(The following story by John D. Boyd appeared on The Journal of Commerce website on October 26, 2009.)
WASHINGTON, D.C. — An activist rail shippers’ lobbying group pushed back hard against an industry proposal for Congress to make only limited change in laws governing rail competition. The proposal came from a federal advisory panel of railroads and freight customers.
The Railroad-Shipper Transportation Advisory Council meets periodically with federal regulators at the Surface Transportation Board and is set up by law to advise the administration and Congress. The group released a “white paper” that urged Congress to make one key change but leave most of the current regulatory structure unchanged.
RSTAC’s voting group is made up of small railroads and small shippers, while large carriers and customers attend as non-voting members. It said a majority of its voters want Congress to order railroads to allow reciprocal switching of cargoes to other nearby rail lines.
But the members could not agree on any policy statement for a related issue of eliminating the “bottleneck” practice in which railroads serving an entire long-haul route can refuse to quote rates to connect with a separate railroad for that trip, thereby avoiding price competition.
That stirred a sharp rebuttal from Consumers United for Rail Equity, a shippers’ lobby that has been asking Congress for years to enact changes that would give rail customers more competition for their shipments.
“CURE appreciates that even a railroad-dominated group like RSTAC has called for changes to cargo switching rules, which are important to providing greater protection for consumers. Unfortunately, though, these recommendations fall far short by failing to advocate critical pro-consumer changes in other rail issues,” said Robert Szabo, CURE’s executive director.
Szabo says the current system produces “the abusive pricing power being exerted by the railroad monopoly,” and that “Congress has already demonstrated bipartisan interest in restoring fairness to railroad pricing.”
The industry is waiting for Sen. Jay Rockefeller, D.-W.Va., to put a rail regulatory reform bill before the Commerce, Science and Transportation Committee that he chairs. Meanwhile, a bill to strip railroads of a limited antitrust exemption is moving through the House of Representatives, but the Senate measure is expected to address antitrust rules in a broader overhaul of rail-shipper regulation.
RSTAC weighed in against removing the antitrust exemption, which prevents federal court challenges on many issues by giving the STB power over most economic disputes. RSTAC also wants to keep the STB’s current rate review process, which CURE and some individual shippers have criticized as too costly and time-consuming.
“We’re hopeful forthcoming Senate Commerce Committee legislation will address all of the barriers to competition as well as the rate challenge process,” Szabo said.