Railroad industry DNC donations add freight to regulation bill

Two western railroad companies are donating an unusually high amount — more than $1 million — to the Denver National Convention (DNC) host committee — at the same time that railroad regulation proponents say they’re close, for the first time in decades, to winning additional oversight of the rail industry.

The companies offering up their political support include Union Pacific (UP) and Burlington Northern Santa Fe’s (BNSF). Nebraska-based UP disclosed its $1 million donation to Democratic convention organizers; company officials have said that an additional donation has been made to the Republican National Convention, which will be held in Minneapolis-St. Paul, though they haven’t revealed that amount.

Burlington Northern Santa Fe, headquartered in Texas, refused to disclose its donations to either convention but is an official donor, according to the Denver host committee’s online list of sponsors.

Neither railroad was a donor of $100,000 or more four years ago, according to a report by the Campaign Finance Institute, a Washington, D.C.-based organization that tracks campaign contributions and expenditures.

In general, donating to presidential nominating conventions is essentially a “lobbying opportunity,” said Bob Duffy, chairman of Colorado State University’s political science department.

Campaign-finance laws restrict corporate donations to candidates but allow companies to give to convention host committees, a “loophole” that some political watchdogs say donors exploit for political influence.

The Denver host committee, the convention’s local organizing arm, has pledged to raise more than $40 million but, as of its last report in June, was still $11 million short of its fund-raising goal.

Steven Forsberg, a spokesman for BNSF, said the railroad has donated to previous convention host committees but could not provide the amounts of those gifts.

Forsberg did not respond to a request to explain why BNSF is donating to this year’s DNC host committee. The company also spent $3.6 million on lobbying efforts last year, up from $2.2 million in 2006.

Union Pacific agreed to an interview through an e-mail from spokesman Mark Davis.

“Both host committees asked for support for their respective conventions,” Davis said. “We were pleased to support those committees with a contribution.”

Union Pacific has already spent more than $4 million on lobbying efforts this year, according to the company’s lobbying registration form,putting the company on track to meet the almost $10 million mark, as they’ve done the past two years.

UP lobbyist Michael Rock did not immediately return a call seeking comment.

In 1980, the Staggers Act deregulated railroads, significantly decreasing the amount of federal oversight railroad companies were subject to and allowing individual firms to set their own shipping rates in place of an industry wide rate-setting formula.

If passed, The Railroad Antitrust Enforcement Act of 2007 would remove what proponents call the railroad industry’s “antitrust exemption,” or right to a monopoly of the rails, and give individual rail customers more rights to information about shipping rates as well as the flexibility to legally challenge those rates. Opponents say the Senate bill and its companion bill in the House would stifle an industry that only became profitable after deregulation 28 years ago.

Market analysts now consider UP and BNSF stocks a wise investment because the railroads have consolidated over the years since deregulation, giving them more pricing power, and have become more efficient, according to a recent New York Times article.

The legislation made its way out of both the House and Senate Judiciary committees for the first time this year because of support from Democratic leadership, said Bob Szabo, executive director of Consumers United for Railroad Equity, an association of railroad customers including chemical, energy and farming companies.

The proposed law has bipartisan support and backers in both convention host states, with James Oberstar, D-Minn., acting as a sponsor in the House and Colorado Representatives Ed Perlmutter, Marilyn Musgrave and Mark Udall signing on as co-sponsors.

CURE claims railroads are able to charge artificially high shipping rates because they own one of the last corporate monopolies in the country.

“We’re much closer than we’ve been,” Szabo said, referring to prospects for antitrust legislation.

The Association of American Railroads (AAR), a lobbying group representing freight rail companies as well as Amtrak, opposes the expansion of regulation.

AAR spokesman Tom White said that deregulation has been good for the railroad industry and the consumer, lowering prices substantially.

Freight-rail shipping prices have been cut in half since deregulation in inflation-adjusted dollars, according to an AAR report.

CURE members counter by claiming that 35 percent of rail traffic doesn’t have a choice between competing lines, leading railroads to increase shipping rates by up to 500 percent.

White said that regulation proponents have lobbied for a return to regulation every year since 1980 with little success.

“We naturally oppose [the proposed legislation] because the railroad industry was in desperate financial condition before deregulation … and we don’t particularly want to see a return to those days,” White said.

AAR takes all regulation efforts very seriously, he said, but doesn’t think CURE has made any substantial progress this year.

“I think we expect the wrangling to continue,” White said.

White declined to speculate on why the railroads would be writing checks to the host committees, but Szabo claimed the donations are part of an overall campaign to influence the politicians capable of enacting regulations.

“The railroads are intensely concerned that their monopoly power is getting curbed. … They are trying to ingratiate themselves any way they can,” Szabo said.



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J.C. O'Connell

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