the film forum library tutorial contact

Shippers Seek Rail Competition by Dave Wilkins, Idaho Staff Writer Capital Press, May 6, 2005

Backers of a rail competition bill are giving it another shot.

Introduced in the U.S. Senate last week, the Railroad Competition Act of 2005 is intended to help rail customers who have little or no choice of which carriers they use.

"This bill seeks to return the power to the customers and bring capitalism back into many regions where rail shipping has strayed into monopoly," Sen. Larry Craig, R-Idaho, said in a news release.

The bill has several co-sponsors, including Craig, Sen. Conrad Burns, R-Mont., and Sen. Max Baucus, D-Mont.

Many areas of the country, including Montana and Southern Idaho, have only one major railroad serving the region. Shippers in those areas are said to be "captive" rail customers.

The lack of competition has hurt shippers of farm commodities and other goods, according to the bill's supporters.

The bill would ensure that rail customers receive rate quotes for shipments between various points on a railroad's system and provide regional and short line railroads access to major systems.

The bill would also provide captive rail customers with access to federal arbitration when they're unable to resolve disputes with the railroad. Under the current system, customers can spend millions in legal fees to challenge freight rates.

Past efforts to get a rail competition bill through Congress have failed. A similar bill in 2003 got a hearing, but didn't make it out of committee.

The new bill has broad-based national support from a coalition of shippers and stands a good chance of passage, said Idaho farmer Evan Hayes, vice president of the National Barley Growers Association.

Supporters of the legislation include the national barley group as well as the National Association of Wheat Growers.

In Idaho, the legislation is supported by the Idaho Grain Producers Association, Potato Growers of Idaho, Idaho Sugarbeet Growers Association and the timber industry.

"We have a pretty strong base of support here in Idaho," Hayes said by cell phone earlier this week while preparing a field for barley planting near Soda Springs.

"Here in Idaho, we're basically captive to one railroad," he said.

The railroad industry has consolidated to the point that there are only four major carriers left, Hayes said. There were once more than 40 major railroads in the country.

The bill would force the few remaining carriers to be more competitive.

The legislation would provide for "final offer arbitration" as a means of resolving disputes. When deadlocked, customers and the railroad would bring their final offers to a federal mediator, who would select one or the other.

In the past, disputes have gone to the Surface Transportation Board for often lengthy and expensive legal proceedings. Final offer arbitration would expedite the process and make it much less costly, Hayes said.

Another provision of the bill would establish a transportation oversight committee within the U.S. Department of Agriculture.

"That's a big item," Hayes said. "We look at that as a very positive statement."

The bill would also provide $35 billion in guaranteed government loans for railroad infrastructure improvement, a 10-fold increase from what was offered in the 2003 version.

Growers and shippers want the railroads to succeed, but they want dealings to be fair, Hayes said.

"We understand that we need a healthy railroad, and if we don't have a healthy railroad, we're in trouble," he said.

The Railroad Competition Act

• Clarification of National Rail Policy: Clarifies that the STB has the following primary objectives:
  1. ensuring effective competition among rail carriers at origins and destinations;
  2. maintaining reasonable rates in the absence of effective competition;
  3. maintaining consistent and efficient rail transportation service for rail shippers, including the timely provision of rail cars; and
  4. ensuring that small carload and intermodal shippers are not precluded from accessing the rail system.

• Requirement that Railroads Must Quote Rates to Their Customers: In order to increase rail customer access to competition, railroads must quote rates between any two points on their systems where freight movements can originate, terminate or be transferred, when requested by the customer.

• Arbitration of Certain Rail Rate, Service and Other Disputes: Provides ���final offer��� arbitration (baseball arbitration), at the choice of the non-rail party to a dispute, for all rail rate matters and other disputes at the STB involving a railroad charge.

• Removal of ���Paper Barriers:��� Prohibits including ���paper barriers��� in future sales or leases of rail line to short line or regional railroads and allows the STB to invalidate such provisions that have been in existence for 10 years.

• Removal of ���Anti-Competitive Conduct��� Test from Terminal Area and Switching Agreements Policy of ICC/STB: Changes the ���antitrust��� test added in mid-1980s by the former Interstate Commerce Commission to the statutory ���public interest��� test included in the terminal area and switching agreement provisions of the ICC Termination Act.

• Cap on Filing Fees: Caps filing fees in STB rate cases involving the ���coal rate guidelines��� to the level of federal district court filing fees, rather than the current fees that range from $6,000 to $61,400. (S. 919)

• Tri-Annual DOT Study of Extent of Rail-to-Rail Competition

• Areas of Inadequate Rail Competition: On petition of a state, the STB may declare all or part of a state to be an area of inadequate rail competition. Special rail customer remedies apply in such areas.

• Rail Customer Advocacy Office Established at Department of Agriculture