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Senator Amy Klobuchar Pushes Rail Legislation to Help MN Farmers, Energy Producers & Businesses Stay Competitive

March 15, 2007

(Washington, D.C.) Joining leaders of farm, energy and utility organizations at a press conference, U.S. Senator Amy Klobuchar today announced her support for bipartisan legislation that levels the playing field for captive shippers trying to get their goods to market. The bill would take major action to end the all-too-common railroad practices of charging unreasonable rates to shippers and would create a fairer, more efficient rate challenge procedure at the Surface Transportation Board. Congressman Jim Oberstar of Minnesota's 8th district and Chairman of the House Transportation Committee will introduce similar legislation in his chamber.

"Our farmers, energy producers and manufacturers have endured unreasonably high rail rates for too long. As I've traveled across Minnesota, I have listened to their concerns, and with this legislation I hope to answer them." said Klobuchar. "This bill will allow rail shippers to secure competitive rates and to get meaningful relief from the Surface Transportation Board. It is smart, sensible, and fair, and I will work hard to make it law."

Klobuchar also said that this issue is not limited to shippers; consumers, especially customers in rural areas, are burdened with higher costs for electricity and other products because shippers have to pass their costs along.

Klobuchar highlighted a Minnesota business, Blandin Paper, which has a paper plant in Grand Rapids, Minnesota. Blandin reported that it cost roughly the same to ship paper from its plant in Finland to a customer in central Indiana as it did to ship paper from Grand Rapids to that same customer along a captive rail line.

Rail rates for certain energy producers in Minnesota have doubled in the past two years. Klobuchar noted that the current system of rail rate regulation is broken in two major ways and that rail shippers, especially captive shippers who only have access to one rail line, are suffering the consequences. First, rail customers have had to pay unfairly high prices to ship their goods to the market; and second, rail customers have been denied a fair and efficient process for challenging rail rates and railroad practices.

The Senate legislation addresses the first problem by lowering rates for shippers by:

Giving shortline railroads the freedom to seek competitive agreements when working with Class One railroads; requiring large railroads to quote rates to any destination along their rail line giving shippers competitive choices in deciding the most cost effective way to move their goods; Setting a better standard for determining the reasonableness of rates imposed by monopoly railroads.

The legislation addresses the second problem by removing the large filing fees, adjusting the burden of proof and empowering the federal Surface Transportation Board to take proactive steps to improve competitiveness. The end result with be a faster, fairer process and more reasonable rates across the board.