Similar bills have faltered in the past. And, the current Railroad Antitrust Enforcement Act of 2007 is probably headed for the same fate. The reality is that it is easier for lawmakers to let the rail carriers earn fair profits that would then be reinvested back into building new lines than to pass sweeping legislation. That precedence will probably hold unless energy prices rise to the point that consumers everywhere are screaming.

It has not reached that point. In fact, data released late last year by the Energy Information Administration says that coal inventories at the nation's electric utilities ended 2006 at their highest levels in four years, or 125.6 million tons. That's 28 percent over a year ago. The information unit also said it expects inventory levels to rise again in 2007, reaching 139 million tons by the end of the year. That simply means that utilities won't have problems getting coal to shovel into their plants.

Under the current system, the railroads are given an exemption from certain rules of competition by the U.S. Surface Transportation Board. In areas of the country where the infrastructure is inadequate, the board is given the authority to regulate rates. The bills now winding their way through the House and Senate committee process would ensure a workable rate challenge process for those rail customers without access to transportation competition and empower the transportation board to be pro-active when it has knowledge of unreasonable railroad practices.

Constrained System

Railroad industry consolidation over the last 20 years has produced four class I railroads that provide more than 90 percent of the nation's rail transportation. Many industries -- known as "captive shippers" -- are served by only one railroad and face ever-increasing rates. The shippers say that they must then pass these price hikes along to consumers.

To boot: Railroad mergers and acquisitions are exempt from antitrust laws and are reviewed solely by the Surface Transportation Board. Railroads that engage in collective ratemaking are also exempt from those same laws.

"By providing customers with access to rail service options and a venue to challenge market power abuses, as this legislation does, we will be well on our way to establishing a healthy, competitive system for the future," says Glenn English, CEO of the National Rural Electric Cooperative Association. The association's members rely on rail transported coal for most of the power they generate.

A constrained system works, in part, to the benefit of the rail industry. The sector's overall return on investment has risen from 2 percent in the 1970s to 7 percent today. The rail companies, however, are investing an average of $6 billion a year in infrastructure and equipment -- a commitment that it says will continue because more rail lines are a win-win proposition.

For its part, one of the Big Four rail carriers, Union Pacific, says that it moved 194 million tons of coal from Wyoming's Southern Powder River Basin during 2006. That's a new record for the railroad.

Some of the rise can be contributed to the subsequent lifting of an embargo on new contracts that were related to rail safety issues. But, the rail carrier says that much of the recent increase in shipments is because its profits have been reinvested in capacity improvements and new processes. Not only has it added new trains running to the basin but it has also augmented train size. Furthermore, Union Pacific along with Burlington Northern Santa Fe announced last year a dual effort to improve existing lines running into the basin.

The railroads collectively argue that the current system is working. "Re-regulation would be ruinous," says the Association of American Railroads. "It would prevent railroads from earning enough to adequately maintain their existing system, much less make the huge investments in new capacity that must be made if our future freight transportation needs are to be met."

Conversely, utilities and coal producers are concerned with whether transportation systems have the ability to move efficiently and cost-effectively their products. Take Peabody Energy, which reports records for 2006 shipments in the Powder River Basin. But, it says that it is unable to meet new demand because of voids in the network.

"Over the past several years, industries that are served by only one railroad have faced spiking rail rates," says Sen. Herb Kohl, D-WI, author of one of the bills to curb antitrust exemptions. "They are the victims of price gouging by the single railroad that serves them, price increases which they are forced to pass along, ultimately, to consumers."

Those are legitimate grievances and any industry that receives exemptions from the laws of competition deserves to be scrutinized. But the rail carriers' position -- that they must be profitable to invest new capital toward expanding their infrastructure -- still carries lots of weight on Capitol Hill. That argument will likely triumph again.