US Senate committee advances key rail rate relief bill

03 March 2011 20:10  [Source: ICIS news]

WASHINGTON (ICIS)--The US Senate Judiciary Committee on Thursday approved legislation that would ease rail rates for chemical manufacturers and other high-volume freight shippers.

The committee approved S-49, The Railroad Antitrust Enforcement Act of 2011, which would eliminate some of antitrust exemptions that US railroads have enjoyed since 1980.

US chemical manufacturers, cement and steel makers along with electric utilities and grain shippers have long sought legislative relief for what they contend was an unfair railroad price-setting authority that for practical reasons could not easily be appealed or challenged.

Chemical producers in particular have protested high prices charged by the major US rail carriers to so-called captive shippers.

A captive shipper is a manufacturing or distribution site that is served by only one of the four major US railroads.

Under the 1980 Staggers Act, passed by Congress in order to revive the then struggling US rail industry, railroads were exempted from many aspects of US anti-monopoly law and allowed to charge high rates in order to increase revenues and raise the financial well-being of rail carriers.

But chemical producers and other high-volume freight shippers, who make up a coalition called Consumers United for Rail Equity (CURE), have argued for years that with the railroads’ fiscal health well restored, the Staggers Act antitrust exemptions were no longer needed or fair.

The bill approved by the Judiciary Committee eliminates some of those exemptions and also allows shippers to file suit in US federal courts to challenge rail rates. Under current law, courts generally refer such complaints to the federal Surface Transportation Board (STB).

Rail shippers contend that rate appeals before the STB are extremely costly and can take years to reach an often unfavourable resolution.

The bill also would give the Federal Trade Commission (FTC) new authority to regulate railroads’ monopolistic behaviours and to initiate antitrust enforcement proceedings when deemed necessary.

Moreover, it would allow courts to award treble damages to shippers that successfully challenge unfair rail pricing schedules.

Glenn English, chairman of the CURE group, said the committee’s approval of S-49 was “an important step in righting a wrong that is stalling job creation and threatening the economic recovery”.

English said that what he termed excessive rail freight rates are passed along by shippers to their customers and ultimately to consumers, raising costs for everything from electricity to groceries.

The bill was now to be scheduled for a floor vote in the full Senate, where passage is expected. The US House has yet to act on a similar measure.

The Association of American Railroads (AAR), a rail industry trade group, was not immediately available for comment.

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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