Chutzpah

2011-09-23T15:28:00Z

On the eve of the Jewish new year, the railroads have given added meaning to the Yiddish term "chutzpah". Ordinarily defined as nerve or gall, the railroads have managed to add offensive hypocricy. On September 22, 2011, the Association of American Railroads joined the RATE - Reducing America's Taxes Equitably - coalition. The sole goal of the organization is to reduce the corporate tax rate. AAR joined the group after its members reaped millions of dollars of Federal financial assistance through the U.S. Department of Transportation's TIGER grants. Norfollk southern Railway received #104 million to assist it in developing its 2,500-mile Crescent Corridor domestic intermodal corridor. CSX Corporation received $98 million for its National Gateway intermodal corridor. They and the other railroads serving the Chicago gateway received $100 million to install grade separations and other rail lilne improvements. The railroads willingly took all this money even as they were acknowledged to be among the Nation's most profitable industries. And now they are calling for the reduction of the rate of taxes they have been paying. Talk about chutzpah!

The STB's first step down the path of reregulating the railroads

2010-10-26T15:53:00Z

The deregulation of the Nation's raiilroads began with the enactmernt of the Railroad Revitalization and Regulatory Reform Act of 1976. Among its other provisions was the grant of authority to the Interstate Commerce Commission to exempt a transaction or service from the statutory and regulatory provisions which ohterwise would apply. The leading propponent of this revision was the Southern Pacific Transportation Company which had been commplaining that the ICC's regulations prevented it from speedily and aggressively competing with trucks in the transcontinental transportation of California fresh fruits and vegetables. Fresh fruits and vegetables shortly were followed by a whole host of other commodities, including automobiles and trucks, lumber and furniture, most manufactured products, canned fruits and vegetables, poultry and meats, butter and chees, sand and gravel and any commodity which was transported in a railroad boxcar. The railroads were free to set the rates on the exempted commodities at whatever levels they chose, and they could provide such service in their transportation as they saw fit. The shippers of the exempt commodiities were without any remedies before the ICC or its successor agency, the Surface Transportation Board. Indeed, the railroads were free to cease transporting the exempt commodities altogether.

. The rationale for exempting these commodities from regulation was that trucking was a ready alternative and that the competition of truck transportation would serve to restrain the railroads from exacting exhorbitant rates or rendering unacceptable service. Thus there was no need for the ICC's regulation. As the ICC said in adding lumber and wood products to the list of exempt commodities, "[T]his exemption will enhance the level of competition benefitting shippers and also benefitting railroads in the competition with motor carriers." The exempt commodities may be truck competitive for relatively short hauls, but the traffic is captive to the railroads when the exempt commodities are shipped for longer distances. Wood products, for example, on average move by truck 161 miles per shipment. The average length of a shipment of wood products by rail is 1,236 miles. Thus the availability of trucking wood products hardly serves as a restrain on the railroads' pricing and service in handling such commodities.

So-called captive shippers by rail long have contended that the 4-R Act and the Staggers Rail Act of 1980 were being construed by the ICC and STB in favor of the railroads , and they found a champion in Senator Rockefeller, Chairman of the Senate Committee on Commerce, Science and Transportation. He has had his staff working for nearly a year to arrive at a compropmise bill that would satisfy shipper groups such as Consumers United for Rail Equity and Alliance for Rail Competition, as well as the Association of American Railroads. The bill he introduced, S. 2889, satisfies the shippers and is strongly opposed by the railroads, and it is unlikely to be enacted by the Congress. At a recent hearing before his committee Senator Rockefeller reportedly expressed is disappointment and frustration by stating that, if reform cannot be effected by legislation, it will be by regulation. Chairman Danniel Elliott of the STB was in the hearing room and in his testimony agreed that the time had come for the STB to reconsider some of its decisions which the shippers contended had favored the railraods.

The STB wasted no time. On October 25, 2010, it issued a notice that it would hold a hearing on December 9, 2010, at which interested parties could express their views on the effectiveness of the exemptions in the marketplace and whether the rationale behind these exemptions should be revisited by the agency. CURE already has stated that it will be urging the cancellation of most, if not all, of the commodity exemptions. CURE may not get all it wishes for, but it is almost certain that the STB will cut back on some of the exemptions. To the extend that it does so, the commodities again will be subject to regulations by the STB. Thus, the STB has taken the first step on the path of reregulating the Nation's railroads.

FritzRKahn

Chutzpah

The STB's first step down the path of reregulating the railroads