STB’s Elliott to Rockefeller: Staggers needs “review”

In testimony before the Senate Commerce Committee—whose chair is West Virginia Democrat Jay Rockefeller, a leading proponent of freight railroad reregulation—Surface Transportation Board Chairman Daniel R. Elliott III said the Staggers Act needs to be reviewed and likely requires revision.

The Wall Street Journal’s Josh Mitchell, reporting on the hearing, wrote: “[Elliott] said he is considering wading into a fight between shippers and freight rail companies to give farmers, coal companies, and other freight customers more leverage to fight rail industry price increases. . . . [He] pointed to concerns that railroads are using market dominance to charge ‘excessive’ rates for the shipment of goods. Elliott also suggested that the Staggers Act, signed by President Jimmy Carter, was outmoded and may have given railroads too much pricing power over farmers, grain merchants, and other shippers.

 “‘I believe that the arena has significantly changed since the Staggers Act’ and that a wide-ranging review is needed to determine whether shippers lack access to competing railroads,” Elliott said during a hearing before the Senate Commerce Committee. He said he would review rules put in place in the 1980s designed to shore up rail companies’ finances but that may have reduced competition on certain routes. Elliott also said he would explore eliminating regulatory exemptions for railroads, and lowering the filing fee for challenging rates before the board to allow more cases to come forward. Elliott’s comments come as shippers and some congressional Democrats are calling for legislation that would boost regulators’ powers to police rail rates and give more leverage to shippers.

“Rockefeller blasted the industry’s attempts to stall the legislation, and he released a report showing railroads are raising rates 5% annually, above inflation, while maintaining double-digit profit margins. He pointed to a lack of competition on many routes that, he said, has given railroads too much pricing power. ‘We’ve allowed them to establish a virtual monopoly on freight transportation in this country,”’ Rockefeller said.

“Rockefeller, whose state includes coal shippers and other customers of the railroad industry, said he would push for congressional passage of the legislation this year or next. But he called the industry the ‘most powerful, effective lobby in town’ and indicated the changes may have to come from policies and regulations developed by the Obama Administration instead of Congress.”