Mr. President, it is my pleasure today to join with my colleagues Senators Craig, Dorgan, Vitter, Klobuchar, Tester, Landrieu, Crapo, Baucus, and Cantwell to introduce the Railroad Competition and Service Improvement Act of 2007. This…
Mr. President, it is my pleasure today to join with my colleagues Senators Craig, Dorgan, Vitter, Klobuchar, Tester, Landrieu, Crapo, Baucus, and Cantwell to introduce the Railroad Competition and Service Improvement Act of 2007. This legislation stands for the very basic premise that businesses should serve their customers, and do so at reasonable rates.
This essential concept of capitalism is what our economy is based upon. Those ideas, plus promoting competition and protecting consumers, were prime motivating factors when Congress in 1980 passed the Staggers Act. The Staggers Act provided a government agency--now the Surface Transportation Board (STB)--with the ability to prevent monopoly abuses of those shippers left ``captive'' to just one railroad, and to make sure that the railroads in competitive situations were able to operate in such a way that they could be profitable. Somewhere along the way the part of the STB mandate calling on the agency to protect shippers, and by extension consumers, has been ignored, or at least subsumed into the STB's fervor to see the railroads profitable.
And profitable they are. What is important for my colleagues to recognize is that neither I nor any of my cosponsors want the railroads to fail. We want, and this country needs, a healthy freight rail industry. From coal to chemicals to plastics to forest products to grain and potatoes, America's shippers depend on the railroad industry to carry their products to customers across the country to keep our economy moving.
What no member of Congress should want to see is a freight rail system dominated by four regional carriers whose business plans are based on bleeding their captive customers dry. Meanwhile, these companies invest none of their profits in infrastructure expansion to handle current traffic, much less the expected need in the decades to come.
This is by no means the first time my colleagues have seen me introduce legislation in this vein. In fact, this is at least the eighth time that I have asked my colleagues to look into the problems in our freight rail network and to work with me to fix it. Businesses in my home State of West Virginia have been describing problems with the railroads to since before I came to the Senate in 1985. Like businesses anywhere, West Virginia industries depend on efficient and dependable rail service at fair prices to move their products to market.
Well, what was a troubling situation 22 years ago for about 20 percent of rail shippers captive to the more than 40 Class I railroads then is a nightmare now for hundreds of companies in almost every industry and in virtually every part of the United States that are being underserved and overcharged by the five remaining Class I railroads. I have worked for years in a bipartisan and regionally diverse coalition of members of Congress to change a system that just is not working. Our goal is to improve the economic situation for rail shippers and retail shoppers. And, I hasten to add, we seek to strengthen and improve the economic vitality of the Class I railroads, as well.
I am sure that my colleagues will hear from railroads that we are ``re-regulating.'' My colleagues should carefully review our bill and find where we would regulate anything that is not already regulated. This is, of course, the point. The railroads have touted the success of the deregulation, but what they fail to mention is that the Staggers Act never deregulated the railroads where shippers had no competitive transportation options. The railroads can have all the opinions about our legislation that they want, but they are not entitled to their own set of facts.
What has happened while the railroads have consolidated and mischaracterized this effort on behalf of shippers? Shippers and end- use consumers have paid increasingly high prices for electricity, food, medicine, paper products; the chemicals to protect our water supply and crops, and the basic ingredients of the plastics in many of the goods we purchase. It was not supposed to be this way.
In 1980, when Congress passed the Staggers Act, it was seeking to rescue the railroads from a burdensome and counterproductive regulatory scheme overseen by the Interstate Commerce Commission (ICC). In the decades leading up to passage of the Staggers Act the freight rail situation was bloated with unprofitable railroads forced to make un- economic choices regarding track, routes, and countless other business decisions. The Staggers Act was an attempt to let the marketplace create a more workable system. Where rail shippers were already captive to one railroad, the ICC was supposed to continue to protect shippers' rights and to require railroads to meet their responsibilities.
As the marketplace evolved, the ICC, and its successor agency the STB, were supposed to make sure that railroad consolidation and industry policy did not harm rail customers. The only reason the railroads in 2007 can say that my colleagues and I are attempting to ``re-regulate'' them is that the regulatory agencies charged with regulating them all along largely have abdicated their responsibilities, and have been sadly ineffective on the rare occasion when they purport to be carrying out the part of their mission that includes maintaining the advantages of competition.
To the extent that the Staggers Act has been successful in fulfilling its promise, that success has been completely one-sided. Railroads are no longer struggling to be profitable. Neither are they struggling to serve their customers. The STB, which should be working to make the system work, is more of a problem than it is a solution. The only parties still struggling are the shippers, and our bill is designed to make it a fair fight.
The title of our bill, the Railroad Competition and Service Improvement Act, really says it all. Cosponsors of this legislation seek a freight rail system envisioned in the drafting of the Staggers Act. We hope to remind the STB of its responsibilities, and give its enforcement the teeth successive Chairmen have told Congress the Board needs.
As I have said, this legislation is about making capitalism work for all parties in the freight rail marketplace, not just for the monopoly railroads. Shippers need Congress to remind the STB that good service at reasonable rates is not an outrageous demand. Congress must demand that shippers that ask for a rate quote are given one. Unbelievably, the STB's reading of the Staggers Act allows shippers no such right.
In addition to that most basic right of business negotiations, our legislation would do the following: clarify and restate the STB's responsibility to shall promote competition among rail carriers, as well as requiring reasonable rates and dependable service in keeping with the railroads' common carrier obligation; remove so-called ``paper barriers,'' contractual restraints on short-line and regional railroads that prevent them from providing improved service to shippers; modify the rate challenge process, and implement real-world evidentiary standards and burden of proof requirements; authorize STB to require ``reciprocal switching,'' the transfer of traffic between railroads, where it is in the public interest; affirm the railroads' obligation to serve; cap filing fees for STB rate cases at the level of federal district courts; allow Governors to petition the STB for declarations of ``areas of inadequate rail competition,'' with appropriate remedies; create position of Rail Customer Advocate in the Department of Transportation; and establish a system of ``final offer'' arbitration for disputes over agriculture, forest product, and fertilizer shipments.
Solutions to these problems are long overdue. I commend to my colleagues the Railroad Competition and Service Improvement Act as a set of common-sense solutions to unresolved problems that are putting American competitiveness at risk.