US House considers new anti-monopoly role over railroads

19 May 2009 22:40  [Source: ICIS news]

WASHINGTON (ICIS news)--US railroads warned on Tuesday that broader anti-monopoly enforcement of rail operations and rate setting sought by chemical producers and other high-volume shippers could undermine the nation’s rail freight system.

In testimony before the House Judiciary Committee, the Association of American Railroads (AAR) cautioned members of Congress against weakening anti-monopoly immunities that railroads have held for decades.

Chemical producers and a coalition of other heavy rail freight consumers want Congress to give more federal authorities and individual shippers renewed ability to regulate or file suit against rail operators under US anti-monopoly laws.

The American Chemistry Council (ACC) along with electric utilities, forest and paper producers and cement manufacturers are pressing for congressional approval of HR-233, the Railroad Antitrust Enforcement Act of 2009.

Among other things, the bill would eliminate the nearly exclusive oversight and regulatory authority for rails held by the Surface Transportation Board (STB).

While STB would retain its authority to regulate rail operations, arrangements and rate policies, the legislation would also allow US federal courts, the Federal Trade Commission (FTC) and private individuals to take actions to enforce anti-monopoly laws in rail matters.

The railroads were exempted from many aspects of anti-monopoly law when Congress deregulated the rails in 1980 in order to spur profit potential and capital investment among the then-floundering rail operators.

In recent years, however, chemical producers and other high-volume rail shippers have complained that while rails have prospered, those anti-monopoly exemptions have allowed carriers to arbitrarily set rates and to charge even higher fees to so-called captive shippers, production sites served by only one rail line.

If passed, HR-233 would submit to anti-monopoly review agreements among rail carriers to pool or divide traffic, services or earnings and would give the commission renewed authority to enforce anti-monopoly law as it applies to rail rate agreements even if already approved by the Surface Transportation Board.

The bill also would allow private parties - companies or individuals - to file suit in federal court to seek an injunction against a railroad for rate or other policies that may be in violation of antitrust law.

In addition, federal courts would be able to impose rulings against rail carriers without deferring to the STB.

But Association of American Railroads president Edward Hamberger urged Congress to think twice about exposing rail operators to anti-monopoly intervention by the FTC and private parties through US courts.

“If enacted, HR-233 could drag us back to pre-deregulation days of weak investment and withering rail networks,” Hamberger said.

He cautioned that with the STB, FTC and multiple court jurisdictions all having anti-monopoly authority over rail operators, railroads will experience rising costs, conflicting regulatory requirements, multiple delays and a diminished ability to raise and invest new capital in rail infrastructure.

The Judiciary Committee has just begun consideration of the bill, which also must be considered by the House Committee on Transportation and Infrastructure.  A companion bill is pending in the US Senate and has already been approved by that chamber's judiciary panel.

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By: Joe Kamalick
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