D.C. Event Draws Attention to Captive Rail Issue

Leaders of the National Association of Wheat Growers convened recently in Washington, D.C. for their annual March board meeting and to visit members of Congress and other federal officials regarding ag policy issues including emergency energy assistance and the future Farm Bill.

Rail competition also was an issue, and a number of NAWG leaders participated in an affiliated event, Rail Customer Coalition Day, which attracted over 220 representatives from the agriculture, energy, chemical and other industries from across the U.S. to draw attention to the issue of railroad captivity.

Rail captivity happens when a customer must depend on a single railroad for transportation needs at any point on a route. This control allows the railroad company to dictate price and service conditions for the entire shipment.

Often, remedies from the government body charged with mediating disputes between railroads and customers, the Surface Transportation Board, are so time consuming, complicated and expensive that they provide no relief for customers. These cases generally take years and millions of dollars to resolve. 

In addition, railroads are not subject to federal antitrust provisions.

Two bills before Congress, S. 919 and H.R. 2047, would mitigate these problems by:

• requiring rail carriers, upon shipper request, to provide a rate quote for service;
• preventing the creation of “paper barriers,” which restrict the ability of Class II and Class III rail carriers to interchange traffic with Class I carriers;
• allowing the STB to designate a state as an “Area of Inadequate Rail Competition” and requiring the STB to remedy the issue;
• allowing either a shipper or a rail carrier to submit a dispute over rail rates, rail service and other matters under the jurisdiction of the STB for “final offer” arbitration.

Another bill, H.R. 3318, would remove the antitrust exemptions currently enjoyed by the railroads.

The captive rail day started with a breakfast rally addressed by Sen. Conrad Burns (R-Mont.), Sen. John D. Rockefeller IV (D-W. Va.) and Sen. Craig Thomas (R-Wyo.).

Burns said it was necessary for captive rail customers to “tell the story” to members of Congress, and that the fight for rail equity was necessary for a strong economy.

Sen. Rockefeller noted that his great-grandfather might have appreciated the railroad’s monopoly-like activities, but that he did not. “I will never give up on this subject because my state is getting killed by it,” he said.

NAWG has been involved in the fight to pass S. 919 and H.R. 2047, because rail captivity is especially hurtful for farmers, who can’t pass on unfair rail rates to their customers.

Sherman Reese, an Oregon wheat grower and NAWG’s immediate past president, participated in Captive Rail Customer Day, and said teaming up with other industries adversely affected by rail captivity is important.

“The lack of competition in rail shipping is a huge burden on the agriculture industry in general and on wheat growers in particular,” Reese said. “Wheat producers are price-takers, not price-makers. Rail captivity makes a profit even harder to achieve for companies in many industries, including farming. We all have to work to get this problem solved.”

Captive Rail Customer Day activities were sponsored by the Alliance for Rail Competition (www.railcompetition.org) of which NAWG is a member, and Customers United for Rail Equity (www.railcure.org).

A NAWG briefing paper on the rail issue (as well as other issues) can be found on the NAWG’s web site, www.wheatworld.org.  Go to ‘NAWG issues.’