WASHINGTON - The Society of the Plastics Industry Inc. called it bad precedent and bad government, but the federal Surface Transportation Board July 3 approved the formation of the largest railroad operation in history with the merging of the Union Pacific and Southern Pacific railroads. The SPI board voted its opposition earlier this year, contending that the proposal would not require the combined rail giant to divest parallel rail lines.
Larry Thomas, president of the Washington-based SPI, came out against the merger in a July 8 statement.
``SPI disagrees with the Surface Transportation Board's decision to substitute federal oversight for the free-market system.''
STB had attached 35 conditions to the merger that require, among other things, regular reporting of the progress of the merger to the STB.
``If the Union Pacific had been required to di-vest itself of parallel tracks, as SPI and many others urged, true rail competition would have been preserved in the Gulf Coast region. Instead, the board devised an ill-conceived scheme of trackage and storage rights for [competing] Burlington Northern-Santa Fe [railroads] and five years of STB oversight.''
Prior to the merger, parallel-lines-of-rail competitors were common in the petrochemical-heavy Texas Gulf Coast region, where several large SPI-member companies produce plastic resins. The rail system is the principal bulk carrier of the majority of the resins produced in the area.
``This isn't competition,'' Thomas said of the merger. ``It's a lame effort to compensate for the fact that the STB has created a rail monopoly in a region critical to the plastics industry.''
Thomas concluded: ``This is bad precedent and bad government.''
STB Chairwoman Linda J. Morgan said the ruling should withstand any court fight from competitors or unhappy customers.
SPI officials present for the STB's vote, including Maureen Healey, director of federal affairs for transportation issues, were not prepared to comment on whether SPI would challenge the ruling in court.