Tuesday, May 19, 2009

AAR to Congress: Reconsider Railroad Antitrust Enforcement Act

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House Resolution [H.R.} 233, the Railroad Antitrust Enforcement Act of 2009, currently being considered by Congress, would damage the public interest and severely distort the relationship between regulation and antitrust laws, the Association of American Railroads said Tuesday.

"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."

J. Michael Hemmer, senior vice president--law and general counsel for Union Pacific, testified before the House Judiciary Committee’s courts and competition subcommittee on behalf of the rail industry. Hemmer asked Congress to consider H.R. 233 amid a broad range of issues, and suggested that the subcommittee work with colleagues in other committees of jurisdiction to craft a coherent rail policy on a national scale 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."

Hemmer noted that four provisions within H.R. 233 actually deal with antitrust law exemptions.  He said the measures would:

1. Eliminate the "Keogh Doctrine" for railroads where its current application is unclear, but not for the utility industry where it has been mostrecently used as means of inoculation from antitrust law;

2. Repeal antitrust immunity for rate bureaus, which have been all but eliminated by the railroads during the past few decades; 

3. Authorize dual agency review of rail mergers, creating additional cost and administrative burden, and

4. Allow private antitrust injunctions against railroads, but not other carriers, thus putting regulators and courts at potential conflict.

Hemmer also said several provisions of the bill are designed to override regulatory decisions, rather than repeal antitrust exemptions. These provisions would give communities priority in some regulatory decisions,thus adopting "NIMBY-ism" (Not In My Back Yard sentiment) as federal policy. They also would allow the Federal Trade Commission to regulate rail carriers, but not other carriers, thereby creating a glaring conflict with the STB. Finally they would restrict primary jurisdiction for railroads, but not for other regulated entities.

Hemmer said 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.