[Congressional Record Volume 149, Number 112 (Friday, July 25, 2003)]
[Extensions of Remarks]
[Pages E1638-E1639]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  THE RAILROAD COMPETITION ACT OF 2003

                                 ______
                                 

                         HON. RICHARD H. BAKER

                              of louisiana

                    in the house of representatives

                         Friday, July 25, 2003

  Mr. BAKER. Mr. Speaker, today I am joined by Representatives Chris 
John, David Vitter, and Earl Pomeroy to introduce the Railroad 
Competition Act of 2003, a bill designed to restore a measure of 
competition to our nation's freight rail marketplace. This bill, I 
believe, captures the true intentions of railroad deregulation.
  Like all Americans, Mr. Speaker, I want our national railroad 
industry to remain the most efficient in the world. Indeed, our 
railroad system is a model for other national systems. My home state of 
Louisiana in particular relies heavily on efficient railroads to 
deliver product to market and provide the feedstock for our 
manufacturing base. Without reliable rail service, Louisiana--and all 
of America--would be economically hamstrung.
  Congress deregulated the railroad industry in 1980 when it passed the 
Staggers Act. This law revitalized the industry, built efficiencies in 
the system, and bolstered the railroads as a critical component to 
America's transportation infrastructure. As Chairman of the Louisiana 
House Committee on Transportation and Highways, I observed closely the 
implementation and success of the Act.
  However, one lingering element of the Staggers Act provides for 
``differential pricing,'' which in effect allows railroads to ``price 
gouge'' customers served by a single railroad in order to help make up 
for revenue that is lost to customers served by more than one railroad. 
In other words railroads can overcharge a customer where the railroad 
is a monopoly to help recover the revenue it loses in a competitive, 
multiple-railroad environment.
  Prior to the Staggers Act, the federal government administered the 
finances of railroads by imposing price controls. But by allowing 
railroads to institutionalize price gouging, are we not continuing the 
practice of price controls? Indeed, is differential pricing the 
thriving legacy of regulatory control? I believe it is. I assert that 
differential pricing is no more ``deregulation'' than the artificially 
imposed government price controls that existed before 1980.
  I do not believe Congress intended to institutionalize price gouging 
when it passed the Staggers Act in 1980. Rather, the Staggers Act was 
an attempt to revive an important industry in America's economy. It was 
not enacted to allow the industry to thrive at its customers' expense. 
When the 108th Congress reflects back on the success of the Staggers 
Act, we can indeed take pride in ``getting it right.'' Congress 
achieved its goal of resuscitating the ailing railroad industry, but 
Congress did not intend to sustain the life of this industry at the 
growing, unfair expense of other industries.
  When Congress passed the Staggers Act in 1980 there were over 40 
Class I railroads competing for business. Today, after over 50 mergers 
and consolidations there are only 7 Class I railroads in North America 
and four of them control over 95 percent of the railroad business.

[[Page E1639]]

  This unprecedented consolidation has led to whole states, regions and 
entire industries becoming captive to a single railroad. This level of 
concentration and the lack of competition it has brought were never 
envisioned by Congress in the 1980 Act.

  Over this same period the agency that administers rail law, the 
Surface Transportation Board, has produced rulings, which have skewed 
the freight rail market place to the point that it is now a Federally 
protected monopoly. Railroads are operating within the law, but that 
law is outdated given the current number of railroads and market 
conditions of the new century.
  Mr. Speaker, as you may know, Louisiana industry is in dire straits. 
Every month companies announce closures, lay offs, and moves--depriving 
our economically struggling state of hundreds of important jobs. When 
these jobs are lost, so are the workers' pensions, salaries, and health 
benefits. When hundreds of jobs are lost, it affects other small 
businesses that rely on workers to keep them viable.
  Though Louisiana industry faces many financial challenges, premier 
among them is the cost to do business--and aside from energy supply, 
the most expensive cost of business is the artificially inflated rates 
imposed on Louisiana companies that, through no fault of their own, 
exist under a railroad monopoly.
  Mr. Speaker, this situation is not exclusive to Louisiana. It exists 
in West Virginia, North Dakota, Idaho, Georgia, Florida, Montana, 
Minnesota--in fact, Mr. Speaker, there is not a state in the union free 
from this blemish on the free enterprise system.
  The bill we are introducing today will truly match the deregulation 
goals of the Staggers Act with the tried and true American tradition of 
a competitive free market.
  Our bill takes deregulation to a higher level by fortifying healthy 
market competition. The bill would remove artificial protections 
maintained by an outdated policy which allows freight railroads to 
operate in an atmosphere which no other business in the country 
enjoys--including exemption from anti-trust law.
  Mr. Speaker, I urge all pro-market, pro-consumer, pro-deregulation, 
pro-fairness, projobs, pro-economy, pro-transportation, and pro-
railroad Members to join me in completing the deregulation goals of the 
Staggers Act of 1980 by cosponsoring the Railroad Competition Act of 
2003.

                  The Railroad Competition Act of 2003

       Clarification of National Rail Policy: Clarifies that the 
     STB has the following primary objectives: (1) ensuring 
     effective competition among rail carriers at origins and 
     destinations; (2) maintaining reasonable rates in the absence 
     of effective competition; (3) maintaining consistent and 
     efficient rail transportation service for rail shippers, 
     including the timely provision of rail cars; and (4) ensuring 
     that small carload and intermodal shippers are not precluded 
     from accessing the rail system.
       Requirement that Railroads Must Quote Rates to Their 
     Customers: In order to increase rail customer access to 
     competition, railroads must quote rates between any two 
     points on their systems where freight movements can 
     originate, terminate or be transferred, when requested by the 
     customer.
       Arbitration of Certain Rail Rate, Service and Other 
     Disputes: Provides final offer arbitration (baseball 
     arbitration), at the choice of the non-rail parry to a 
     dispute, for all rail rate matters and other disputes at the 
     STB involving a railroad charge.
       Removal of ``Paper Barriers'': Prohibits including paper 
     barriers in future sales or leases of rail line to short line 
     or regional railroads and allows the STB to invalidate such 
     provisions that have been in existence for 10 years.
       Removal of ``Anti-Competitive Conduct'' Test from Terminal 
     Area and Switching Agreements Policy of ICC/STB: Changes the 
     ``antitrust'' test added in mid-1980s by the former 
     Interstate Commerce Commission to the statutory ``public 
     interest'' test included in the terminal area and switching 
     agreement provisions of the ICC Termination Act.
       Tri-Annual DOT Study of Extent of Rail-to-Rail Competition.
       Areas of Inadequate Rail Competition: On petition of a 
     state, the STB may declare all or part of a state to be an 
     area of inadequate rail competition. Special rail customer 
     remedies apply in such areas.
       Rail Customer Advocacy Office Established at Department of 
     Agriculture.

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