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Oct 1, 2006 12:00 PM

America needs reliable freight rail service to remain strong and create jobs, but the monopoly power of railroads and ineffective Surface Transportation Board (STB) oversight are hurting America's competitiveness, the American Chemistry Council (ACC) told the United States Senate Subcommittee on Surface Transportation and Merchant Marine.

Testifying on behalf of the ACC, John McIntosh, president of Chlor Alkali Products for Olin Corp, said, “The system is broken and Congress needs to fix it” by providing a clear signal to the STB, passing legislation to restore competition, and ensuring that railroads are covered by antitrust statutes.

Reliability is crucial for chemical companies and other shippers, but without competition, monopoly rail carriers have no incentive to deliver efficient, predictable service. In the 1970s, there were 63 major US railroads. Today, there are seven, and 90% of the rail traffic is handled by five.

Consequently, nearly two-thirds of ACC member company facilities are “captive customers; that is, customers with service from a single monopoly railroad.” Because we are captives, “we have no way to negotiate, beg, or buy reliability,” McIntosh said.

“Railroad monopolies are driving a ‘golden spike’ through the heart of American competitiveness,” McIntosh told the panel. Captive customers are “completely at the mercy of the carrier,” and “free and fair market forces no longer ride American rails.”

The long history of anti-competitive decisions by the STB is further eroding US chemical industry competitiveness. That's why it's time to “tear down the barriers to competition,” and pass S. 919, the Railroad Competition Act of 2005, ACC urged.