AAR: Rail Anti-Trust Bill Will Impose Confusing, Overlapping Regulatory Scheme

WASHINGTON — Legislation approved that will repeal the railroads’ limited anti-trust exemptions creates an unprecedented and confusing regulatory scheme that could alter current economic oversight of the railroads, according to the Association of American Railroads (AAR).

The legislation to eliminate the railroads’ few anti-trust exemptions was reported by the Senate Judiciary Committee. At the same time, the Senate Commerce Committee will be developing legislation that could subject railroads to still more economic regulation by the Surface Transportation Board (STB).

“We face two disparate schemes that spell nothing but confusion for the railroads and those charged with enforcing the regulations,” said AAR President and CEO Edward R. Hamberger. “Congress should be promoting policies that help jumpstart the economy and regain consumer confidence, not overburden an industry that stands ready to get America back on track.

“Overlapping regulatory schemes could derail the industry’s ability to meet the nation’s increased need for environmentally sound freight transportation,” he added.

Hamberger pointed out that many industries besides the railroads, including, agricultural marketing cooperatives, newspapers and soft drink bottlers, operate with limited anti-trust exemptions. Congress, however, has specified how to deal with the potential conflict between anti-trust law and economic regulation by an independent federal agency, except in the case of the railroad legislation being considered by the Judiciary Committee, he said.

“All aspects of railroad practices exempt from anti-trust laws are subject to STB jurisdiction,” he said. “Eliminating the railroads’ exemptions would not fill any void in the law. It would, however, create a scenario where multiple agencies have overlapping authority over railroads. There is no justification for singling out railroads in this manner.”

Hamberger noted other problems with the proposed legislation. The legislation could have retroactive application, meaning that previously approved mergers, line sales and related activities could come under anti-trust attack. Such action is “unwarranted and could raise constitutional issues,” he said.

“The fair and balanced regulatory system introduced by the Staggers Rail Act of 1980 has provided U.S. shippers with the best and most cost-effective rail freight service in the world,” Hamberger said.

“Today’s freight railroads are a true American success story,” Hamberger said. “Knowing the immediate economic, environmental and energy challenges our nation faces, we cannot afford to subject railroads to a conflicting regulatory system that will make it difficult — if not impossible — to meet the nation’s transportation needs.”