By TIM ALEXANDER
Illinois Correspondent

WASHINGTON, D.C. — Though the USDA and U.S. departments of Justice (DOJ) and Transportation (DOT) have asked the federal Surface Transportation Board (STB) to take a serious look at the lack of freight rail competition, the rail industry’s biggest trade association maintains that limited antitrust exemptions granted to the railroads under the Staggers Act should remain intact.
The STB has scheduled a hearing for June to consider competition in the freight rail industry, in particular how it affects rural farming communities with no access to competing carriers. Comments filed by the three agencies urge the STB to examine how that alleged lack of competition affects U.S. exporters, including agricultural shippers.

Glenn English, chair of Consumers United for Rail Equity (CURE), said the comments filed by USDA, DOT and DOJ shine a spotlight on the need for a thorough government examination of rail pricing, billing and service.
“The agencies are emphasizing the need for a freight rail policy that restores fair, market-based pricing and better access for American companies and the jobs they support,” he stated in a CURE news release.

According to comments filed with the STB by these agencies, the initial success of the Staggers Act has given way to concern from agricultural producers and shippers because of decreased competition, higher rates and deteriorating service and infrastructure. Rail capacity constraints and fair allocation of rail capacity were also listed as concerns.

At the heart of the issue are the few limited federal antitrust exemptions granted railroads which are overseen by the STB, such as rail mergers. Legislation before Congress such as S.49 – the Railroad Antitrust Enforcement Act – would eliminate railroads’ antitrust exemptions and open the way for competition, proponents such as CURE say.

Not so, according to the Assoc. of American Railroads (AAR), which claims that eliminating railroads’ antitrust exemptions would not provide customers with protections they don’t already have.

“While railroads do have limited exemptions from antitrust laws, the activities subject to those exemptions fall under the jurisdiction of the STB. There is no gap where railroads are free of antitrust or regulatory laws,” according to an email response attributed to the AAR from Holly Arthur, an AAR spokeswoman.
“Therefore, removing the limited antitrust exemptions railroads have would not fill any void in the law, or provide rail customers with any protections they don’t already have. In fact, doing so could create problems for railroads and their customers.

“For example, eliminating the limited antitrust exemptions could create overlapping and potentially conflicting oversight by the STB and courts. This could result in some situations where the STB, relying on regulations, would direct the railroads to behave one way, while a court or jury, relying on its interpretation of antitrust laws, would tell them to behave differently,” Arthur wrote.

In addition, removing railroads’ antitrust exemptions could affect efficiency of key operations between railroads and their customers, according to the AAR.
“Ultimately, such potential conflicts create an air of uncertainty for railroads, rail customers, regulators and courts and threaten the efficiency and of the national rail system,” the AAR statement concluded.

The National Grain & Feed Assoc. (NGFA), along with 11 other national agricultural producer and agribusiness groups, issued their own statement to the STB urging it to “improve its regulatory structure to foster a more competitive rail environment.” Rates and switching charges, unreasonable rail business practices and penalties imposed on shippers, practices discouraging competition and better rate appeal procedures were cited by the associations as “being ripe” for federal review.

With President Obama calling for a 50 percent increase in U.S. exports, English said overhauls of the nation’s freight rail competition, rates and appeal procedures are essential to the president’s goal.

“We believe the board’s action or inaction will have profound implications for our national economy, for the creation of American jobs and for increasing American exports,” English stated. “We are encouraging the STB to recognize the lack of competition in the national freight rail system and take steps to improve rail competition. Other free American industries have benefited from intra-industry competition, and the freight railroads would benefit as well.”