Bill would strip antitrust protections from freight railroads

By Thomas Content and Joe Taschler of the Journal Sentinel
March 5, 2009

In a move hailed by Wisconsin industries as an important victory, the U.S. Senate Judiciary Committee voted unanimously in favor of legislation that would repeal railroads' immunity under federal antitrust laws.

The measure was written by Wisconsin Democratic Sen. Herb Kohl, who said the industry's current exemptions deny rail consumers antitrust protections available in virtually every other industry.

"Over the past several years, railroad shippers of vital commodities have faced spiking rail rates," Kohl said. "Rail customers are forced to pass these price increases along into the price of their products, and ultimately, to consumers. Our bill will enact a simple and straightforward remedy - eliminate the outmoded antitrust exemptions."

The committee vote is its first in decades rebuking the railroad industry, according to bill supporters.

Wisconsin companies, including electric utilities that import coal from Wyoming, have faced surcharges and service disruptions from railroads in recent years. The surcharges have contributed in part to rising electricity prices.

"Many of Wisconsin's leading industries depend on rail to transport coal, grain, corn, forest products, chemicals and other commodities that cannot be shipped economically by truck or other means," said Matt Bromley, coordinator of Wisconsin Consumers United for Rail Equity, which has been pushing for the legislation.

Over the last 20 years, railroad industry consolidation has reached the point where only four Class I railroads provide over 90% of the nation's rail transportation, Kohl said. Many industries - known as "captive shippers" - are served by only one railroad. These captive shippers have faced constantly rising rail rates, he said.

The four railroads operating in Wisconsin are Burlington Northern Santa Fe; Union Pacific; Canadian National; and Canadian Pacific, according to the Commissioner of Railroads.

In 2006, the most recent year for which data are available, the largest freight category delivered to the state was coal at 43 million tons, followed by metallic ores at 13 million tons. The figures come from the American Short Line and Regional Railroad Association.

The Association of American Railroads opposes the bill, which would add Justice Department oversight to the Surface Transportation Board's existing rail-rate regulation.

"Overlapping regulatory schemes could derail the industry's ability to meet the nation's increased need for environmentally sound freight transportation," Ed Hamberger, the association's chief executive officer, said in a statement.

"Congress should be promoting policies that help jump-start the economy and regain consumer confidence, not overburden an industry that stands ready to get America back on track," he said.