On the offensive following the Surface Transportation Board’s recent flurry of activity on multiple proposed regulations, the Association of American Railroads wrote to leaders of the Senate Commerce Committee and House Transportation and Infrastructure Committee.
AAR President and CEO Ed Hamberger’s letter covers “concerns over three primary issues that we see as STB overreach: Forced access, commodity re-regulation and rate caps.”
Following is the full text of the letter to Senate Commerce Committee Chair John Thune and Ranking Member Bill Nelson, and House T&I Committee Chair Bill Shuster and Ranking Member Peter DeFazio:
“The Association of American Railroads is writing to you to express the railroad industry’s concerns with recent actions by the Surface Transportation Board. Last year, Congress reauthorized the agency for the first time since its inception in 1996 by passing the bipartisan STB Reauthorization Act focused on improving the agency’s processes for rendering decisions. Despite a massive lobbying campaign to the contrary, Congress wisely declined to alter the regulatory framework that has governed the industry since the Staggers Rail Act of 1980.
“That stable regulatory environment has allowed railroads to spend [more than] $600 billion in private capital to make the nation’s freight rail network the best in the world. Congress has charged the STB to recognize that where railroads face competition for their services—from other railroads, from other modes of transportation, or from market forces that allow customers to substitute products or obtain them from different sources—the market, not regulation, should govern. The regulatory framework provides that in the limited instances where railroads do not face effective competition for their services, economically based rate regulation should be available.
“Today, railroads continue to face fierce competition for their transportation services for shipments that can be directly loaded to or from trucks, barges or other railroads and also where those shipments can be transloaded to or from those competitive options. For example, according to the Department of Agriculture, railroads move about 24% of the nation’s grain, with most grain shipments moving by truck or truck-and-barge combinations. Similarly, railroads account for only approximately 20% of chemical shipments. Those are hardly numbers that support the contention that railroads do not face competition for their services.
“Railroads also face competitive constraints on the demand for their service from shippers and receivers that can substitute products in end markets or obtain goods from different geographic locations around the world. Shippers, even those served by one railroad, can and do use all of these competitive forces as leverage in negotiating freight rates at competitive levels.
“Any claim that competition for freight transportation has lessened as a result of consolidations in the rail industry is simply not true. Due to conditions placed on those transactions by the Interstate Commerce Commission and the STB, shippers who had access to two or more rail carriers prior to mergers retained access to at least two rail carriers after consolidations. In several mergers, the number of customers served by multiple carriers increased, not decreased.”