By TIM ALEXANDER
Illinois Correspondent

WASHINGTON, D.C. — Railroad monopoly power that adversely affects rural customers in the form of higher fees may be nearing the end of the line with the House Judiciary Committee’s passage last month of the Railroad Antitrust Enforcement Act of 2009 (HR 233).

HR 233, led by U.S. Rep. Tammy Baldwin (D-Wis.), would eliminate “antiquated” railroad antitrust exemptions that shield railroads from consequences of providing unreliable service at exorbitant fees through monopoly power, according to a press release issued by Baldwin’s office.

“This legislation is long overdue and absolutely necessary to begin to end the railroad monopolies that are driving consumer prices up and service down,” she stated. “It’s time for Congress to apply our antitrust laws more equitably.”

A letter sent to House and Senate leadership in March, signed by 20 state attorneys general, asked Congress to apply the same antitrust regulations to railroads that are applied to other industries, including telecommunications, energy, trucking and aviation. Because of dramatic consolidation in recent years, only four Class 1 railroads carry some 90 percent of the nation’s freight.
Bob Szabo, executive director and counsel for CURE (Consumers United for Rail Equity), called the passage of Baldwin’s bill a tremendous step forward for captive rail customers, which include rural fertilizer, feed and seed stores and electric cooperatives.
Since the House and Senate judiciary committees have now agreed that railroads should abide with federal antitrust laws, Szabo said, more rail customers will have access to competition, which should reduce the cost of electricity, food and other goods.

“The (House) committee staff is now working with the Energy and Commerce Committee and the Transportation and Infrastructure Committee to produce a report with any modifications to the language of the bill, so the bill can move to the (House) floor,” explained Szabo.

“The committee staff met October 1 with the railroads one more time to see if there are any legitimate problems that might result in modifications in the reported legislation or in the report language. The railroads came back with some things ...we can accommodate and a couple of things that are out of the question.
“In the not-too-distant future the (House Judiciary Committee) will file the report with the House and the bill can move any time thereafter,” he added.

Sen. Jay Rockefeller (D- W.Va.), meanwhile, has been busy crafting a compromise companion bill to Baldwin’s legislation that, in addition, will reorganize the U.S. Surface Transportation Board and grant it broader, more proactive antitrust regulation and enforcement powers.

“Senator Rockefeller continues to say he is very close to unveiling his compromise legislation; we’ve been expecting that for at least a month,” Szabo said. “I’m very confident it will be released in October, and I’m confident it will be a bipartisan bill supported by the ranking committee leaders. It’s realistic to think it will get through the floor of the Senate in 2009.”

Szabo concluded there is a “high probability” both the House and Senate’s final versions of rail antitrust bills could be “wrapped up in this Congress. If a final bill is signed by President Obama, the U.S. Attorney General and state attorneys general will have the power to be more vigilant about enforcing antitrust violations.

“The (legislation) will knock down some of the barriers that rail customers encounter when they try to reach a competing railroad for transportation,” said Szabo, adding that Rockefeller’s Senate bill should “modify the rate challenge process so customers can have better access to the (Surface Transportation Board) to challenge rates when they are captive, which should be very helpful to rural America and the agricultural community.”

Baldwin has said that for years, captive shippers have reported “spiking” rail rates and unreliable service. Baldwin points to Dairyland Power, a rural electric cooperative serving 575,000 customers in the upper Midwest, as a prime example.

Dairyland’s three coal-fired plants consume more than three million tons of coal per year, of which most is shipped by rail from coal mines in Wyoming. Dairyland operators claim their rail transportation rates have more than doubled in the past four years, resulting in 5-20 percent increases in electricity rates for their customers.

Chemical companies, the manufacturing industry, the agricultural sector and forest and paper companies are among the industries paying the price for the railroads’ monopoly power, according to Baldwin. “Opponents argue that by subjecting the railroads to our nation’s antitrust laws, we will somehow be ‘re-regulating them,’“ she said. “Our legislation does nothing of the sort. Subjecting the railroads to antitrust laws is about competition ... not re-regulation.
“This bill will not fix all of the problems with the railroad industry. But, it will be a starting point for good faith negotiations between the rails and the shippers. And, it will restore some of the public interest responsibilities to our nation’s rail system.”

Published on Oct. 7, 2009