The Senate Judiciary Committee approved a bill March 5 to repeal limited antitrust exemptions for
U.S. railroads, prompting the top rail trade group to warn this could help produce a regulatory
structure that would threaten the transportation system.

The panel okayed with no changes a measure from Sen. Herb Kohl, D-Wis., that he says would
remove obsolete provisions in the law that protect railroads from competition and allow them to
gouge captive shippers in freight charges.

“Our bill will ensure that railroads play by the same rules as all businesses in our economy and
give those injured by anti-competitive conduct strong remedies under antitrust law,” Kohl said.
“Over the past several years, railroad shippers of vital commodities have faced spiking rail rates.
Rail customers are forced to pass these price increases are passed along into the price of their
products, and ultimately, to consumers.”

But the AAR said the one-two punch of this antitrust measure, plus another bill expected from the
Senate Commerce Committee to put railroads under tougher regulation by the Surface
Transportation Board, will hit rail lines hard.

“Overlapping regulatory schemes could derail the industry's ability to meet the nation's increased
need for environmentally sound freight transportation,” said AAR President and CEO Edward R.
Hamberger. “We cannot afford to subject railroads to a conflicting regulatory system that will
make it difficult --- if not impossible --- to meet the nation's transportation needs."

He said the impact of the bills would be “nothing but confusion for the railroads and those
charged with enforcing the regulations. Congress should be promoting policies that help jumpstart
the economy and regain consumer confidence, not overburden an industry that stands ready to
get America back on track.”

But Kohl’s office said industry consolidation has left the four top U.S. railroads dominating rail
freight, and leaving many shippers that are captive to a single long-haul carrier paying high
charges without the ordinary protections of antitrust laws. Rail customer challenges to rail
practices now have to go through the STB in nearly all instances.

His bill would, among other things, allow the federal government, state attorneys general or
private parties to sue railroads to block “anti-competitive mergers and acquisitions,” and put rail
merger reviews back under the Justice Department’s Antitrust Division and the Federal Trade
Commission. It would also make it easier for rail customers to fight rail rates, and tell district
courts they do not have to defer to STB jurisdiction.

Yet AAR’s Hamberger said rails already face plenty of oversight. "All aspects of railroad practices
exempt from anti-trust laws are subject to STB jurisdiction," he said. "Eliminating the railroads'
exemptions would not fill any void in the law.