Pressure builds for antitrust bill on US rails

25 February 2008 22:30  [Source: ICIS news]

WASHINGTON (ICIS news)--Chemical companies and other high-volume rail shippers urged Congress on Monday to end antitrust exemptions for railroads, charging that those waivers have allowed “outrageous rail rates and poor service”.


Member companies of a broad-based industrial and agricultural coalition seeking railroad regulatory reform told a House Judiciary Committee hearing that antitrust exemptions for rail operators “have allowed rail companies to wield significant monopoly power”.


The American Chemistry Council (ACC) has joined electric power and forestry groups, cement producers and wheat and corn growers among other agriculture interests in backing legislation - HR-1650 and S-772 - that would strip railroads of some limited antitrust exemptions left over from 1980 when Congress partially deregulated the rail industry.


Speaking for the coalition of high-volume rail shippers, Glenn English, chief executive of the National Rural Electric Cooperative Association, said: “The proposed legislation would bring fairness to an industry that has been profiting unfairly for years from monopoly power.  There is no excuse for this anti-competitive behaviour to continue.”


Council president Jack Gerard said that “While there may have been a need for such exemptions when the federal government played an outsized role in the regulation and management of railroad operations, that is no longer the case”.


Chemical companies have long complained that production sites served by a single railroad - so-called captive shippers - are subject to exorbitant rail freight rates that are not charged to producers whose plants are served by more than one rail carrier.


In addition to removing remaining antitrust exemptions, the legislation would allow states and private companies to file suit against rail operators to challenge alleged anticompetitive conduct.


However, the rail industry argued at Monday’s hearing that “this legislation is a solution looking for a problem”.


Paul Moates, speaking for the Association of American Railroads (AAR), argued that “All aspects of railroad conduct that are exempt from the antitrust laws are subject to the regulatory jurisdiction of the Surface Transportation Board (STB)”.


He warned that if the legislation were enacted and stripped remaining antitrust exemptions from rail service, shippers would be unfairly awarded two avenues of remedy, the STB and courts.


Shippers argue in turn that the board has failed to exercise antimonopoly control of railroads or give rail customers a real outlet for relief.


The Senate version of the rail reform bill, S-772, has already been approved by the Senate Judiciary Committee and is awaiting a full vote by the Senate.


If the House Judiciary Committee gives its approval to HR-1650, the measure would then go before the full House.

By: Joe Kamalick
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