[Congressional Record (Bound Edition), Volume 146 (2000), Part 6]
[Extensions of Remarks]
[Page 8752]
[From the U.S. Government Publishing Office, www.gpo.gov]


[[Page 8752]]

   INTRODUCTION OF THE RAIL MERGER REFORM AND CUSTOMER PROTECTION ACT

                                 ______
                                 

                           HON. EARL POMEROY

                            of north dakota

                    in the house of representatives

                          Monday, May 22, 2000

  Mr. POMEROY. Mr. Speaker, I am pleased to introduce the Rail Merger 
Reform and Customer Protection Act. This legislation would extend the 
reach of the antitrust laws to the railroad industry while providing 
the Surface Transportation Board (STB) with additional criteria on 
which to evaluate future railroad mergers.
  For virtually every business in the United States, mergers and 
acquisitions in excess of $10 million are subject to Antitrust Division 
of the Department of Justice. Railroads, however, are treated 
differently. Under current law, the STB has exclusive jurisdiction over 
most matters concerning rail transportation including mergers and 
acquisitions. In exercising that authority, the STB has approved a 
series of mergers over the past twenty years since passage of the 
Staggers Act which has resulted in widespread consolidation in the rail 
industry. This consolidation has reduced the number of rail carriers 
from 40 Class I railroads to just 7, resulting in significant service 
disruptions, negative impacts on shippers and a reduction in 
competition.
  Mr. Speaker, believe it or not, the railroad industry is the only 
industry, except for America's favorite pastime, baseball, that is 
almost entirely exempt from the substance of the antitrust laws. With 
the rail industry now consolidated to seven major railroads, and the 
stage set for a possible final consolidation, there is an increased 
potential for the rail industry to exercise market power and monopoly 
abuse against shippers. In order to protect shippers and promote true 
competition, it makes sense to treat the railroads like other 
industries and subject them to the jurisdiction of the Department of 
Justice and full application of antitrust laws.
  Currently, the Department of Justice can only comment on proposed 
mergers. In previous mergers the recommendations of DOJ were ignored. 
For example the Department of Justice pegged the Union Pacific-Southern 
Pacific merger ``the most anti-competitive rail merger in history.'' In 
that merger, the STB ignored not only the concerns expressed by 
Department of Justice, but also the concerns of rail customers, 
organized labor and the United States Department of Agriculture. I 
believe that the Department of Justice, an agency that can objectively 
evaluate the impact of mergers and protect shippers from the continual 
decrease in competition, needs to have a strong voice in mergers 
reviewed by the Surface Transportation Board.
  My legislation would require both the Department of Justice and the 
STB to review and approve future rail mergers. Under this proposed 
regulatory framework, the DOJ would approve a merger unless it 
substantially restrains commerce in any section of the country or tends 
to create a monopoly in any line of commerce. The STB would still be 
required to review and approve a merger under a similar standard but it 
would also judge the proposed merger by a broader public interest 
standard. However, my legislation would not allow a merger to move 
forward without approval from both Department of Justice and Surface 
Transportation Board.
  Under my legislation, the STB would also be required to examine 
several additional criteria before approving a merger. The merger (1) 
cannot eliminate transportation alternatives; (2) must improve 
transportation alternatives; (3) must improve competition among rail 
carriers; (4) must improve service to customers. Additionally, the 
legislation ensures that relief can be sought under the current 
regulatory framework or through the antitrust laws.
  In light of the recent decision by the Surface Transportation Board 
to place a 15-month moratorium on mergers and its solicitation on how 
merger rules can and should be revised, we have an unprecedented 
opportunity to reshape railroad policy for the 21st Century. In this 
day and age, there is no public policy reason to justify the industry's 
special treatment, particularly since the railroads have enjoyed 
considerable deregulation under both the Staggers Act and the 
Interstate Commerce Commission (ICC) Termination Act. The passage of 
these laws which reduced the scope and effectiveness of the regulatory 
agency, makes it more necessary than ever for shippers to have the full 
panoply of remedies available against monopolistic activities.
  I am pleased that the Alliance for Rail Competition, the Consumers 
United for Rail Equity, National Farmers Union, American Farm Bureau 
Federation, National Association of Wheat Growers, Northern States 
Power, the American Forests and Paper Association and the National 
Association of Chemical Distributors have endorsed this legislation.
  I urge my colleagues to join me in this effort to ensure that the 
railroad industry is subject to the same laws as every other industry. 
It is in the public interest to raise the bar for review of the last 
few remaining mergers and to have oversight by the Department of 
Justice of the actions of the railroads.

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