Senators Reach Deal to Work on Single Bill for Freight Rail Competition, Antitrust

This story appears in the June 8 print edition of Transport Topics.

The path for 2009 freight rail legislation was simplified last week when Sens. Herb Kohl (D-Wis.) and Jay Rockefeller (D-W.Va.) agreed to work together on a single bill addressing shippers’ concerns about a lack of competition.

As part of an agreement announced June 1, a scheduled Senate vote on a bill Kohl sponsored was canceled, and the senators agreed to add its antitrust provisions to a bill Rockefeller is developing. No date has been set for introducing or considering Rockefeller’s measure.

The agreement means shippers who want more rail competition will have to wait at least a few months for a vote on legislation that would remove the railroads’ antitrust exemption, make changes at the Surface Transportation Board and may include other provisions that could lower rail rates.

“We hope to shortly have a bipartisan package that reforms the Surface Transportation Board and repeals the railroads’ antitrust exemption available for the consideration by the full Senate,” Rockefeller and Kohl said in a letter to other senators that promised “a robust reform package.”

“This is a high priority for both of us, and we are absolutely committed to finding real solutions that can be enacted into law this year,” the senators said in their letter.

From both a broad policy standpoint and the particular focus of the transportation industry, the Senate has a crowded summer agenda that includes debates over health care, economic policy and Supreme Court nominee Sonia Sotomayor.

Any rail legislation will have to get in line behind the reauthorization of spending for the Federal Aviation Administration, a Senate staffer who asked not to be identified told Transport Topics.

FAA’s authorization expires in September. Included in the reauthorization bill, which the House passed last month, is a provision that would place employees of FedEx Corp.’s express unit under the jurisdiction of the National Labor Relations Act. Most FedEx Express employees are now covered by the Railway Labor Act (click here for previous story).

Also in the legislative mix is work on a federal transportation bill to replace the current spending authorization, which expires Sept. 30.

The Senate had scheduled a procedural vote on Kohl’s bill, S. 146, last week. A companion bill in the House has not yet had a hearing.

Shippers welcomed the action by Rockefeller, who leads the Senate Commerce Committee, and Kohl, who heads the antitrust subcommittee of the Judiciary Committee.

“We are very pleased with the move,” said Bruce Carlton, president of the National Industrial Transportation League. “The issues are very complicated, and they tend to push the parties in different directions. I am hopeful there will be a bill that’s good for everybody. By taking up the matter in a single bill, the policy prescriptions that come out of it will be more coherent, comprehensive and rational.”

“It’s a positive development,” said Bob Szabo, executive director of Consumers United for Rail Equity, an interest group that favors increased rail competition. “We were wondering how these bills would be put together. Now there will be one package in front of the Senate.”

The Association of American Railroads said it was pleased Sens. Rockefeller and Kohl “were able to work out an agreement and stop the cloture [procedural] vote.”

The rail carrier trade group opposed Kohl’s bill, saying in a statement that “rail policy should be developed in a coordinated fashion under the Commerce Committee’s jurisdiction. We will continue to work with members of both the House and the Senate as they undertake key rail transportation policy initiatives.”

CURE’s Szabo said that, in addition to retaining provisions to expose railroads to antitrust laws, the consumer group wants Rockefeller’s bill to include a larger Surface Transportation Board with a commitment to policies that encourage competition, lower costs for rate cases at the regulatory agency and legislative removal of policies that limit shippers to service by a single railroad.

“I am fully expecting [Rockefeller’s] bill will address those issues,” Szabo said.

“The railroad’s unwarranted and outmoded antitrust exemption has led to higher prices and poorer service to railroad shippers across the nation, resulting in higher prices to consumers for food, for electric power and for manufactured goods,” Kohl said in a June 1 statement. “Aggressive enforcement of our nation’s antitrust laws is essential.”

Senior Reporter Sean McNally contributed to this report.