USDA Makes 10 Recommendations to STB
May 22, 2000
USDA has made 10 recommendations to the Surface Transportation Board designed to protect the interests of agricultural producers, shippers and rural communities when railroads merge. STB is accepting public comment because the current regulations no longer are considered adequate to protect the public interest.
USDA. s 10 recommendations are that the STB should --
-Incorporate possible downstream and crossover effects of all future major railroad mergers upon the railroad industry, other railroad firms, other transportation modes, shippers and communities into its revised merger guidelines;
-Institute a rebuttable 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 existence of merger-related benefits and demonstrate that those benefits cannot be achieved by other means short of merger;
-Require that railroads involved in major railroad consolidations indemnify shippers and other railroads (during the merger implementation period) for costs incurred due to merger-related service interruptions and require binding arbitration of all claims which the consolidated railroad disputes;
-Continue to consider the ability of the merged firm to make the necessary infrastructure improvements before approving any major rail consolidation;
-Before approving any future major railroad consolidations, require the railroads involved to offer specific proposals to enhance competition and to mitigate any adverse competitive consequences of the consolidation upon shippers;
-In approving further major railroad mergers, require the merging railroads to keep all existing rail gateways open;
-Carefully analyze the impacts of future major railroad consolidations upon short line and regional railroads since significant quantities of grain and food products originate or terminate on these smaller railroads and because of the damages that diversion to truck transportation causes to the rural road infrastructure;
-Examine more closely merger applicants'estimates of the synergies and other public interest benefits when balancing the benefits of proposed major railroad mergers against societal costs;
-Consider the effects that different commercial and regulatory regimes between two countries can have upon cross-border trade and the potential international beneficiaries of a proposed transnational rail merger;
-When considering major transnational rail mergers or combinations, analyze the effect of a foreign government's jurisdiction on the rail operations of the resulting railroad and the influence of the Canadian Wheat Board, particularly on the distribution of railcar capacity among U.S. and Canadian agricultural shippers which could have impacts in world markets.