US STB Chair Nominee Vows To Address Rail Shippers' Concerns

President Barack Obama's nominee to head the U.S. agency that regulates the railroad industry said he would be "proactive" in addressing shippers' allegations of pricing abuses by freight-rail companies, and indicated that the decades-old law that deregulated the railroad industry is outdated.

The comments by Daniel R. Elliott III came as a House Judiciary subcommittee approved a bill Thursday that would eliminate exemptions from antitrust law for commercial railroad companies. The bill, introduced earlier this year by Rep. Tammy Baldwin, D-Wis., could face a hearing and a vote by the full committee as early as September.

Meanwhile, Sen. John D. Rockefeller, D-W.Va., chairman of the Senate Commerce Committee, and Sen. Herb Kohl, D-Wis., chairman of the Judiciary's antitrust subcommittee, are crafting a proposal to overhaul the Surface Transportation Board and repeal antitrust exemptions for railroads. The package, which would modify a bill introduced by Kohl earlier this year that was tabled, hasn't been unveiled.

Patti Reilly, a spokeswoman for the Association of American Railroads, a trade group representing CSX Corp. (CSX), Union Pacific Corp. (UNP), Burlington Northern Santa Fe Corp. (BNI) and Norfolk Southern Corp. (NSC), said the earlier bill was "overreaching" and would saddle railroads with "onerous" regulations.

"We maintain the system is in place and the system works," Reilly said.

Robert Szabo, executive director of Consumers United for Rail Equity, which represents shippers, said he was "heartened" by Elliott's testimony, which he viewed as part of a broader effort by the Obama administration and Congress to strengthen antitrust laws.

"Up until him, every chairman has refused to look at the competition issues affecting rail customers," Szabo said.

Companies that rely on railroads to transport their goods have long accused railroads of charging exorbitant prices, accusations that railroads deny.

During his confirmation hearing Wednesday, Elliott said his work as associate general counsel for the United Transportation Union, the largest railroad union, enables him to be sensitive to the concerns of railroads and shippers alike and that he would be fair in overseeing disputes.

Elliott is expected to win Senate confirmation as chairman of the Surface Transportation Board as early as next week. He would join the three-member board, which approves rail mergers and decides rate disputes between shippers and railroads.

Pressed by Rockefeller, Elliott suggested the 1980 Staggers Act that deregulated the industry was outdated, given that rail companies are financially stronger than they were then.

Elliott said shippers' concerns that the law has eroded competition and given railroads too much pricing power have been heard "loud and clear."

-By Josh Mitchell, Dow Jones Newswires; 202-862-6637; [e-mail]

(Alex Roth contributed to this report.)