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For Immediate Release Study: Freight Railroads Enriched Washington, D.C. (May 19, 2009) — A study released today by the Consumer Federation of America (CFA) shows that freight railroads are responsible for overcharges that cost American consumers $3 billion annually. The study provides the first comprehensive nationwide tally of the windfall that corporate freight railroads receive through their monopoly pricing power. The study conducted by the consumer watchdog group found that lax federal oversight has led to excessive industry consolidation from 40 railroads down to seven. Four of those railroads have broken up the U.S. into regional monopolies and control 90 percent of U.S. freight rail traffic. This creates immense market power for the railroads and leads to higher consumer prices for goods shipped by rail, such as agricultural commodities like corn and wheat, raw materials like steel and chemicals, and coal used for electricity generation. “If you’re tired of reading headlines about corporate greed in the face of job losses and tighter budgets for ordinary Americans, don’t look now,” said Glenn English, chairman of Consumers United for Rail Equity, a coalition of freight rail customers. “This CFA study provides a sobering reminder that the railroads’ monopoly power costs consumers money. Congress should take this opportunity to tackle the freight rail monopoly before another $3 billion is swindled from consumers.” The CFA study, entitled “Bulk Commodities and the Rails: Still Crazy After All These Years,” describes the need to address the problem of rail monopoly power as “urgent” and calls on Congress to enact a legislative solution. According to the study, “legislation is necessary because the regulators have failed to properly implement [the] provisions [of the Staggers Act] for a quarter of a century. There is no prospect that the STB [Surface Transportation Board] is willing or able to correct the problem on its own. The exemption from the antitrust laws that Congress granted to the railroads in the Staggers Act should be eliminated.” The study also calls for enhanced railroad oversight by the STB, the federal agency charged with regulating freight rail, to effectively protect shippers from abuse, and urges the STB to change its procedures for calculating railroad costs and the reasonableness of rail rates so that they more fairly estimate costs to shippers. CURE is seeking legislation to place the railroads under the nation’s antitrust laws, from which they are largely exempt. This legislation - the Railroad Antitrust Enforcement Act of 2009 (H.R. 233, S. 146) - passed the Senate Judiciary Committee on March 5 by a bipartisan vote of 14-0. The House Judiciary Subcommittee on Courts and Competition Policy is holding a hearing today on H.R. 233, the Railroad Antitrust Enforcement Act of 2009. CURE also supports enactment of legislation to reform the STB in order to create a more level playing field for customers and consumers. ### Consumers United for Rail Equity (CURE) represents a wide variety of rail customers including public utilities, rural electric coops, agriculture; chemical, ethanol, cement and other manufacturers, forest and paper companies, and their customers. For more information about CURE visit: www.railcure.org
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