Shippers Push for Rail Law

Shippers Push for Rail Law

Thirteen shipper groups, hoping the Senate will keep a rail competition bill alive in the face of sharp criticism by top carriers, told lawmakers they want to see it through.

Executives from some of the largest rail customer groups signed a letter praising leaders of the Commerce, Science and Transportation Committee for their “ten months of effort to develop this legislation.”

On Dec. 17, the panel approved a bill crafted through secret negotiations between staff, industry representatives and senators over most of last year. But when the bill will go to the full Senate for a vote is far from clear.

While the shippers didn’t push, their intent was clear when they thanked lawmakers for their work “despite the long intractability of the controversy over the proper role of competition and regulation in the freight rail industry.”

The signers included chief executives at organizations with a mixed base of shippers, including the Alliance for Rail Competition, Consumers United for Rail Equity, the National Industrial Transportation League and Consumer Federation of America. Others were officials from the electric utility, chemicals, forest products and grain industries.

The bill they support would toughen regulations on railroads, force carriers to offer competitive rates for some traffic now locked into a single railroad and make it easier for customers disgruntled over rates or service to file complaints with the Surface Transportation Board.

It also would expand the STB, beef up the regulatory staff and empower the agency to launch its own investigations into rail competition issues and initiate complaints.

But while railroad chiefs for months assured Wall Street they expected a bill they could accept, and thereby put an end to years of shipper lobbying for new federal rules, industry leaders since have said the committee’s bill goes too far to threaten railroad profits. Some executives have said they will work to prevent the bill from becoming law unless changes are made.

As a result, no one is saying when the legislation might proceed to a version that can go to a Senate vote along with amendments from Commerce Chairman Jay Rockefeller, D-W.Va. Washington sources insist the bill’s bipartisan sponsors want it enacted this year.

But neither side is sitting back, waiting to see what happens next. Hundreds of executives from major railroads and short lines poured into Senate and House offices Feb. 25 for the annual “Railroad Day on Capitol Hill” to promote their legislative agenda.

They went armed with briefing materials warning about rising regulatory costs, including for major crash-avoidance technology. The material also said the new legislation could “vastly expand the role of government in rail operations” and hurt the “railroads’ ability to make adequate returns” to cover future investments in their infrastructure.

Obie O’Bannon, the Association of American Railroads’ senior vice president for government affairs, said the industry was “saturating” the television media in the Washington, D.C., area with ads underscoring the value of freight rail.

That same day, the 13 shipper groups drafted their letter to sponsors of the Commerce bill — Rockefeller; ranking committee Republican Kay Bailey Hutchison of Texas; Frank Lautenberg, D-N.J.; John Thune, R-S.D.; and Byron Dorgan, D-N.D.

The barbs have continued back and forth since.

Michael Ward, chairman, president and CEO of eastern-U.S. railroad CSX Transportation, told CNBC television the drive for new legislation comes from “a select group of customers that are basically trying to lower their rates . . . which I think would be detrimental to other customers because we’ll have to raise the rates to the other customers — or invest less, which is not good for the country.”

CURE, one of the letter-signing groups that has often been out front with complaints about railroads and past regulatory actions, last week said a new 52-week high in Union Pacific Railroad’s stock price was partly due to “monopoly” pricing power over shippers captive to its line.

Robert Szabo, CURE’s executive director, said big freight railroads are getting billions of dollars in federal stimulus money to improve their track networks for expanded passenger service, while their pricing is often protected from competition. Meanwhile, he said, UP and other carriers are attacking the Senate bill that would improve competition.

“We don’t have any problems with people making a profit,” Szabo said later. But CURE objects to railroads getting federal funding before the competition issues are addressed, and to “unreasonable profit from monopoly power.”

Contact John D. Boyd at jboyd@joc.com.