Wednesday, April 29, 2009

Is compromise legislation bogging down?

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Nothing is simple on Capitol Hill, not even compromise, which is how the vast majority of legislation that makes its way to the President’s desk for signing is arrived at.

For the past few weeks, the railroads and shippers have been working closely with the staffs of the House Transportation and Infrastructure and Senate Commerce, Science and Transportation committees, led by Jim Oberstar (D-Minn.) and Jay Rockefeller (D-W.Va.) respectively, to draft compromise legislation that would address certain shipper complaints while stopping well short of re-regulation. Such legislation would likely be incorporated into the long-overdue reauthorization of the Surface Transportation Board. At the same time, the railroads are battling legislation that would repeal their remaining, highly limited anti-trust exemptions.

Washington sources say that the Rockefeller/Oberstar attempt at a quick resolution of the railroad-shipper dispute is getting bogged down. Actual draft legislation has been circulated, but informal meetings continue to be held to discuss concepts. Snags described as “serious” are surfacing over paper barriers, which are line-sales contracts that forbid a short line from interchanging with a competitor of the Class I railroad that sold the short line its right-of-way.

“The paper barrier issue is an important element of the rail-shipper debate, and the railroads are lobbying—against shipper counter-lobbying—that Congress can’t change contracts, and that any change to paper barriers must be in the future,” says one industry observer. “The shippers, trotting out decades of case law, insist that Congress can indeed change existing contracts. Neither side seems willing to compromise. It appears that shippers are now ramping up efforts to move the antitrust bill to the Senate floor as a countermeasure to railroad efforts to influence the Rockefeller/Oberstar legislation in favor of the railroads.”

The railroads appear to be holding firm with regard to the manner of computing costs for purposes of ratemaking, pushing for a formula that puts upward pressure on rates for captive shippers. A parallel proceeding is under way within the STB.

“All this leads to the conclusion that the wide gulf between railroads and shippers is not narrowing, and that both sides are digging in their heels, through lobbying and vote counting, for what could be a protracted fight—just the opposite of the Rockefeller/Oberstar objective,” says the observer. Oberstar in particular wants to get compromise legislation passed, so he and the T&I Committee can focus on reathorization of SAFETEA-LU, which expires Sept. 30.