Rockefeller vows to push rail regulation

Rockefeller vows to push rail regulation    Senate Committee on Commerce, Science, and Transportation Jay Rockefeller IV, D-W.V., vowed Wednesday to press ahead with plans to reregulate the railroad industry.
   Last December the committee included a massive overhaul of railroad regulation in the Surface Transportation Board Reauthorization Act of 2009, but that bill has not come to a Senate vote.
   'This year or next, railroad reform is going to happen,' Rockefeller said during a hearing on national rail policy. 'Either Congress will do it or we will do it through regulation.' He said Wednesday's hearing was the first in series on the subject he planned.
   'We need a rail system that works not just for the freight railroads, but for all — shippers, passengers, and consumers. Unfortunately, it has felt at times like the railroads — some much more than others — have attempted to delay this process, hoping that these reforms will die if they can only stretch the process out through the elections,' he said.
   While he was warm to Daniel R. Elliott, Surface Transportation Board chairman, Rockefeller complained the railroads have wielded power over the STB and its predecessor, the Interstate Commerce Commission (ICC).

Elliott

   'They have had such input, if not ownership, up until recently, of the ICC and the STB and their respective chairmen, I can understand why they don't want to change. But what is at stake here is are we talking in public policy in the Congress of this country about simply what is good for them and sort of forgetting about consumers and shippers and people and non-freight railroads, or are we just talking about what's good and profitable for them,' Rockefeller said.
   The committee released a staff report hours before the hearing that concluded the Staggers Act of 1980 allowed railroads to restore the financial stability by getting rid of unprofitable lines, consolidating and being allowed to charge lower rates to shippers where they faced competition and higher rates to shippers captive to a single railroad.
   'Railroads are earning 12 and 13 percent profit margins,' and are among the five most profitable categories of business among the Fortune 500, he said. 'And they're just getting more profitable because they're raising their shipping prices by an average of 5 percent a year.'
   When before the STB, railroads 'act like it's still 1980. They say they're barely making enough money to keep the lights on. But when they're on their quarterly calls with Wall Street investors, it's a very different story. These companies tout their high profit margins and their power to dictate prices to their customers,' he said.
   'At the same time they're telling Congress that they don't have enough money to invest in needed capital projects, and at the same time they're using billions of dollars of their profits to reward their shareholders with dividends and stock buybacks.
   'This is all happening at a time when shippers all over our country are paying more than their fair share to transport their goods to their customers — paying more because they have no other alternative.'
   While the Association of American Railroads did not testify at the hearing, it issued a statement complaining that the staff report 'makes profits and corporate efficiency sound like dirty words. The reality is the railroad industry's return to financial health has resulted in private capital — not taxpayer dollars — getting turned back into building and maintaining the nation's rail network.
   'Even during the worst recession in 80 years, America's freight railroads have kept investing, spending $21.8 billion of their own private capital in 2008 and $20.2 billion in 2009 to build, maintain and modernize the nation's 140,000-mile rail network that serves both passengers and freight.
   'Imposing new Washington regulations will undermine railroads' ability to sustain the private investments in the nation's rail network that provides hundreds of thousands of American jobs, and the foundation for both freight and passenger rail.'
   Sen. Kay Bailey Hutchison, R-Texas, ranking member of the committee, said she has tried to 'strike a balance between the strong rail community and a profitable one but with captive shippers as well. Captive shippers have paid a very high price from lack of competition on those lines that only allow for one way out of a captive shipper site.'
   Sen. Herb Kohl, D-Wis., testified to the committee, calling for an end to what he said was an “outmoded and unwarranted antitrust exemption” for the industry that he said means higher prices for consumer and manufactured goods, food and electricity.
   AAR's statement argued the STB staff report was 'aimed not at leveling the playing field, but at justifying attempts to regulate lower rates for some large shippers, like chemical companies, agribusiness and electric utilities,' the association said.
   It noted another STB report found that 'lowering rates for some shippers through re-regulation would result in increased rates for other shippers, or decreased investments in the rail network.' ' Chris Dupin