Bullock joins fight on railroad exemptions

Tim Leeds Havre Daily News [email protected]

Montana's attorney general has helped spearhead an effort by state attorneys general to pass a law removing exemptions on antitrust laws for railroads that supporters of the bill say can lead to higher prices for shippers and consumers. “I think that, really, we're dealing with an obsolete law,” Attorney General Steve Bullock said Thursday. “Not having the railroads operate under the same rules as virtually every other industry is wrong.” Tom White, spokesperson for the Association of American Railroads, said the legislation the Railroad Antitrust Enforcement Act of 2009, Senate Bill 146 and House Resolution 233 is unnecessary and would create problems for the railroads. The industry is already covered by most antitrust regulations, and those that aren't, are regulated by the federal Surface Transportation Board, he said. “It would remove the exemptions but not remove the other regulations,” White said. White said that could lead to multiple, even conflicting, rulings on actions by the railroads. “That would put the railroads in an untenable position,” he said. Bullock said that many industries are governed by the full antitrust regulations and by regulatory agencies. If the railroads are setting fair and competitive rates, “there certainly should be no concern about (the legislation).” U. S. Sen. Jon Tester, D-Mont., said he believes there is a problem in Montana with the lack of competition which leads to high shipping rates for family farmers and ranchers. “As a Montana farmer, I understand the challenges producers face in getting their product to the marketplace,” Tester said. “I cosponsored this bipartisan legislation because from my point of view, it's just common sense to strengthen family farms and ranches by making sure rail shipping is fair and competitive. “I appreciate Steve Bullock's leadership in drawing national attention to this issue,” Tester added. Sen. Max Baucus, D-Mont., said he is concerned about the issue of rail shipping rates. Right now, he is closely watching the impacts of an agreement between Burlington Northern Santa Fe Railway, which controls some 95 percent of rail shipping in Montana, with the Montana Grain Growers Association and the Montana Farm Bureau Federation to use arbitration and mediation on shipping rates. “I'm watching the railroad situation in Montana very closely,” Baucus said. “We must find solutions that will create good-paying jobs and help steer Montana out of this economic downturn. “I understand the challenges facing Montana's shipping community and I've long fought to support their Rights,” Baucus said. “Right now, I'm keeping a close eye, to ensure that all rail legislation is right for Montana.” Re p . Denny Rehberg , R-Mont., could not be reached for comment by this morning. Regulatory questions According to the letter sent by the attorneys general to congressional leaders, the exemptions given to the railroads were set up during a period of high regulation. Since then, laws were passed in 1976 and 1980 which “dismantled” that regulatory regime. The writing of the letter was spearheaded by Bullock and Attorneys General Larry Long, R-S.D., and Richard Cordray, D-Ohio, and sent to Senate Majority Leader Harry Reid, D-Nev., and Senate Minority Leader Mitch McConnell, R-Ky. House Speaker Nancy Pelosi, D-Calif., and House Minority Leader John Boehner, R-Ohio. A total of 20 state attorneys general signed the letter. “It's not a partisan issue,” Bullock said. White said railroads already are covered by most antitrust laws, such as preventing companies colluding to set rates or allocating markets among themselves. The exemptions given to railroads are still regul a t e d by t h e S u r fa c e Transportation Board, he said. White added that it is not in the railroad's best interests to set unfair rates. “A railroad doesn't make a penny of profit on anything it doesn't move,” he said. “It's not in our best interest to price our customers out of the market.” Years of proposed legislation Montana has a history of trying to remove exemptions for railroads. Montana's U.S. Sen. Conrad Burns, who lost his last bid for re-election to Tester, co-sponsored a bill in 2001 to increase competition between rail carriers and resolve disputes about rail rates. That bill died in committee. In 2002, Burns sponsored the bill again. Baucus co-sponsored the bill and Rehberg co-sponsored its companion bill in the House. Those bills also failed to pass. A study conducted by the Montana Attorney General's Office, released in February, says the lack of competition in Montana has allowed BNSF to set rates that are unfair to Montana shippers, highlighting its impact on the grain industry, although it shows disparities for shipping rates in other industries as well. That study shows that BNSF overcharged Montana grain growers between $19 million and $50 million in 2006. BNSF disputes that study's findings. In a press release, the company said the study uses 2006 data which “paints a distorted view of BNSF's rail rates.” Kevin Kaufman, group vice president for agricultural products for BNSF, said in the release that the railroad is “providing best-of-class service at reasonable rates, which enhances Montana producers' ability to compete in world markets. “This report is wrong and inaccurately portrays BNSF rates and service,” Kaufman said. Bullock said that if the rates are fair and reasonable, “again, I just return to the fact that there shouldn't be any concerns.” He said he will continue to work to ensure fair shipping rates for agricultural producers. “Agriculture is, and will continue to be, a critical issue in Montana,” he said.