A POLITICAL LESSON FOR RAILROADS

A POLITICAL LESSON FOR RAILROADS

Sen. John McCain, R-Ariz., chairman of the Senate Commerce Committee, is allowing his committee's Surface Transportation Subcommittee to hold oversight hearings on the rail issues. Morgan will be the principal witness at the first hearing Wednesday. Subcommittee chairman Gordon Smith, R-Ore., appears more shipper-friendly than McCain has. Last year's subcommittee chairman, Sen. Kay Bailey Hutchison, R-Texas, was long on rhetoric and short on performance when it came to shipper/carrier issues. This year, she's moved on to the Aviation Subcommittee. The dispute over alleged railroad abuse of market power has festered for several years, and has gained some headway since the Union Pacific nearly brought the entire railroad system to a halt when it botched the integration of the Southern Pacific into its system in 1997. The congestion spawned by Norfolk Southern and CSX Transportation when they took over Conrail operations in 1999 only made shippers more adamant in their belief that government must intervene on their behalf.

The railroads have a problem in trying to fend off their customers. It is almost impossible to gain victory when you are seeking nothing. No matter how many times railroad lobbyists can persuade key committee chairman not to hold hearings or to scuttle draft bills, the shipper lobby keeps coming back. Given enough time, pressure eventually builds to 'do something,' whatever something might mean.It's beginning to appear that the shippers may be in that position. The various shipper groups are hiring some big gun lobbyists, which will help them gain access to key members of Congress.

In the past, when faced with similar disputes, Congress has sent a message to both sides: negotiate an agreement you each can live with and bring it to us to put into law. It worked in railroad deregulation two decades ago. It worked on railroad retirement legislation.

But railroads don't seem to be in a negotiating mood. For one thing, they're not sure that compromise may not equal total defeat. Shippers know that if they accept railroad pleas to meet one-on-one that the solid front can be broken as individual companies allow themselves to be bought off with rate and service packages the railroads aren't willing to provide to everyone. With chief executive officers of some major shippers serving on railroad boards, there is a question about just how serious some of these companies are about pushing for legislative change.

As is the case with most commercial disputes, the issues are not clear-cut on one side or the other. Congress's normal predilection is not to get in a position where it has to referee a fight between competing interests.