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CEI-Led Coalition Opposes Price Controls on Freight Railroads

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Today, a coalition of free market groups led by the Competitive Enterprise Institute sent a letter to Senate Commerce Committee and Surface Transportation Subcommittee leaders criticizing an effort by regulators to impose new mandates and price controls on freight railroad carriers, a vital industry in the U.S.

The letter, signed by 25 national public policy groups, specifically urges committee leaders to make sure nominees for the Surface Transportation Board understand that re-regulating the freight rail industry is a dangerous idea.

“The Senate should ensure new federal regulators recognize that three decades of partial railroad deregulation have resulted in a surge in railroad investment while shipping rates have dramatically declined, and that means more efficient and cheaper transportation of industrial and consumer goods,” said Marc Scribner, CEI senior fellow and transportation policy expert.

“The Surface Transportation Board recently sought to change longstanding rules in a way that benefits powerful industrial shipping interests at the expense of American consumers,” Scribner explained. “We urge members of the Senate Commerce Committee to consider this troubling recent development and to confirm board members who appreciate the rebirth of America’s railroad industry made possible by deregulation.”

At issue is a move by the STB to change rules concerning reciprocal switching, requiring Class I rail carriers—railroads that are the largest by revenue—to handle the cars of competing carriers at an artificially low rate.

In an effort to force more of these access arrangements, the STB would eliminate a 30-year-old standard for determining whether rail companies engage in anticompetitive behavior, such as collusion that drives up prices. Currently, anyone making that claim must bring evidence that proves anticompetitive behavior before regulators can step in. That standard was upheld by courts three decades ago and, to date, there has not been any finding of anticompetitive conduct on the part of rail carriers. But now, the STB in essence argues it must rewrite the law to find guilt where none exists.

CEI has also argued in public comments submitted to the STB that the Board cannot lawfully eliminate the anticompetitive conduct requirement, as Congress has acquiesced to the standard for decades despite numerous failed attempts to eliminate it through legislation. 

>View the coalition letter