Vitter Introduces Railroad Competition Legislation

Press Release

Vitter Introduces Railroad Competition Legislation

U.S. Sen. David Vitter today introduced legislation to improve competitiveness on America's railroad system. Vitter is the lead Republican in the U.S. Senate on the Railroad Competition and Service Improvement Act along with Sens. Rockefeller, Dorgan and Craig. The bill would ensure increased rail competition and enable rail customers to obtain more reliable service.

"The lack of healthy competition in our national rail system is stifling rail customers like our Louisiana chemical industry and utility providers. The extreme prices these rail customers are charged and the service challenges they face have a direct impact on jobs and prices for consumers. We must reform our railroad system to foster more competition and provide relief to consumers," Vitter said.

Government accountability reports have noted a lack of competition in the railroad industry and a lack of action by the Surface Transportation Board to ensure rail competition and protect rail customers from railroad market abuse.

"This bill is a major step forward in the effort to protect and grow jobs in Louisiana. Virtually every rail shipper - from chemicals to forest products to agriculture to utilities - has suffered because of excessive rail rates and spotty performance," said Dan Borne, president of the Louisiana Chemical Association. "We commend Senator Vitter for his leadership in the Senate fight to fix our problems."

"The STB, which is supposed to oversee rail pricing and practices, has proven to be ineffective for rail customers and very friendly to rail providers, most notably as their actions apply to rail customers having only one choice of rail providers. We thank Senator Vitter for standing up against these unfair monopoly practices and co-authoring this bill demanding that the STB do its job properly," added Terry Huval of Lafayette Utilities System.

Lafayette's electricity customers have faced $5 and $6 million or more annually in rates increases because of the lack of railroad competition. The Rodemacher Plant that provides electricity to the Lafayette Utilities System gets its coal from the Powder River Basin in Wyoming, which is transported by rail for more than 1,500 miles. Currently, two railroads travel from the Basin to Alexandria, Louisiana. However, the last 19 miles of travel distance to the Rodemacher Plant only has one major railroad provider. Present law allows the current rail provider's control of the last 19 miles to push its pricing monopoly all the way back to the Powder River Basin, which in essence, turns a 19 mile monopoly into a 1,500-mile monopoly.

This monopoly forces the Lafayette to pay much higher rates than if the Rodemacher Plant had access to both railroads that serve the Powder River Basin. The Railroad Competition and Service Improvement Act would address bottlenecking issues like this and the lack of competition.

The legislation also pushes for a workable rate challenge process at the STB. Currently, rail customers are stuck paying large filing fees and paperwork requirements that force them to hypothetically prove that they can build and operate a railroad for less than the rates being charged. Vitter's legislation removes these filing fees, eases the paperwork burden and ensures that the rate will be based on the standard used by regulatory agencies.

"Over the past decade, the cost to ship electric power plant coal by rail has been rising dramatically while reliability of getting the coal delivered has dropped to alarming levels. For a community like Lafayette, the resulting electric costs to our residential and business consumers have increased by many millions of dollars each year," added Huval.

The STB has been criticized for not proactively addressing rail problems. Vitter's legislation empowers the STB and directs it to actively investigate and suspend unreasonable practices.

"The Surface Transportation Board is not doing an effective job of ensuring rail customers have access to competition and protecting rail customers from railroad market abuses," said Vitter. "This legislation will direct the STB to do its job and foster a free marketplace for our rail system."

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