Today, the Competitive Enterprise Institute sent a letter signed by 21 free market groups to the Surface Transportation Board urging the board to withdraw its proposed rule concerning a freight railroad reciprocal switching mandate. We believe the future of freight rail investment and quality service is at risk from unnecessary, harmful government restrictions. Text of the letter is below. See also this blog analysis.
Re: Docket No. EP 711 (Sub-No. 1)
Dear Chairman Begeman, Vice Chairman Fuchs, and Member Oberman,
We, the undersigned, wish to congratulate and welcome you to yourappointments. The Surface Transportation Board (STB) plays a vital role in thegrowth of American commerce and we commend your efforts to promote a free flowof commodity traffic to ensure U.S. economic competitiveness in the years tocome.
To that end, we urge the STB to adhere to its statutory mandateand continue its measured approach to regulation of the railroad industry. TheU.S. experience with regulatory intervention into the operations of railcarriers has been nothing short of disastrous. These compounded missteps overseveral decades nearly destroyed a vital American industry and led Congress totake the extraordinary step of terminating the Interstate Commerce Commission,in addition to substantially deregulating the railroad industry.
We are deeply concerned about the stalled competitive switchingrulemaking. The STB argued that its inability—and the inability of theInterstate Commerce Commission before it—to uncover any evidence ofanticompetitive conduct on the part of the railroad industry justifies its callfor eliminating the post-deregulation requirement that anticompetitive conductbe found before mandatory reciprocal switching could be imposed.
The STB provided no economic analysis to support its conclusionthat the anticompetitive conduct requirement “effectively operated as a bar torelief rather than as a standard under which relief could be granted.” Indeed,this absence of analysis could just as easily be used to support the oppositeconclusion: that the lack of successful demonstrations by shippers ofanticompetitive abuse on the part of carriers effectively shows no such abuseexists and thus no relief is warranted.
Many industry observers have expressed concern that imposingforced reciprocal switching and reducing rate flexibility will come at theexpense of network investment. Many have also observed that the proposedcompetitive switching framework is backdoor rate regulation designed tosidestep established procedures defined in statute. The proposed competitiveswitching rule threatens railroads, shippers, and consumers with degradedservice quality and higher prices on goods, which would naturally follow theresulting reduction in operational efficiencies and private railroad investment.
The railroad industry, like its competing modal industries, isundergoing significant transformation. The competitive transportation landscapeof the future—with the rise of new technologies and accompanying businesspractices—will undoubtedly look drastically different than today’s landscape.Heavy-handed administrative action based on outdated regulatory analysis isdangerous and needlessly threatens the competitive viability of rail carriers.
Over the last 30 years, Congress has repeatedly rejected railroadre-regulation, regardless of political control. On numerous occasions, it hasexplicitly rejected attempts to eliminate the anticompetitive conductrequirement, recognizing that reducing private railroad investment is not inthe public interest. We strongly urge the STB to withdraw the proposedcompetitive switching rule. The STB should take action to improve its economicanalysis in rulemakings in order to avoid similar missteps in the future.
Sincerely,
Marc Scribner, Senior Fellow
Competitive Enterprise Institute
James L. Martin, Founder/Chairman
Saulius “Saul” Anuzis, President
60 Plus Association
Phil Kerpen, President
American Commitment
Steve Pociask, President/CEO
The American Consumer Institute
Lisa B. Nelson, CEO
American Legislative Exchange Council
Grover Norquist, President
Americans for Tax Reform
Norman Singleton, President
Campaign for Liberty
Andrew F. Quinlan, President
Center for Freedom and Prosperity
Jeff Mazzella, President
Center for Individual Freedom
Tom Schatz, President
Citizens Against Government Waste
Jon Decker, Executive Director
Committee to Unleash Prosperity
Matthew Kandrach, President
Consumer Action for a Strong Economy
Jason Pye, Vice President of Legislative Affairs
FreedomWorks
Tim Chapman, Executive Director
Heritage Action
Heather Higgins, CEO
Independent Women’s Voice
Tom Giovanetti, President
Institute for Policy Innovation
Harry C. Alford, President/CEO
National Black Chamber of Commerce
David Ridenour, President
National Center for Public Policy Research
Pete Sepp, President
National Taxpayers Union
Nick Zaiac, Commercial Freedom Fellow
R Street Institute
Karen Kerrigan, President & CEO
Small Business & Entrepreneurship Council
