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12/18/2009



Rail News: Rail Industry Trends

STB reauthorization bill mark-up a non-event - commentary by Tony Hatch


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In watching the live stream of the Senate Commerce, Science & Transportation Committee’s “executive mark-up” of the STB reauthorization bill yesterday I learned ... next to nothing. Sen. Rockefeller led a bunch of self-congratulatory statements praising the “balance” of the bill between “the shippers” (the? Or really “those shippers that have leverage and have historically opposed the railway industry and excludes such shippers as UPS and Walmart, etc.”) and the railways. In fact, Rockefeller actually used the unfortunate phrase “fair and balanced.” He and others did discuss the viability and “financial security” of the railways, which is something ... and of the “reform” of the STB, which has been finding more (six of the last seven decisions) for shippers — not due to reform but due to facts, as rails have only gotten any pricing power in the past few years.

There was mention of the lack of antitrust provisions, which still aren’t included, and Sen. Kohl’s efforts — and Rockefeller made the candid statement that while he agreed with Kohl, to put the presumably original provisions from the latter’s antitrust bill into the STB reauthorization would have “caused the bill to fail,” which was unacceptable. That acknowledgment of the rail industry’s vote power is interesting in and of itself.

The only other dealings of note were Sen. Dorgan’s revelation of his complete capture by Consumers United for Rail Equity (CURE) by repeating practically word-for-word our good friend Mike McBride’s point of view regarding the BNSF/Buffett takeover premium, not only for its possible role in future revenue adequacy studies but also “proving” that BNSF could not possibly be revenue inadequate as the STB found (and thereby revealing his complete and utter ignorance of the principles of investing for future returns. I can only hope for his family’s sake that he doesn’t manage his own money). Sen. Klobuchar from Minnesota revealed why she is so anonymous; Sens. Thune from South Dakota (DM&E), Brownback from Kansas (speaking out for short lines) and especially Johanns of Nebraska (who spoke on the need for stability for rail investment and for rail employees) came off rather well. I have long argued that rail “re-reg” isn’t partisan but rather regional and industrial (think of the case of CSX vs. Dupont) but I must admit, rather painfully, that the GOP came off rather better in their statements.

Meanwhile, a press released issued by the Association of American Railroads yesterday reveals its disappointment but not, yet, its next actions. With the removal of that famous and surprisingly effective “cone of silence” we might get some of our questions answered — remember, it is well-nigh impossible to figure out the significance of the bill without either true (inside) costing knowledge or help. So, we wait ...

— Tony Hatch is an independent transportation industry analyst


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