WASHINGTON — Federal regulators rejected attempts by two resin manufacturers and a coalition of trade groups to boost rail competition in the Gulf Coast, saying that the service crisis in the region is over.
The Surface Transportation Board, in a Dec. 21 decision, turned down proposals from Dow Chemical Co. and Formosa Plastics Corp. USA to build costly rail yards at their Texas plants that would let them connect with other railroads.
And, in an expected move, the STB turned down a plan from the Society of the Plastics Industry Inc., the Chemical Manufacturers Association, two railroads and a Texas state agency. That plan would have expanded neutral switching in Houston, forced Union Pacific Railroad Co. to sell some of its facilities in the Gulf region and let other railroads build new lines.
The requests are an outgrowth of service meltdowns of the past two years, when the dominant railroad in the region, Union Pacific, ran into trouble digesting its merger with Southern Pacific.
SPI President Larry Thomas called the STB decision the ``final insult to shippers'' and said that SPI's request was aimed at restoring competition that existed before the merger. A CMA official said the coalition will turn its attention to Congress.
A Union Pacific spokesman praised the STB decision, saying ``it backed up all our arguments'' that problems stem from poor infrastructure in the Gulf Coast, not from a lack of competition.
``Clearly the board agreed with us and felt no need to impose competition that didn't exist before the merger,'' said UP spokesman John Bromley.
In rejecting the SPI proposal, STB said the service problems were caused by an expanding economy, bad weather and mistakes UP made in implementing the merger. While STB said the crisis was not caused by a lack of competition, the agency noted that only Congress has the authority to make the changes sought by Washington-based SPI.
Dow and Formosa both sought STB permission to build rail yards and connect their mammoth complexes in Texas to a second railroad, Burlington Northern Sante Fe Railway Co. Both were served by just one railroad before the merger.
Dow wanted to build a 500-car yard at its Freeport campus, in a $20 million partnership with BNSF. Formosa wanted a yard for several hundred cars at its Point Comfort, Texas, complex.
The resin manufacturers argued that UP service still is not back to normal.
