US chemical firms, other heavy rail users press anew for reform

05 May 2010 21:28  [Source: ICIS news]

WASHINGTON (ICIS news)--US chemical producers, agriculture interests and electric utilities joined forces on Wednesday to urge prompt action by Congress on long-pending legislation to reform federal regulation of railroads and rail freight rates.

Tom Coleman, vice president for governmental affairs at BASF and speaking for the American Chemistry Council (ACC), told a meeting of industry officials and members of Congress on Capitol Hill that “the chemical industry can no longer tolerate paying higher and higher prices for bad service”.

Coleman and representatives from other major chemical firms - including Dow Chemical, DuPont, Bayer, Rhodia, Olin and Arkema - called on members of Congress to press for rail rates reform as part of the sixth annual “Rail Customer Day” on the Hill.

Along with high-volume rail freight shippers from the agriculture sector, such as wheat and corn growers, and electric utilities, which depend on rail delivery of coal, the ACC is part of a coalition called Consumers United for Rail Equity (CURE).

Senator John Rockefeller (Democrat-West Virginia), chairman of the Senate Committee on Commerce, Science and Transportation, told the shippers group that he hoped to secure passage this year of his Surface Transportation Board Reauthorization Act (S-2889).

The bill, the latest of several legislative efforts in recent years aimed at reforming federal review of rail freight rates, would give the Surface Transportation Board (STB) greater authority over railroad charges and mergers and make it easier and less costly for shippers to challenge rail rates.

The legislation also would establish the STB as an independent federal agency and raise the number of the board’s members from three to five. The STB, which has primary but limited authority over US railroads, is now part of the Department of Transportation.

Noting that he has been working on rail reform for 25 years, Rockefeller said that “I hope this is the last time we have to meet to rally for STB reform”.

“Next year, I would like to be talking about implementation, but we need to be honest - it’s a long way from here to there,” he said.

Citing congressional work on financial reform, climate legislation, the new focus on the safety of offshore energy production, Rockefeller said that “the atmosphere here in the Senate is very challenging, and floor time to debate bills is precious”.

“Even the most non-controversial bills and nominations have been slowed to a crawl,” he said.

But he said he has been in touch with his counterparts in the House of Representatives and that he was “hopeful that we will get this done this year”.

US railroads were exempted from many aspects of anti-monopoly law when Congress deregulated the rails with the 1980 Staggers Act in order to spur profit potential and capital investment among 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.

The rail industry has opposed broader federal regulation or control over freight rates, arguing it would undermine their ability to fund needed capital improvements.

Final action on Rockefeller’s bill this year by both the Senate and House appeared unlikely, according to Hill sources.

In addition to the crowded legislative calendar cited by Rockefeller, Congress was facing the additional time constraints of this election year. The congressional business year would essentially end when Congress takes its usual month-long summer break in August.

After August, all members of the House and one-third of the 100 senators would be almost completely focused on their re-election campaigns in the run-up to the 2 November national elections.

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By: Joe Kamalick
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