Association of American Railroads Urges Congress to Reconsider the Railroad Antitrust Enforcement Act of 2009

H.R. 233 Could Damage the Public Interest, Establish Conflicting Law and Regulations.

(AAR Press Release)

Washington, D.C. – May 19, 2009 – The Association of American Railroads today told Congress that the Railroad Antitrust Enforcement Act of 2009 would damage the public interest and severely distort the relationship between regulation and antitrust laws.

“Congress should take a step back and consider the harmful impacts this measure would have on not only railroads, but also our customers and American consumers,” said AAR President and CEO Edward Hamberger. “The freight rail industry moves the goods we all need every day. We do that cleanly, efficiently and without public funds – thereby allowing us to invest our own funds back into vital network infrastructure. If enacted, H.R.233 could drag us back to pre-deregulation days of weak investment and withering rail networks.”

Representing the railroad industry, J. Michael Hemmer, senior vice president - law and general counsel for Union Pacific Railroad Co., testified before the House Judiciary, courts and competition subcommittee, urging them not to consider H.R. 233 in isolation, but if Congress wants to address rail transportation policies, it should work with colleagues in other committees of jurisdiction to craft a coherent, national rail policy that integrates regulation with antitrust jurisprudence.

“This bill is not just about antitrust law, it is an attempt to overturn long-established regulatory policies that have provided enormous benefits to shippers and American consumers,” Hemmer said. “The bill even creates new regulatory law on matters unrelated to antitrust – and in doing so, treats railroads differently than other regulated industries.”

In his testimony, Hemmer noted that of the many provisions within H.R. 233, four actually deal with antitrust law exemptions. These measures would:

  • eliminate the “Keogh Doctrine” for railroads where its current application is unclear, but not for the utility industry where it has been most recently used as means of inoculation from antitrust law;
  • repeal antitrust immunity for rate bureaus, which have been all but eliminated by the railroads over the past few decades;
  • authorize dual agency review of rail mergers, creating additional cost and administrative burden, and
  • allow private antitrust injunctions against railroads, but not other carriers, thus putting regulators and courts at potential conflict.

Several provisions of the bill are designed to override regulatory decisions, rather than repeal antitrust exemptions, Hemmer also noted. In particular, there are provisions that would aim to:

  • give communities priority in some regulatory decisions, thus adopting NIMBY-ism as federal policy;
  • allow the Federal Trade Commission to regulate rail carriers, but not other carriers thereby creating a glaring conflict with the STB, and
  • restrict primary jurisdiction for railroads, but not for other regulated entities.

Hemmer also noted that H.R. 233 threatens to be retroactive, which could lead to antitrust attacks on the continuing operation of every ICC-approved, or STB-approved transaction in railroad history.

Editors Note: The Association of American Railroads is a Washington, D.C.-based trade association whose members include the major freight railroads, or Class I railroads, of the U.S., Canada and Mexico, as well as Amtrak. Class I railroads represent 67 percent of the U.S. freight rail mileage and 90 percent of freight railroad industry employees. Railroads account for 43 percent of intercity freight volume — more than any other mode of transportation. To learn more about how freight rail works for America, the environment and for you, please visit: www.freightrailworks.org.