UPDATE:Senate Panel Approves Bill Without Rail Antitrust-Exemption Repeal

A U.S. Senate committee approved legislation Thursday to impose tighter regulation of the rates that freight railroads charge shippers to transport goods, but the bill lacks the tough antitrust provisions pushed by some Democrats.

The bill, unveiled by Senate Commerce Committee Chairman John D. Rockefeller (D., W.Va.) and approved by a voice vote, caps months of negotiations among lawmakers, shippers and freight rail companies. It is designed to expand shippers' access to competing railroads and make it easier for them to challenge rates before the Surface Transportation Board, the federal agency that regulates the industry. Shippers hope that the measures will bring down prices charged by railroads to use their tracks, after years of shippers' complaints that rail companies have too much pricing power.

But the bill is much narrower than some Democrats originally envisioned. It drops a provision that would have stripped railroads of antitrust immunity. Supporters of the provision argued that such a step is needed to increase competition in an industry dominated by four companies. Railroads contended that the measure would break up decades-old mergers and threaten their viability.

Rockefeller said he supported tougher antitrust enforcement but that a repeal of antitrust exemptions had no chance of clearing the full Senate, given industry opposition.

The antitrust provision would be "a deal breaker for railroads," Rockefeller told reporters after Thursday's vote. "If I put that in, the bill goes down."

Rockefeller vowed to continue to work with senators about possible changes but that the current bill would likely pass in its current form.

He said his stance has upset some Democrats, including Sen. Herb Kohl (D., Wis.), who earlier this year withdrew a bill to repeal railroads' antitrust exemptions after Rockefeller said lawmakers needed more time to draft the legislation.

Kohl said Thursday that he wouldn't give up on the measure.

"I believe and expect that when the bill is considered by the full Senate, it will include an effective repeal of the railroads' antitrust exemption," Kohl said in a statement. "The railroads' antitrust exemption is wholly undeserved, shared by virtually no other industry, and clearly anti-competitive."

Shippers said the current bill would give them more leverage by imposing new regulations, including one that they said would force railroads to open "switching" facilities to expand route options.

"What shippers want more than anything is access to competition," said Robert Szabo, executive director of Consumers United for Rail Equity, which represents shippers. "This bill knocks down regulatory barriers that have kept shippers from getting access to competition."

Edward Hamberger, president and chief executive of the Association of American Railroads, a trade group representing CSX Corp. (CSX), Union Pacific Corp. (UNP), Burlington Northern Santa Fe Corp. (BNI) and Norfolk Southern Corp. (NSC), said he is relieved that the bill lacks antitrust provisions but still has concerns.

"As you read through this bill, there's just a much more broad involvement of the STB in the operations of the railroad industry," Hamberger said. "We don't know what the net impact is."

-By Josh Mitchell, Dow Jones Newswires; 202-862-6637; joshua.mitchell@dowjones.com

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