A3O-LincMtf Farming, Saturday, Juna 3, 2000
USDA Requests Changes To Railroad Merger Regulations
WASHINGTON, D.C. On
May 16, the USDA filed com
ments before the Surface Trans
portation Board (STB)
regarding proposed changes to
its regulations governing major
railroad mergers.
STB has requested public
comment since it believes the
current regulations no longer
adequately protect the public in
terest. The comments address
those issues most related to
USDA’s mandate and expertise,
such as downstream effects,
safeguarding rail service, pro
moting and enhancing competi
tion, short line and regional
railroads issues, merger-related
public interest benefits, and
cross-border issues.
“In 1999, American fanners
produced more than 16 billion
bushels of grain and oilseeds.
Agricultural shippers pay more
than $3.5 billion annually in
freight costs to U.S. railroads to
transport agricultural products.
Nearly half of all grain pro
duced in the U.S. moves to
market by rail,” said Michael V.
Dunn, undersecretary for
USDA’s marketing and regula
tory programs. “Therefore, the
issue of rail mergers is a matter
of great concern.”
USDA has made these 10 rec
ommendations designed to pro
tect the interests of agricultural
producers, shippers, and rural
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communities:
1. The STB incorporate pos
sible downstream and crossover
effects of all future major rail
road mergers upon the railroad
industry, other railroad firms,
other transportation modes,
shippers, and communities into
its revised merger guidelines.
2. The STB institute a rebutt
able presumption against future
major railroad mergers unless
the merging railroads come up
with a plan that mitigates any
adverse consequences of the
merger upon shippers and other
railroad firms, prove the exis
tence of merger-related benefits,
and demonstrate that those ben
efits cannot be achieved by other
means short of merger.
3. The STB require that rail-
roads involved in major railroad
consolidations indemnify
shippers and other railroads
during the merger implementa
tion period for costs incurred be
cause of merger-related service
interruptions and require bind
ing arbitration of all claims
which the consolidated railroad
disputes.
4. The STB continue to con
sider the ability of the merged
firm to make the necessary in
frastructure improvements
before approving any major rail
consolidation.
5. The STB, before approving
any future major railroad con
solidations, require the railroads
involved to offer specific propos
als to enhance competition and
to mitigate any adverse competi
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tive consequences of the consoli
dation upon shippers.
6. The STB, in approving fur
ther major railroad mergers, re
quire the merging railroads to
keep all existing rail gateways
open.
7. The STB carefully analyze
the impacts of future major rail
road consolidations upon short
line and regional railroads since
significant quantities of grain
and food products originate or
terminate on these smaller rail
roads and because of the dam
ages that diversion to truck
transportation causes to the
rural road infrastructure.
8. The STB examine more
closely merger applicants’ esti
mates of the synergies and other
public interest benefits when
balancing the benefits of pro
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posed major railroad mergers
against societal costs.
9. The STB consider the ef
fects that different commercial
and regulatory regimes between
two countries can have upon
cross-border trade and the po
tential international beneficiar
ies of a proposed transnational
rail merger.
10. The STB, when consider
ing major transnational rail
mergers or combinations, ana
lyze the effect of a foreign gov
ernment’s jurisdiction on the
rail operations of the resulting
railroad and the influence of the
Canadian Wheat Board, partic
ularly on the distribution of rail
car capacity among U.S. and
Canadian agricultural shippers
which could have impacts in
world markets.
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