CEI-Led Coalition Opposes Regulator Price Controls on Freight Railroads

Today, a coalition of free market groups led by the Competitive Enterprise Institute sent a letter to congressional leaders opposing 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 13 national and state policy groups, urges Congress to take a hard look at the Surface Transportation Board’s conduct and prevent a proposed rule change.

“Decades after freight rail was deregulated in the United States and the industry has proven its tremendous benefit to our nation's economy, the federal Surface Transportation Board wants to take a big step towards re-regulation,” said Marc Scribner, CEI transportation policy expert.

“The STB seeks to force reciprocal switching arrangements between railroads, a move that represents a dangerous re-regulatory action that Congress must again reject,” Scribner explained. “The STB's suggestion that a three-decade absence of anticompetitive conduct has rendered the anticompetitive conduct requirement obsolete makes no sense. In fact, STB's troubling proposal suggests that it may be the STB itself that is obsolete.”

Letter signatories, in addition to CEI, include: American Commitment, American Conservative Union, Campaign for Liberty, Center for Individual Freedom, Georgia Public Policy Foundation, Grassroot Institute of Hawaii, John Locke Foundation, The Maine Heritage Policy Center, National Taxpayers Union, Rio Grande Foundation, R Street Institute, and the Taxpayers Protection Alliance.

The STB 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 STB 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 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 consistently and repeatedly acquiesced to the standard for decades in the face of numerous failed attempts to eliminate the requirement through legislation.