The President, surrounded by members of his Cabinet, signs the Executive Order. Transportation Secretary Pete Buttigieg is at far left.

EXECUTIVE ORDER: PROMOTING COMPETITION IN THE AMERICAN ECONOMY (Excerpts)

By the authority vested in me as President by the Constitution and the laws of the United States of America, and in order to promote the interests of American workers, businesses, and consumers, it is hereby ordered as follows:

Section 1. Policy

A fair, open, and competitive marketplace has long been a cornerstone of the American economy, while excessive market concentration threatens basic economic liberties, democratic accountability, and the welfare of workers, farmers, small businesses, startups, and consumers. The American promise of a broad and sustained prosperity depends on an open and competitive economy. For workers, a competitive marketplace creates more high-quality jobs and the economic freedom to switch jobs or negotiate a higher wage. For small businesses and farmers, it creates more choices among suppliers and major buyers, leading to more take-home income, which they can reinvest in their enterprises. For entrepreneurs, it provides space to experiment, innovate, and pursue the new ideas that have for centuries powered the American economy and improved our quality of life. And for consumers, it means more choices, better service, and lower prices.

Robust competition is critical to preserving America’s role as the world’s leading economy. Yet over the [past] several decades, as industries have consolidated, competition has weakened in too many markets, denying Americans the benefits of an open economy and widening racial, income, and wealth inequality. Federal Government inaction has contributed to these problems, with workers, farmers, small businesses, and consumers paying the price. Consolidation has increased the power of corporate employers, making it harder for workers to bargain for higher wages and better work conditions.

Section 2. The Statutory Basis of a Whole-of-Government Competition Policy

The antitrust laws, including the Sherman Act, the Clayton Act, and the Federal Trade Commission Act, are a first line of defense against the monopolization of the American economy. The antitrust laws reflect an underlying policy favoring competition that transcends those particular enactments … The agencies that administer such or similar authorities include the Department of the Treasury, the Department of Agriculture, the Department of Health and Human Services, the Department of Transportation, the Federal Reserve System, the Federal Trade Commission (FTC), the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, the Federal Communications Commission, the Federal Maritime Commission, the Commodity Futures Trading Commission, the Federal Energy Regulatory Commission, the Consumer Financial Protection Bureau, and the Surface Transportation Board.  

Section 4. The White House Competition Council

There is established a White House Competition Council (Council) within the Executive Office of the President. The Council shall coordinate, promote, and advance Federal Government efforts to address overconcentration, monopolization, and unfair competition in or directly affecting the American economy … The Council shall work across agencies to provide a coordinated response to overconcentration, monopolization, and unfair competition in or directly affecting the American economy. The Council shall also work with each agency to ensure that agency operations are conducted in a manner that promotes fair competition, as appropriate and consistent with applicable law … The Council shall be led by the Assistant to the President for Economic Policy and Director of the National Economic Council, who shall serve as Chair of the Council.

The Council shall consist of the  Secretary of the Treasury; Secretary of Defense, Attorney General; Secretary of Agriculture; Secretary of Commerce; Secretary of Labor; Secretary of Health and Human Services; Secretary of Transportation; Administrator of the Office of Information and Regulatory Affairs; and  the heads of such other agencies and offices as the Chair may from time to time invite to participate.

The Chair shall invite the participation of the Chairs of the FTC, Federal Communications Commission and Federal Maritime Commission; the Director of the Consumer Financial Protection Bureau; and the Chair of the Surface Transportation Board. Members of the Council shall designate, not later than 30 days after the date of this order, a senior official within their respective agency or office who shall coordinate with the Council and who shall be responsible for overseeing the agency’s or office’s efforts to address overconcentration, monopolization, and unfair competition.

To further competition in the rail industry and to provide accessible remedies for shippers, the Chair of the Surface Transportation Board (Chair) is encouraged to work with the rest of the Board to:

• Consider commencing or continuing a rulemaking to strengthen regulations pertaining to reciprocal switching agreements pursuant to 49 U.S.C. 11102(c), if the Chair determines such rulemaking to be in the public interest or necessary to provide competitive rail service.

• Consider rulemakings pertaining to any other relevant matter of competitive access, including bottleneck rates, interchange commitments, or other matters, consistent with the policies set forth in Section 1 of this order.

• To ensure that passenger rail service is not subject to unwarranted delays and interruptions in service due to host railroads’ failure to comply with the required preference for passenger rail, vigorously enforce new on-time performance requirements adopted pursuant to the Passenger Rail Investment and Improvement Act of 2008 that will take effect on July 1, 2021, and further the work of the passenger rail working group formed to ensure that the Surface Transportation Board will fully meet its obligations.

• In the process of determining whether a merger, acquisition, or other transaction involving rail carriers is consistent with the public interest under 49 U.S.C. 11323-25, consider a carrier’s fulfillment of its responsibilities under 49 U.S.C. 24308 (relating to Amtrak’s statutory rights).

DOWNLOAD A PDF OF THE FULL EXECUTIVE ORDER:

Biden-Executive-OrderDownload

Further Analysis: Biden Targeting Class I Rail Mergers? Report (UPDATED)

AAR RESPONSE

Ian Jefferies

AAR President and CEO Ian Jefferies issued the following in response to the Executive Order:

“The Biden Administration today announced an executive order that included a misguided direction to interfere with functioning freight markets that could ultimately undermine railroads’ ability to reliably serve customers. In part, the Executive Order called on the independent STB to consider a forced switching rule and other ill-considered policy changes.

“Competition is alive and well in the rapidly changing freight transportation market, with nearly three quarters of all U.S. freight shipments moving by a mode of transportation besides rail. With the logistics chain already challenged by the recovery from COVID, this executive order throws an unnecessary wrench into freight rail’s critical role in providing the service that American families and businesses rely on every day.

“As freight providers work to resolve issues at the ports and supply chain disruptions, the need for reliable, efficient transportation solutions has never been clearer. To meet today’s challenges and prepare for the 30% growth in freight demand projected by the U.S. Department of Transportation (USDOT) by 2040, a viable, thriving rail network is foundational to current and future economic health.

“Railroads—one of the most environmentally friendly freight transportation modes—compete against each other and other transportation modes to win business and remain viable. The significant investments in private infrastructure made by railroads—nearly $25 billion annually—are only possible under a market-based economic regulatory framework overseen by the STB. Thanks to those investments and productivity improvements, today’s average rail rates are 44% less than they were in 1981, when the current economic regulatory framework (the Staggers Act) was put into place.

“Any STB action mandating forced switching would put railroads at a severe disadvantage to freight transportation providers that depend upon tax-payer funded infrastructure. Such a rule would degrade rail’s significant benefits to both customers and the public by throttling network fluidity, disincentivizing investment, increasing costs to shippers and consumers, and ultimately diverting traffic onto trucks and the nation’s already troubled highways.

“For decades, large corporations dissatisfied with paying fair-market rates to ship products by rail have sought to leverage political influence to change that framework and force railroads to hand over traffic to competitors who might charge less. These proposals have varied over the years, but all had one thing in common: They would benefit select favored shippers at the expense of the efficiency of the whole rail network, including passenger operations.

“Just last year, a large and diverse coalition—including eight former USDOT Secretaries, crucial industry partners like ports, policy analysts and scores of state and local officials—wrote in support of today’s system and cautioned against wholesale changes. An open access regime, endorsed by today’s Executive Order, is in direct conflict with their message and would undermine the market system currently in place.”

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