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Sunday, November 25, 2007

Long overdue: Senate moves on Big Rail

I was very heartened to see the Senate has taken up legislation to open the door to the use of rail. Encourage your Senator to cosponsor.
S. 772: Railroad Antitrust Enforcement Act of 2007: A bill to amend the Federal antitrust laws to provide expanded coverage and to eliminate exemptions from such laws that are contrary to the public interest with respect to railroads.
The bill's sponsor is Sen. Herbert Kohl [D-WI]
Sen. Joseph Biden [D-DE]
Sen. Norm Coleman [R-MN]
Sen. Byron Dorgan [D-ND]
Sen. Russell Feingold [D-WI]
Sen. Thomas Harkin [D-IA]
Sen. Patrick Leahy [D-VT]
Sen. John Rockefeller [D-WV]
Sen. Charles Schumer [D-NY]
Sen. David Vitter [R-LA]
I am presuming the bill would move toward the removal of legal shelters to Big Rail preventing the public from fully utilizing rail and rail technology. Rail is domestic infrastructure that can replace imported oil. It is a win on employment, efficiency, economic independence, and environment. Big Rail has run this public good for narrow pecuniary purposes for far too long.

A piece from Oregon Wheat describes the measure as primarily benefiting the heavy commodities that now monopolize the use of the tracks. Senator Kohl is quoted:
Over the past several years, industries that are served by only one railroad have faced spiking rail rates. They are the victims of price gouging by the single railroad that serves them, price increases which they are forced to pass along, ultimately, to consumers. It is time to put an end to the abusive practices of the nation’s freight railroads and force railroads to play by the rules of free competition like all other businesses.
But the problem is much deeper. Railroads have targeted coal and grain and modular imports (containers) as their cargo of choice, and have abandoned thousands of miles of track.

We need to move freight off the roads and back onto the rails. Roads are too costly to maintain for freight. One semi causes 16,000 times as much wear to a road as a car. The use of gasoline and diesel by trucks is a mammoth greenhouse gas problem. Freight corridors used to exist throughout the nation, financed by huge land giveaways to the rail companies. We need them back.

The Oregon Wheat article concludes:
Over the last 20 years, railroad industry consolidation has reached the point where only four class I railroads provide over 90 percent of the nation’s rail transportation. Many industries – known as “captive shippers” -- are served by only one railroad. These captive shippers have faced constantly rising rail rates. In many cases the ordinary protections of antitrust law are unavailable to these captive shippers – instead, the railroads are protected by a series of exemptions from the normal rules of antitrust law to which all other industries must abide.

Current antitrust law protects a wide range of railroad industry conduct from scrutiny by antitrust enforcers. Railroad mergers and acquisitions are exempt from
antitrust law and are reviewed solely by the Surface Transportation Board. Railroads that engage in collective ratemaking are also exempt from antitrust law. Kohl’s bill will eliminate these antitrust exemptions by allowing the federal government, state
attorneys general and private parties to file suit to enjoin anti-competitive mergers and acquisitions. It will restore the review of these mergers to the agencies where they belong – the Justice Department’s Antitrust Division and the Federal Trade Commission. And it will eliminate the antitrust exemption for railroad collective rate making.
An American Public Power Association flier also urges support on the basis of reducing the costs of coal transport.

A CURE flier lists problem and solution.
  • The Surface Transportation Board (STB), which is supposed to ensure competitive markets and reasonable prices for rail customers without access to competition, is not doing its job. In fact, rulings from the STB have actually enhanced the market dominance of the railroads, leaving rail customers with no legal recourse.

  • The broad antitrust exemptions enjoyed by the railroads prevent customers and state Attorneys General from pursuing legal action against alleged monopolistic behavior.

  • Unlike most industries, railroad mergers and acquisitions are not subject to DOJ/FTC review. The STB approves mergers and acquisitions on a simple “public interest” test. The result is a highly consolidated rail industry operating in non-competitive markets, often charging high rates and providing poor service.
A Solution – Under S. 772:
  • The railroads would be given six months to review their anticompetitive practices to bring them into compliance with the nation’s antitrust laws. After that date, a plaintiff with standing could bring an antitrust action in federal district court to enjoin railroad practices that do not comply with the nation’s antitrust laws.

  • The Attorney General, state attorneys general, and private persons are empowered, where they have antitrust standing, to file suit in federal district court to enjoin railroad actions that violate the nation’s antitrust laws.

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