CURE :: Consumers United For Rail Equity

House Judiciary Subcommittee Passes H.R. 233 on Voice Vote

On July 30^th, the House Judiciary Committee’s Subcommittee on Courts and Competition Policy passed by voice vote H.R. 233, the Rail Road Antitrust Enforcement Act of 2009, sponsored by Rep. Tammy Baldwin (D-WI).

The legislation contains several key provisions consistent with CURE’s recommendations for creating greater competition in the freight rail industry, including:

Amending the Clayton Act to make federal antitrust laws applicable to all common carriers subject to the jurisdiction of the Surface Transportation Board (STB);
Subjecting to antitrust review future agreements among rail carriers to pool or divide traffic, services, or earnings;
Subjecting to antitrust review two mechanisms used by the freight railroads today to deny rail customers access to rail competition: exclusive service agreements between a major and short line railroad; and refusals to provide rail customers rates to move freight to the lines of competing railroads.
Removing the prohibition against a private party seeking injunctive relief against a rail carrier for a violation of the antitrust laws.

Senate Commerce Committee Holds Hearing on Nominee to Chair STB

The Senate Commerce Committee held a confirmation hearing on Daniel Elliott, President Obama’s nominee to chair the STB, on July 29^th during which Sen. Rockefeller pressed for greater consideration of the rights of rail customers and decried the treatment to which many rail customers are subjected.

“Captive shippers throughout the land are being blackmailed, held-up, being threatened, being cut-off, having their prices raised because there is only one rail going into that particular farm or steel mill or coal mine,” Chairman Rockefeller told the nominee.

Although the hearing was occasionally contentious, with Sen. Rockefeller challenging Mr. Elliott’s statement that he would strive to be “fair” in his role as STB Chairman, Mr. Elliott is expected to be confirmed.

Senate to Vote on Rail Reform Bill in September, Predicts Thune

Sen. John Thune (R-SD), ranking Republican on the Surface Transportation Subcommittee of the Senate Commerce, Science and Transportation Committee, predicted the Senate would vote on rail reform legislation in September, according to news reports in the Journal of Commerce. While a full agreement in principle may not be reached prior to the Senate's August recess, the Senator said negotiations had "come a long way" and that the Senate negotiators were "getting closer" to a deal on rail customer legislation.

STB Issues Favorable Ruling on OG&E vs. UNP

On July 24th, the STB issued a ruling in favor of Oklahoma Gas & Electric against UNP for charging excessive rates for shipping coal from the Powder River Basin to OG&E’s Muskogee Station power plant. The STB ordered UNP to pay OG&E $100 million over the next ten years, including reducing their shipping rates for the utility by $1.75 per ton.

The case was unique because UNP did not dispute their monopoly on transportation for the utility nor did they demand their right to a full “Stand-Alone Cost” (SAC) test to assess if their rates are within the STB’s standards for revenue-to-variable cost. Had UNP chosen to vigorously oppose OG&E’s charges, as freight rail companies usually do, the case could have followed the standard pattern of being very lengthy and cost-prohibitive for the utility and, ultimately, its consumers.

A few recent STB decisions have been fairer to shippers but these are still the exception not the rule. Because continuing monopoly power of railroads leaves consumers and rail customers at their mercy, CURE remains focused on creating the structural changes needed to ensure that shippers can rely on the protection of the law rather than the whims of a regulatory agency.

                                           Cosponsor Update

Rep. Charlie Melancon (D-LA) - Thank Rep. Melancon for supporting H.R. 233

                                            Noted and Quoted

Rockefeller: "…you said 'I don't come into this with a sense of who's right and who's wrong' or maybe 'what's right or what's wrong' I'm not sure what it was, but it surprised me…I want you to be reasoned and fair and all the rest of that, but I don’t want you to be somehow disengaged from this whole thing.”

Elliott: "…Obviously the Staggers Act was set up during a time where the railroads were suffering and it was to help them to get back on their feet and obviously the railroads have gotten back on their feet. There was also a concern about competition with respect to the shippers and I take that aspect of the act very seriously and I intend to take a very careful look at it and be proactive.”

            - Senator John D. Rockefeller IV (D-WV), chairman of the Senate Commerce Committee, and Dan Elliott in the hearing considering Mr. Elliott’s nomination to chair the Surface Transportation Board, July 30, 2009.