Eighteen State Attorneys General sent a letter to ranking members of Congress Aug. 17 calling for the passage of legislation to aid rail customers and open up competition between the railroads.
“Rail customers in our states in a variety of industries are suffering from the classic symptoms of unrestrained railroad monopoly power: unreasonably high and arbitrary rates and poor service,” the letter said. “Since 1980, the major railroad industry has consolidated from over 40 companies to only four companies that provide over 90 percent of the nation’s rail service. We understand from our citizens that the Surface Transportation Board has failed in its responsibility to restrain railroad monopoly power. In fact, a 2004 Department of Justice Antitrust Division letter to the Chairman of the House Judiciary Committee strongly suggests that some of the railroad practices allowed by the STB would be of questionable legality under the nation’s antitrust laws.”
The letter said agriculture is “suffering significantly” from what the AGs referred to as the “adverse consequences” of “unrestrained railroad monopoly power.” As an example, the AGs said “increasingly the costs of rail transportation are being shifted from the railroad to the farmer. Small grain elevators are being forced to either consolidate into larger elevators that can load a unit train of grain or transship their grain to such loading facilities. Rates are increasing arbitrarily and service is declining. The net result is that farmers are putting less money into their pockets from their crops,” the letter said.
The chemical industry was also cited as a victim of railroad monopoly. “Two-thirds of the chemical plants in the nation are served by a single railroad, with many of their customers also subject to single rail service,” the letter said. “This railroad monopoly power is resulting in rates and service that is making American manufactured goods from chemical products uncompetitive with imported goods ?Çô which normally enjoy competitive rail transportation rates because they have their choice of entry points into the nation.”
Multi-nationals are less likely to invest in U.S. plants, said the AGs, since their likely options are to be served by only one railroad.
Major utilities are having trouble getting coal, according to the AGs, due to rate increases that sometimes reach 100 percent.
The AGs support two pending bills before the Judiciary Committees of the House and Senate. They are the Railroad Antitrust and Competition Enhancement Act of 2005 (H.R. 3318) and the Railroad Antitrust Enforcement Act of 2006 (S.3612). The AGs say the rail system needs competition and the railroads no longer need to be exempt from antitrust laws.