Chemical firms, others ask House to restrain rail

25 September 2007 20:56  [Source: ICIS news]

WASHINGTON (ICIS news)--Chemical manufacturers and other high-volume freight shippers urged Congress on Tuesday to impose what they say are needed changes in US rail regulations to ensure competition, better service and more equitable rates.


DuPont vice president Gary Spitzer joined electric utility and agriculture executives in charging that major US railroads effectively wield monopoly power in freight pricing and service.


Chemical companies along with forestry and paper firms, grain shippers and coal-dependent power producers told the House Transportation and Infrastructure Committee that rail operators are having “a devastating effect on our industries and the economy as a whole”.


A coalition of rail-dependent industries, Consumers United for Rail Equity (CURE), charged that greatly increased freight rail rates are forcing some US electric utilities to import coal from overseas, “which is often a more affordable alternative to paying the railroads’ monopoly prices”.


The coalition also complained that rail operators “increasingly refuse to transport grain or fail to make scheduled pickups and deliveries”, causing disruptions in US agriculture.


The group cited a recent study by the American Chemistry Council (ACC) claiming that rail carriers overcharged customers more than $6.4bn (€4.54bn) over a four-year period through special fuel fees that ACC said far exceeded the railroads’ real energy costs.


“Now is the time to reform railroad policy that for too long has allowed major railroads to abuse their monopoly status and anticompetitive power,” said Glenn English, chief executive of the National Rural Electric Cooperative Association and chairman of CURE.


The coalition wants Congress to approve HR-2125, the Railroad Competition and Service Improvement Act, which would strengthen the regulatory authority of the Surface Transportation Board, the principal federal agency responsible for rail operations.


The Association of American Railroads (AAR) said in a statement that the bill would eliminate limited antitrust immunity given railroads when they were essentially deregulated in 1980.


The rail operators contend that the basic premise of HR-2125 - that rail carriers enjoy wide-ranging antitrust immunity - is not true.  “Freight railroads are subject to most antitrust laws, including those that prohibit agreements among railroads to set rates, allocate markets or unreasonably restrain trade,” AAR said.


The bill, sponsored by Representative James Oberstar (Democrat-Minnesota), chairman of the Transportation Committee, is likely to get committee approval.  It’s fate in the full House is uncertain, but English said that “more and more lawmakers are coming out in support of this much-needed reform”.  Similar legislation is pending in the US Senate.


($1 = €0.71)

By: Joe Kamalick
+1 713 525 2653

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