WASHINGTON — The plastics industry and other shippers face an uphill battle to make big changes in rail regulation in Congress, if an April 22 hearing before a key House panel was any indication.
Emboldened by the attention given to widespread problems on the Union Pacific Railroad Co.'s network in the Gulf Coast, rail shippers are urging Congress to do things like toughen railroad antitrust laws, reduce a railroad's ability to control bottleneck rail segments or let competitors use each other's rail lines.
But members of the Railroad Subcommittee questioned whether government should intervene and asked, in pointed exchanges, whether chemical firms want lawmakers telling them to share their facilities with competitors.
The powerful chairman of the Transportation and Infrastructure Committee, Rep. Bud Schuster, R-Pa., told the hearing that the rail industry has come back from financial ruin since it was deregulated 20 years ago. While there are ``enormous problems'' on some railroads, he said he was ``very interested in making sure we don't undo all the progress we've made in the rail industry.''
The chairman of the rail subcommittee, Rep. Robert Franks, R-N.J., said in an interview after the hearing that the rail industry is consolidating, but he is unsure if there are widespread abuses by railroads.
``It's going to be a challenge to define what response is most appropriate,'' he said.
The House reaction contrasts with a Senate hearing held in late March, when members of a Senate subcommittee grilled federal regulators and said they planned to examine whether rail regulation is working.
Some senators also have prodded the Surface Transportation Board into reviewing the state of rail competition, but plastics industry lobbyists have said little support seems to exist for big changes beyond that small group of senators.
Congress must renew the STB's charter this year, opening a window to make changes in rail regulation.
The Society of the Plastics Industry Inc. testified at the April 22 hearing. Marc Levine, president of resin distributor United DC in Houston, told the hearing that few industries are as dependent on rail as plastics.
Washington-based SPI said 80 percent of resin is shipped by rail, with 75 percent of those shippers captive to a single railroad. That can raise rates 15-60 percent over competitive routes, Levine said.
Much of the hearing examined railroads' arguments that changes pushed by SPI and others would cut profit, weakening their ability to attract capital and make investments to improve networks.
Most analysts who testified said the rail industry is not as attractive to investors as most other industries, but said railroads will need large doses of new investment to increase productivity.
Alfred Kahn, a professor at Cornell University in Ithaca, N.Y., and a witness for rail shippers, said railroads remain good investments because their stocks sell for about twice book value.
But Rep. Spencer Bachus, R-Ala., said airline stocks routinely trade at 10 times their book value, Coca-Cola Co. for 37 times book value and General Electric Co. for more than 20 times book value.