2/17/2012 Legislation

Federal Legislation & Regulation Article
Sen. Kohl proposes rail antitrust act as amendment to Senate's surface transportation bill

On Tuesday, U.S. Sen. Herb Kohl (D-Wis.) announced he had offered the Railroad Antitrust Enforcement Act (S. 49) as an amendment to the Senate’s version of a long-term surface transportation measure, the Moving Ahead for Progress in the 21st Century (MAP-21) bill. The Railroad Antitrust Enforcement Act, which Kohl has championed in Congress the past several years, proposes to repeal railroads’ antitrust exemptions.

Kohl, who chairs the Senate’s Antitrust, Competition Policy and Consumer Rights subcommittee, believes freight railroads are “abusing their dominant market power and raising rates for those who rely on them to ship dozens of vital commodities, including coal and agricultural products,” he said in a prepared statement.

“The antitrust exemption for the railroad industry is hurting businesses that are often forced to use a single rail provider and are charged vastly increased rates with no recourse,” he said. “The railroad industry should be governed by the same antitrust rules and consumer protections as other industries.”

Railroad mergers and acquisitions are exempt from antitrust law and are reviewed by the Surface Transportation Board. The Railroad Antitrust Enforcement Act would restore the review of rail mergers to the U.S. Department of Justice’s Antitrust Division and eliminate the antitrust exemption for railroad collective ratemaking, said Kohl.

However, the current regulatory framework, which was brought about through passage of the Staggers Rail Act of 1980, helps keep costs low for shippers, encourages railroad capital investment and enables freight railroads to support 150,000 high-paying rail jobs, according to the Association of American Railroads (AAR), which opposes the Railroad Antitrust Enforcement Act. For railroads to continue to be one of the nation’s private-sector success stories, the regulatory framework must be maintained, AAR officials believe.

But members of rail shipper coalition Consumers United for Rail Equity (CURE) believe Kohl’s bill would create better access to competition and foster “fairer” rates for shippers, and they support the proposal of the Railroad Antitrust Enforcement Act as an amendment to MAP-21.

“Removing railroad exemptions to current antitrust laws is vital to improving the U.S. economy and helping American companies compete globally,” said CURE Chairman Glenn English in a prepared statement “The current exemptions inflate transportation costs, inhibit U.S. job and export growth, and increase electricity bills and food costs for consumers.”