Today, a little over one hundred years after President Teddy Roosevelt launched antitrust suits against railroad combinations and obtained legislation authorizing the Interstate Commerce Commission to regulate rail rates, rail-dependent shippers are again subject to unrestrained railroad monopoly pricing power. In 1980, Congress enacted the Staggers Rail Act, which largely deregulated the relationship between major railroads and their customers. The idea was that market competition would replace government regulation to protect rail customers from excessive pricing.
Nevertheless, for most rail-dependent shippers today, there is no railroad competition. In the three decades since the Staggers Rail Act, the 40 major railroads that existed then have been allowed to consolidate to the point that four major railroads today control 90% of the nation’s railroad freight transportation. A recent study indicates that only 78% of the places in the nation where major railroads pick up or deliver freight are served by a second railroad. Not surprisingly, since 2004, railroad rates have skyrocketed – even during the nation’s second greatest economic slowdown in modern history – two and a half times the rate of inflation and two and a half times the rise in trucking rates.
If market competition is not available to restrain railroad rates and the resulting high rail rates are hurting shippers, American consumers, the national economy and American jobs, what is available to restrain rail rates?
Not the nation’s antitrust laws. The freight railroads gained exemptions from the antitrust laws during 75 years of strenuous government regulation and the Congress in 1980 failed to take those exemptions away when the railroads were largely deregulated.
Not state regulatory programs or state courts. All railroad economic regulation is at the federal level and all disputes with the railroads under those regulations must be brought to the Surface Transportation Board.
Is the Surface Transportation Board an effective overseer of the national freight rail system? Not really. This three commissioner federal board, which was created in 1995 by Act of Congress, is funded at the level of $30 million annually and has been stripped of many of the necessary powers of other state and federal economic regulatory agencies. Board decisions over the years allow the major railroads to prevent their rail customers from gaining access to other major railroads. The process the Board has established for contesting the reasonableness of a rate in the absence of competition places all burdens of proof on the rail customer and it is so time-consuming, complex and costly that very few rail customers can even fight their unreasonable rates.
CURE is the only organization with the single mission of fighting for improved federal policy for rail-dependent shippers. We work with our Congressional champions to educate all Members of Congress about the problems being caused by the freight rail monopoly and to achieve legislation to address these problems and with the Executive Branch departments and agencies to achieve improved federal rail policy beneficial to rail- dependent shippers. Arrayed against us are the major freight railroads and their national trade association who are spending tens of millions of dollars a year to maintain their monopoly $34 million on federal lobbying alone in 2011. Join us today and add your voice to ours as we fight to rid our nation early in the 21st century of a problem that plagued our economy in the early 20th century and has returned to plague our economy again today.
Consumers United for Rail Equity