A Political Lesson for Railroads

WASHINGTON -- The Kabuki goes on in Washington between railroads and their customers over regulatory legislation and policy. For those who may not be familiar with the term, Kabuki refers to the highly ritualistic Japanese dance, writes Lawrence Kaufman in a Journal of Commerce Online editorial.

Railroads would appear to have the upper hand, inasmuch as they want absolutely nothing, normally the easiest outcome to achieve in Washington.

Rail customer groups, on the other hand, are pressing for change that would result in more rail-to-rail competition than currently exists. The shipper view is that railroads are abusing their market power and the situation has become steadily worse for shippers since rail mergers reduced the number of potential competitors and the Surface Transportation Board consistently has interpreted the Interstate Commerce Act in a way that favors railroads.

Convinced that they will not receive redress from the STB, the various shipper groups have been pressing Congress to hold hearings and pass legislation that will rebalance - or unbalance, depending which side you are on - the railroad-customer relationship.

Shippers, strangely allied with rail unions, have managed to keep the Surface Transportation Board from being reauthorized for three years. That's not much to show for the effort and money they have invested because, in reality, that has meant nothing. Congress simply keeps the regulatory agency alive with continuing resolutions. But hope springs eternal, and there always is a chance that a reauthorization measure might be crafted that includes a mandate to deal with some of the shipper issues differently than STB Chairman Linda J. Morgan has done up to now.

Morgan did just that when she testified at her reconfirmation hearing that she interpreted the law the way she does and if the committee felt a need for a different regulatory approach it would have to change the law.

It is beginning to look as though there may be some glacial movement in the three-year standoff. The Senate Transportation Appropriations Subcommittee, chaired by Sen. Richard Shelby, R-Ala., held a hearing on the issue of rail market abuse last week. It was the second such hearing the committee has held in less than a year.

The appropriations subcommittee hearing is one of the reasons I call this a Kabuki. It's ceremonial. The committee has no substantive jurisdiction over the Interstate Commerce Act, although if it felt strongly enough it could try to force the STB to do its will by withholding funding for the agency. That would bring the Shelby subcommittee into conflict with the Senate Commerce Committee, which does have jurisdiction, and we all know what happens when the elephants dance: the grass gets trampled.