WASHINGTON - The federal government essentially gave the go-ahead June 11 for the last round of giant railroad mergers in the United States, laying out new rules that lobbyists for chemical and plastics companies say favor the rail carriers.
The Surface Transportation Board, however, said its new rules will be substantially tougher on major railroads that want to merge. The STB said that because of the transitional service problems that have accompanied recent rail mergers, future mergers will ``bear a heavier burden.''
The board said it would be willing to consider measures - like reciprocal switching arrangements, track rights and eliminating restrictions on interchanges by short-line railroads - that have been advocated by plastics industry trade groups.
But the rules offer few specifics beyond requiring more paperwork from railroads on things like how they will manage service problems, according to Tom Schick, counsel for the distribution team at the American Chemistry Council in Arlington, Va.
``Basically, we don't think there's any rules there,'' he said. ``They are not looking at something to hold the railroads accountable for shipper damages.''
ACC wants every captive shipper to be given access to another railroad in any merger, and it wants STB to require railroads to quote proportional rates on so-called bottleneck routes, among other things.
The plastics industry was hurt by the severe service problems in Texas from the Union Pacific-Southern Pacific rail merger several years ago, and, after that, by the less severe problems from the split of Conrail in the East.
Intense consolidation in the rail industry has left the United States with four major railroads, and most observers, including STB, expect that in short order there will be just two or three big railroads in North America.
The Association of American Railroads said any merger should be required only to preserve existing competition, not enhance it. And it said that railroads face substantial competition from other forms of transportation.
But Diane Duff, executive director of the Washington-based Alliance for Rail Competition, said the proposal does nothing for companies that can ship effectively only by rail.