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Yesterday, the Senate Judiciary Committee approved the Railroad Antitrust Enforcement Act of 2009 (S. 146) by a 14-0 vote.

Introduced earlier this year by Sen. Herb Kohl (D-Wis.) and co-sponsored by eight senators, S. 146 proposes to repeal railroads’ antitrust law exemption; permit the U.S. Department of Justice and Federal Trade Commission to review mergers under antitrust law; ensure Surface Transportation Board (STB) rulings and regulations conform to antitrust laws; and enable state attorneys general and private parties to sue for treble damages and pursue court orders to halt anti-competitive rail conduct.

“Our bill will ensure that railroads play by the same rules as all businesses in our economy and give those injured by anti-competitive conduct strong remedies under antitrust law,” said Kohl in a prepared statement. “Over the past several years, railroad shippers of vital commodities have faced spiking rail rates. Rail customers are forced to pass these price increases along into the price of their products, and ultimately, to consumers.”

However, S. 146 — along with legislation being developed by the Senate Commerce Committee that would subject railroads to more economic regulation by the STB — “creates an unprecedented and confusing regulatory scheme that could alter current economic oversight of the railroads,” Association of American Railroads (AAR) officials said in a statement.

"We face two disparate schemes that spell nothing but confusion for the railroads and those charged with enforcing the regulations," said AAR President and Chief Executive Officer Edward 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.”

Many industries besides the rail industry — such as agricultural marketing cooperatives, newspapers and soft-drink bottlers — operate with limited anti-trust exemptions, he said.

"All aspects of railroad practices exempt from anti-trust laws are subject to STB jurisdiction," said Hamberger. “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."

Consumers United for Rail Equity (CURE) officials believe there is. The rail shipper coalition, which long has supported the antitrust legislation, believes “railroads have used this exemption to consolidate the country’s rail shipping down to four regional monopolies, giving these corporate behemoths tremendous monopoly pricing power that results in record profits at the expense of captive shippers,” CURE officials said in a statement.

“These monopoly railroads are putting the squeeze on captive shippers to make higher and higher quarterly profits, which result in excessive prices for everything from electricity to food for American consumers,” said CURE Chairman Glenn English. “The Senate Judiciary Committee has shown great leadership by passing this legislation in a bipartisan fashion. This bill brings much-needed scrutiny to freight railroad consolidation and monopoly practices.”
 
Meanwhile, a companion bill (H.R. 233) introduced earlier this year by Rep. Tammy Baldwin (D-Wis.) still is pending in the House Judiciary Committee.