Free The Fine Print: How Big Companies Use "Plain English" to Rob You Blind by David Cay Johnston Page A

airlines do. Instead, the Staggers Act encourages railroads to negotiate individually with their customers on the theory that this will promote competition. The Staggers Act also lets the railroads
require
that the contract terms be kept confidential, even when the customer is a public entity such as the Lafayette Utilities System.
    “I’d tell you the terms of our contract if I could,” Huval said. Even though he couldn’t tell me the particulars, he did describe the big picture. According to Huval, Union Pacific’s monopoly pricing costs his community about $6.5 million per year. And the figure keeps rising.
    Union Pacific’s picking of Lafayette’s pockets works out to more than a dollar per week for every man, woman and child in Lafayette, more than $200 annually for a family of four. That’s more than enough to finance a 10 percent cut in Lafayette property taxes. Or it could cover free electricity to Lafayette schools and colleges, relieving taxpayers of that burden, with enough left over for a small property-tax reduction.
    Looked at another way, that $6.5 million per year could be spent on local goods and services for the benefit of Lafayette’s businesses and workers. Instead, it is extracted from the wallets of local residents andbusinesses and sent to Omaha, home to both Union Pacific and BNSF owner Warren Buffett.
    Lafayette is far from alone in being railroaded into paying higher prices. Charging monopoly rates for an entire route, not just the small portion served by one railroad, is common. Few rail customers have direct access to two or more lines, and railroads work hard to make sure they can protect their monopoly pricing power. Since half the electricity in America comes from burning coal, we can multiply the numbers from Lafayette by all the communities whose electric power comes from burning coal and reach the unsurprising but still shocking conclusion that billions of dollars are being extracted through monopoly pricing. The total cost of monopoly pricing nationwide is easily $6 billion per year; if Lafayette’s experience is in the middle range of price gouging, the cost may exceed $8 billion per year nationwide.
    In a quirky turnabout, the “bottleneck” decision from 1996 was challenged by another utility, none other than Warren Buffett’s MidAmerican Electric Holdings. In early 1999, the decision of the Eighth Circuit Court of Appeals made clear the judges did not agree with the policy; still, they upheld the bottleneck decision. The decision found that, since the rationale given for “bottleneck” pricing was neither arbitrary nor capricious, it would stand.
    COUNTING CARS AND CALCULATING COMPETITION
    Monopoly rates allowed by government rules are just part of the story of how monopoly railroads pollute the economy. The official data on how many freight cars the railroads own suggest a decline in the American rail system, but the actual number of railcars in use has gone up, not down. The explanation for this apparent contradiction is that railroads now demand that more customers supply their own railcars.
    Let’s go back to Lafayette, a city of a little more than 120,000 people. As a railroad customer, it had to pay half the $16.5 million cost of buying 246 aluminum railcars. The railroad paid nothing, since customers of neighboring electric-utility systems paid the balance. For residents of Lafayette, the cost came to about $200 for every household for the new cars.
    Big railroads also erect “paper barriers” to block competitive pricing. The big railroads go to the myriad little mom-and-pop railroads, making offers they cannot refuse: agree to an exclusive relationship—or get cutoff. As Mark Cooper, director of research at the Consumer Federation of America puts it, paper barrier contracts memorialize, in essence, the edict “Thou shalt not compete or do anything that promotes competition.”
    What does the railroad industry have to say for itself? In speeches, in testimony