The Renewable Fuels Association and Growth Energy are calling on the the Surface Transportation Board and the railroad industry to resolve rail service disruptions that are negatively impacting the ethanol industry.

The STB on April 7 announced plans to hold a public hearing on April 26-27 focused on recent rail service problems and recovery efforts involving several Class I carriers. Ethanol producers are among the groups currently impacted by significant rail delays.

In a notice announcing the hearing, the STB said it had heard informally from a broad range of stakeholders about inconsistent and unreliable rail service. The STB also said it had received reports from the Secretary of Agriculture and other stakeholders about the serious impact this inconsistent and unreliable service is having on rail users, particularly with respect to shippers of agriculture and energy products. The STB said those reports were validated by its weekly rail service performance data.

Representatives of Growth Energy and the RFA were among those to offer testimony on the impact rail delays are having on ethanol producers.

Chris Bliley, senior vice president of regulatory affairs at Growth Energy, explained that the rail disruptions include extreme delays in unit traffic and getting loaded trains offsite.

“Nearly 70 percent of all ethanol is shipped by rail with 377,000 carloads in 2018 alone,” Bliley said. “Rail service is vital to get ethanol from our biorefineries in the Midwest to American consumers from coast to coast. It is perhaps even more important today with drivers facing high gasoline prices and ethanol continuing to trade 80 cents to a dollar less per gallon than wholesale gasoline. 

“It is imperative that all possible actions be taken by the nation’s railroads to ensure that these critical fuel supplies are immediately prioritized and reach markets as quickly as possible,” he continued.

Geoff Cooper, president and CEO of the RFA, delivered written testimony to the STB ahead of the hearing. “With the crisis in Ukraine and the subsequent concerns regarding instability in U.S. and global energy supplies, it is imperative that the robust supply of lower-cost American-made ethanol safely and efficiently reaches fuel consumers in a timely manner,” Cooper wrote. “Unfortunately, many of our member companies are experiencing abnormal rail disruptions at a time when they, as well as the American consumer, can least afford it. STB data show a significant increase in dwell times for ethanol unit trains in recent months, as well as a concerning increase in the average number of ethanol unit trains holding per day. Rail traffic congestion appears to be the primary issue and ethanol producers and marketers are being asked to reduce rail car inventories. Some rail service providers are indicating that if there is not a reduction in operating inventory, then metering of traffic will commence until such time as the backlog of rail cars is worked through and service can be improved for all customers.”

Cooper explained that rail traffic congestion and the subsequent decision to meter traffic is causing major disruptions for ethanol producers. “In some cases where on-site storage is reaching capacity, some producers are having to reduce ethanol production rates until cars are made available,” he wrote.

The STB in 2014 began requiring Class I railroads to file weekly data reports regarding service performance, including certain data on ethanol shipments. The requirements were put in place in an effort to promote industry-wide transparency, accountability and improvements in rail service following a period of similar rail delay issues, which also impacted ethanol producers. That data is available on the STB website