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CEI Urges Rail Regulators to Nix Proposed Backdoor Price Controls

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The Competitive Enterprise Institute (CEI) today submitted public comments to the nation’s top railroad regulator opposing new mandates and price controls on freight railroad carriers, a vital industry in the U.S.

“It is no surprise that shippers in the petrochemical and agriculture industries want to ratchet up regulations on rail carriers to force shipping rates down below market prices,” said Marc Scribner, CEI fellow and author of the comments. “It is a surprise that regulators are reversing three decades of policy to meet these self-serving demands.”

The Surface Transportation Board is considering changing the rules on reciprocal switching, requiring Class 1 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 Board would eliminate a 30-year-old requirement that evidence of anticompetitive behavior be found before regulators step in. That standard was upheld by the 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 Board in essence argues it must rewrite the law to find guilt where none exists, CEI explains in its comments.

CEI also argues that the Board cannot lawfully eliminate the anticompetitive conduct requirement, as Congress has consistently and repeatedly acquiesced to the standard for decades in the face of numerous failed attempts to eliminate the requirement through legislation.