(The following story by Thomas Content appeared on the Milwaukee Journal-Sentinel website on September 20.)
MILWAUKEE, Wisc. — Citing concerns voiced by utilities, paper companies, foundries and others, the U.S. Senate Judiciary Committee on Thursday dealt the railroad industry a setback by voting to revoke freight railroad antitrust exemptions.
The committee unanimously approved a measure sponsored by Sen. Herb Kohl (D-Wis.) adding Justice Department oversight to rail antitrust matters.
Union Pacific, the largest U.S. railroad, and its rivals have been criticized by customers who say they charge exorbitant rates on routes served by just one company.
Supporters say the measure passed Thursday may help state attorneys general and shippers sue railroads for what they see as anti-competitive practices.
Freight railroads can “name their price and the consumer pays,” Kohl said in a statement. “We have seen the result of this outdated policy in Wisconsin, where our utilities were forced to absorb staggering cost increases for shipping coal.”
A companion bill is pending in the House, sponsored by U.S. Rep. Tammy Baldwin (D-Wis).
Costs could rise
Edward Hamberger, chief of the Association of American Railroads, said revoking the exemptions may raise the cost of doing business for railroads, and those costs may be passed on to customers.
The industry has denied that it overcharges shippers, saying rates on average have decreased since Congress deregulated the industry in 1980.
The action is a victory of sorts for a broad coalition of business groups and utilities that united last year to form Badger CURE (Consumers United for Rail Equity).
The group was formed after papermakers and other companies saw their own rail rates go up and service problems hit in 2005.
Those same companies also face higher electric prices from the inability of railroads to deliver the coal needed by utilities to run power plants across Wisconsin.
The state Public Service Commission estimated that disruptions in rail service caused $73 million in higher costs for utilities last year.
(Bloomberg News contributed to this report.)