Transportation Regulation

Senators Press for Railroad Reform

By Steven Johnson | ECT Staff Writer Published: July 29th, 2011

On the heels of a major hearing on freight railroads, a group of U.S. senators wants federal regulators to help farmers, businesses and utilities by taking steps to boost competition in the rail industry.

Sen. Al Franken

Sen. Al Franken

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    The five senators―four Democrats and one Republican―asked the Surface Transportation Board in a July 25 letter to provide relief for shippers, especially captive shippers who lack access to competitive rail service.

    “We cannot expect American businesses to participate in the global economy if they can’t afford to transport or export their goods using freight rail,” the senators wrote.

    The letter was authored by Sens. Al Franken, D-Minn., David Vitter, R-La., Herb Kohl, D-Wis., Tim Johnson, D-S.D., and Amy Klobuchar, D-Minn.

    The group said it wants to build on the momentum of a major hearing that the STB conducted last month on the state of competition in the rail business.

    In calling for STB-led reform, the senators cited the example of Dairyland Power Cooperative, La Crosse, Wis., which saw rates for coal delivery jump by 93 percent in 2006.

    “The cost of these rate increases is ultimately born by families and small businesses through higher electric bills, which is deeply disturbing,” they said.

    The senators asked the board to implement several policies proposed in a 2006 Government Accountability Office report to encourage competition in an industry where four carriers control about 90 percent of the traffic.

    Those steps should include providing shippers with access to railroads that come close to their facilities but do not actually reach them, and requiring railroads to grant competing railroads access to their tracks for a regulated fee.

    They also urged the STB to revise its accounting policies to prevent investors from acquiring a railroad at an artificially high price and then passing those costs on to captive shippers through higher rates.

    “The STB’s current policy has the potential to adversely impact captive shippers that may have no choice but to pay higher rates passed on to them by the railroad,” they wrote.

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