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Shippers Seek Congressional Rail Assistance by Patricia R. McCoy Capital Press, November 19, 2004

BOISE -- When Congress deregulated the railroads by passing the Staggers Rail Act in 1980, there were 40 Class I railroads in the United States — lines that earned $270 million or more in annual revenues.

Today only four major lines are left, thanks to mergers and buyouts that followed deregulation. That’s left entire states, regions and industries that are totally captive shippers, with only one choice for getting products to market by rail.

The lack of shipper competition has a large and varied group of industry organizations asking Congress for relief in a proposed Railroad Competition Act, said Terry C. Whiteside, chairman of the Alliance for Rail Competition.

At the same time, the railroads are coming to Congress with an infrastructure bill that could cost billions of dollars. Supporters want to upgrade their lines and equipment to meet the challenges of modern homeland security, and for the sake of the national economy, Whiteside said.

The two pieces of proposed legislation and the combined support of a wide variety of industries increase hope the 109th Congress may act when it convenes after the holidays, he said.

Whiteside presented his update here Nov. 15 before a joint meeting of the Idaho Barley Commission, the Idaho Wheat Commission, and the board of the Idaho Grain Producers of Idaho. The session launched the annual IGPA convention.

Three overlapping bills seeking relief for captive shippers were introduced in the 107th Congress. Lawmakers told supporters to get together and come back. A combined bill was presented to the 108th Congress, Senate Bill 919. It went nowhere, but has a far better chance in the 109th Congress, Whiteside said.

Open Access

“One concept agriculture wants was postponed in S919: open access, or competition. In the meantime, Canada had elections, and the prime minister there called for open access. It appears Canada will get it in some form in the next 24 months. That will affect us,” he said.

The second circumstance is the infrastructure bill being brought to Congress by the railroads, the first time such a proposal has been brought in 100 years. Lawmakers are asking if the two bills could be combined, he said.

“That gives us an opportunity after the current lame duck session of Congress ends,” Whiteside told Idaho’s grain industry.

Nothing passes Congress today without the support of large coalitions, Whiteside said.

The groups behind S919 include the American Chemistry Council, Consumers United for Rail Security, the National Industrial Transportation League, the National Association of Wheat Growers, Edison Electric Institute, the National Rural Electric Cooperative Association, the Fertilizer Institute, the Paper and Forestry Industry Transportation Committee, the Western Coal Traffic League, the National Barley Growers Association, the American Plastics Council, the Glass Producers Transportation Council, Portland Cement Association, and the Agriculture Ocean Transport Coalition, he said.

Infrastructure Support

On the rail side, infrastructure legislation is supported by all the railroads but Union Pacific, he said.

Examples of captive shippers include the entire states of Idaho and Montana, and the whole chemical industry on the Texas Gulf Coast, Whiteside said.

“Being a captive shipper isn’t necessarily bad as long as we’re protected, but that hasn’t happened. Instead, the massive concentration of the rail business and no regulatory intervention has let the railroads do pretty well what they want,” he said.

In the Northwest, for instance, Union Pacific is in its 18th month of service problems. A 2 percent increase in shipments left the railroad unable to handle the load, Whiteside said.

“First they tried to control volume by increasing their prices. That didn’t work, so they curtailed shipments. That has left us with grain on the ground waiting for transportation all over the country. Idaho is probably the state that is worst off,” he said.

Other states are also dealing with the captive shipper issue, including Montana, the Dakotas, Kansas, Oklahoma, Oregon and Washington. All are working together to find solutions, he said.

One way to increase shipping choice is for the states to explore options themselves, Whiteside told the Capital Press after the joint grain industry meeting ended.

“In 1890, Idaho’s main industries were lumber, mining and agriculture. Today it’s the same, with some other manufacturing and tourism mixed in. It will probably still be the same in 2050. All these industries require bulk transport of products to out-of-state markets. We need to find solutions to this problem,” he said.

“The railroads are doing what the law allows them to do. Captive customers are as much or more concerned about the health of the rail system as the railroads. We need to work together and find solutions. We can’t keep doing business as usual,” he said.