II
109th CONGRESS
2d Session
S. 2921
IN THE SENATE OF THE UNITED STATES
__________
Mr. Reid (for Mr. Dayton) introduced the following bill; which was read twice and referred to the Committee on Commerce, Science, and Transportation
A BILL
To amend title 49, United States Code, to enhance competition among and between rail carriers in order to ensure efficient rail service and reasonable rail rates, and for other purposes.
Short title; amendment of title 49, United States Code
Short title
This Act may be cited
as the Railroad Competition Act of
2006
.
Amendment of Title 49, United States Code
Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or a repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of title 49, United States Code.
RAIL TRANSPORTATION COMPETITION
Clarification of rail Transportation policy
Section 10101 is amended—
by inserting (a)
In
General.—
before In regulating
;
and
by adding at the end the following:
Primary Objectives
The primary objectives of the rail transportation policy of the United States are—
to promote effective competition among rail carriers at origins and destinations;
to maintain reasonable rates in the absence of effective competition; and
to maintain consistent and efficient rail transportation service for shippers, including the timely provision of rail cars requested by shippers.
.
Requirement for rate quotes
Section 11101(a) is amended—
by inserting (1)
after
(a)
; and
by adding at the end of subsection (a) the following:
Upon the request of a shipper, a rail carrier shall establish a rate for transportation and provide service requested by the shipper between any two points on the system of that carrier where traffic originates, terminates, or may reasonably be interchanged. A carrier shall establish a rate and provide service upon such request without regard to—
the location of the movement on the rail system, including terminal areas;
whether the rate established is for only part of a movement between a point of origin and a destination;
whether the shipper has made arrangements for transportation for any other part of that movement; or
whether the shipper has a contract with any rail carrier for part or all of its transportation needs over the route of movement, in which case the rate established by the carrier shall not apply to transportation covered by the contract.
.
Elimination of barriers to competition between class i carriers and Class II and Class III rail carriers
Restriction on Approval or Exemption of Rail Carriers’ Activities by Surface Transportation Board
Section 10901 is amended by adding at the end the following:
The Board may not issue under this section a certificate authorizing an activity described in subsection (a), or exempt from the applicability of this section under section 10502 such an activity, that involves a transfer of interest in a line of railroad, from a Class I rail carrier to a Class II or a Class III rail carrier, if the activity directly or indirectly would result in—
a restriction of the ability of the Class II or Class III rail carrier to interchange traffic with other carriers; or
a restriction of competition between or among rail carriers in the region affected by the activity in a manner or to an extent that would violate antitrust laws of the United States (notwithstanding any exemption from the applicability of antitrust laws that is provided under section 10706 of this title or any other provision of law).
Any party to an activity referred to in paragraph (1) that has been carried out, or any rail shipper affected by such an activity, may request that the Board review the activity to determine whether the activity has resulted in a restriction described in that paragraph. If, upon review of the activity, the Board determines that the activity resulted in such a restriction and the restriction has been in effect for at least 10 years, the Board shall declare the restriction to be unlawful and terminate the restriction unless the Board finds that the termination of the restriction would materially impair the ability of an affected rail carrier to provide service to the public or would otherwise be inconsistent with the public interest.
In this subsection:
The term antitrust laws has the meaning given that term in subsection (a) of the first section of the Clayton Act (15 U.S.C. 12(a)), except that such term also means section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to the extent that such section 5 applies to unfair methods of competition.
The terms Class I rail carrier, Class II rail carrier, and Class III rail carrier mean, respectively, a rail carrier classified under regulations of the Board as a Class I rail carrier, Class II rail carrier, and Class III rail carrier.
.
Applicability to Previously Approved or Exempted Activities
Paragraph (2) of section 10901(e) of title 49, United States Code (as added by subsection (a)), shall apply with respect to any activity referred to in that paragraph for which the Surface Transportation Board issued a certificate authorizing the activity under section 10901 of such title, or exempted the activity from the necessity for such a certificate under section 10502 of such title, before, on, or after the date of the enactment of this Act.
Reciprocal switching on competitive terms
Section 11102(c) is amended—
by striking may require
in
paragraph (1) and inserting shall require
;
by striking may establish
in
paragraph (1) inserting shall establish
; and
by adding at the end the following:
In making any finding for the purposes of the first sentence of paragraph (1), the Board may not require that there be evidence of anticompetitive conduct by a rail carrier from which access is sought.
.
Areas of inadequate rail competition
Designation and Remedies
In general
Chapter 105 is amended by adding at the end the following:
Areas of inadequate rail competition
Designation
The Board shall designate any State or part of a State as an area of inadequate rail competition after finding either of the grounds set forth in subsection (b). An area of inadequate rail competition may be limited to be composed of the facilities of a group of shippers or receivers of one or more specific commodities within a geographic area.
Grounds for Designation
The grounds for designating a State or part of a State as an area of inadequate rail competition are as follows:
The State or part of a State encompasses a significant number of rail shipping origins and destinations that are served exclusively by only one Class I railroad.
A significant number of the persons that ship by rail or receive rail shipments in the State or part of a State—
usually find it necessary to pay rates for the rail shipments that exceed the rates necessary to yield recovery by the rail carrier of 180 percent of revenue-variable costs, as determined under standards applied in the administration of section 10707(d); or
has experienced competitive disadvantage in the marketplace or other economic adversity because of high cost or poor quality of rail service in the State or part of a State, as the case may be.
Authorized Petitioners
The following persons may petition the Board for a designation of a State or part of a State as an area of inadequate rail competition:
The Governor from the State.
A Member of Congress from the State.
As provided in section 10504, the Rail Customer Advocate of the Department of Agriculture and any State official referred to in subsection (a)(2) of such section.
Actions
Upon designating a State or a part of a State as an area of inadequate rail competition, the Board shall attempt to resolve, within 60 days after the date of the designation, the conditions described in subsection (b) that justify the designation. In addition to providing other remedies authorized by law, the Board may, when requested in a petition, order any of the following actions:
Provision of reciprocal switching and access to tracks of another rail carrier beyond the limits specified in section 11102(a) of this title.
Haulage transportation of railroad cars by a rail carrier to or from facilities that such carrier alone physically serves on behalf of another rail carrier, for a fee prescribed by the Board.
Regarding rates on any rail segments within or connected to the area of inadequate rail competition on which rail service is susceptible to delay or interruption due to traffic congestion—
expedited review of the reasonableness of the rates under section 10701(d)(3); or
expedited final offer arbitration of the reasonableness of the rates under section 11708(e).
Expedited review, under section 10701(d)(3), of the reasonableness of—
increases in rates or other charges; and
new transportation service tariffs.
Expedited review of whether a rate violates the prohibition against discriminatory rates contained in section 10741, without regard to subsection (b)(2) of such section.
Limitations and Conditions Applicable to Specific Remedies
In the case of a petition for an order for reciprocal switching or access to tracks of another rail carrier under subsection (d)(1), the Board may not require that there be evidence of anticompetitive conduct by a rail carrier as a prerequisite for ordering such action.
In the case of a petition for expedited review of rates or final offer arbitration of rates under subsection (d)(3)—
the Board or arbitrator or panel of arbitrators, as the case may be, shall accord, with respect to rail transportation of a specific commodity, significant persuasive weight to evidence comparing—
rates charged for rail transportation of various quantities of that commodity within the area of inadequate rail competition; and
rates charged for rail transportation of similar quantities of that commodity or any similar commodity or commodities in areas where there is competition among rail carriers for shipments of such commodity or commodities; and
the Board or arbitrator or panel of arbitrators, as the case may be, shall not apply the stand-alone cost test that the Board applies in determining the reasonableness of rates reviewed in cases not involving rail service in an area of inadequate rail competition.
In the case of a petition for expedited review, under subsection (d)(4), of an increase of a rate or other charge or the imposition of a new service tariff by a rail carrier—
the rail carrier shall have the burden of proving the reasonableness of the increase or tariff charge; and
the Board shall consider any evidence comparing—
the increased rate or other charge, or the tariff charge, as the case may be; and
corresponding rates, other charges, or new service tariff charges, respectively, imposed for rail transportation in areas where there is a significant level of competition among the rail carriers.
.
Clerical amendment
The chapter analysis for chapter 105 is amended by inserting after the item relating to section 10502 the following:
10503. Areas of inadequate rail competition
.
Study and Report on Areas of Inadequate Rail Competition
Study required
The Rail Customer Advocate of the Department of Agriculture shall carry out a study of the process provided under section 10503 of title 49, United States Code (as added by subsection (a)), for challenging and remedying conditions described in subsection (b) of such section in States and parts of States designated under such section as areas of inadequate rail competition insofar as such conditions adversely affect rail shippers of agricultural or forestry commodities and products.
Findings on effectiveness of process
The Rail Customer Advocate shall make findings, on the basis of the study under paragraph (1), regarding the effectiveness of the process for remedying the conditions studied, particularly in the case of customers that ship agricultural or forestry commodities and products by rail in annual volumes of 1,500 rail cars or less.
Report
Not later than 3 years after the date of the enactment of this Act, the Rail Customer Advocate shall submit to Congress a report on the results of the study under paragraph (1), including the findings required under paragraph (2).
RAIL SERVICE
Rail service
Public Notice
The Board shall, within 7 days after receipt of a formal or informal complaint by the Board or any Member or staff of the Board, post on the Board’s internet web site information identifying the railroad in question, the general geographic area of the customer’s movement, a general description of the service complaint, the date upon which the service problem occurred and the date notice of the service complaint was made to the Board, any Member or staff of the Board. The Board shall not identify the rail customer, unless the customer has consented in writing to the release of this information. When and if the service complaint is resolved, whether or not by action of the Board or any Member or staff of the Board, the Board shall amend the information posted to indicate that the service complaint has been resolved, the means of its resolution, and the date of its resolution.
Annual Report to Congress
The Board shall, by March 15th of each year, file with Congress, and post on its internet web site, a comprehensive report on the service complaints received in the previous calendar year for each Class I railroad, including all of the information posted for such service complaints on the internet web site of the Board.
Time Limit on Petitions for Injunctive Relief
Section 721 is amended by adding at the end the following:
Time Limit on Petitions for Injunctive Relief
If a complaint is filed and injunctive or similar relief is sought within 20 days after the publication of a new or revised rail rate, rule, or practice, based on an allegation of unlawfulness other than an allegation that a rate level is not reasonable within the meaning of section 10701(d) of this title, the Board shall determine whether or not to grant the requested relief within 90 days of receiving the request. If the moving party establishes that the rule of practice complained of is unlawful per se, there shall be a strong presumption of irreparable harm regardless of the availability of monetary relief. If the Board denies injunctive or similar relief based in whole or in part on the absence of irreparable harm due to the availability of adequate monetary relief, then the Board may award requested monetary damages to the complaining party if that party prevails in its complaint.
.
REASONABLE RATES FOR CAPTIVE RAIL CUSTOMERS
Arbitration of certain rail rate, service, and other disputes
In General
Authority
Chapter 117 is amended by adding at the end the following:
Arbitration of certain rail rate, service, and other disputes
Election of Arbitration
A dispute described in subsection (b) shall be submitted for resolution by arbitration upon the election of any party to the dispute that is not a rail carrier.
Covered Disputes
In general
Except as provided in paragraph (2), subsection (a) applies to any dispute between a party described in subsection (a) and a rail carrier that—
arises under section 10701(c), 10701(d), 10702, 10704(a)(1), 10707, 10741, 10745, 10746, 11101(a), 11102, 11121, 11122, or 11706 of this title; and
involves—
the payment of money;
a rate or charge imposed by the rail carrier; or
transportation or other service by the rail carrier.
Exception
Subsection (a) does not apply to a dispute if the resolution of the dispute would necessarily involve the promulgation of regulations generally applicable to all rail carriers.
Arbitration Procedures
The Secretary of Transportation shall prescribe in regulations the procedures for the resolution of disputes submitted for arbitration under subsection (a). The regulations shall include the following:
Procedures, including time limits, for the selection of an arbitrator or panel of arbitrators for a dispute from among arbitrators listed on the roster of arbitrators established and maintained by the Secretary under subsection (d)(1).
Policies, requirements, and procedures for the compensation of each arbitrator for a dispute to be paid by the parties to the dispute.
Procedures for expedited arbitration of a dispute, including procedures for discovery authorized in the exercise of discretion by the arbitrator or panel of arbitrators.
Selection of Arbitrators
In general
The Secretary of Transportation shall establish, maintain, and revise as necessary a roster of arbitrators who—
are experienced in transportation or economic issues within the jurisdiction of the Board or issues similar to those issues;
satisfy requirements for neutrality and other qualification requirements prescribed by the Secretary;
consent to serve as arbitrators under this section; and
are not officers or employees of the United States.
Smaller disputes
For a dispute involving an amount not in excess of $1,000,000, the regulations under subsection (c) shall provide for arbitration by a single arbitrator who—
is selected by the parties to the dispute; or
if the parties cannot agree, is selected by the Secretary from among the arbitrators listed on the roster of arbitrators under paragraph (1).
Larger disputes
For a dispute involving an amount in excess of $1,000,000, the regulations under subsection (c) shall provide for arbitration by a panel of three arbitrators selected as follows:
One arbitrator selected by the party electing the arbitration.
One arbitrator selected by the rail carrier or all of the rail carriers who are parties to the dispute, as the case may be.
One arbitrator selected by the two arbitrators selected under clauses (i) and (ii).
If a selection of an arbitrator is not made under clause (ii) or (iii) of subparagraph (A) within the time limits prescribed in the regulations, then the Secretary shall select the arbitrator from among the arbitrators listed on the roster of arbitrators under paragraph (1).
Disputes Over Rates or Charges
Limitation
The requirements of this subsection apply to a dispute submitted under this section concerning a rate or charge imposed by a rail carrier.
Awards
Subject to subparagraph (B), the decision of an arbitrator or panel of arbitrators in a dispute on an issue described in paragraph (1) shall be the final offer of one of the parties to the dispute.
A decision under subparagraph (A) may not provide for a rate for transportation by a rail carrier that would result in a revenue-variable cost percentage for such transportation that is less than 180 percent, as determined under standards applied in the administration of section 10707(d).
Rate and charge disputes
If the party electing arbitration of a dispute described in paragraph (1) seeks compensation for damages incurred by the party as a result of a specific rate or charge imposed by a rail carrier for the transportation of items for the party and the party alleges an amount of damages that does not exceed $500,000 for any year as a result of the imposition of the specific rate or charge, the arbitrator, in making a decision on the dispute, shall consider the rates or charges, respectively, that are imposed by rail carriers for the transportation of similar items under similar circumstances in rail transportation markets where there is effective competition, as determined under standards applied by the Board in the administration of section 10707(a).
Time for Issuance of Arbitration Decision
Notwithstanding any other provision of this subtitle limiting the time for the taking of an action under this subtitle, the arbitrator or panel of arbitrators for a dispute submitted for resolution under this section shall issue a final decision on the dispute within the maximum period after the date on which the arbitrator or panel is selected to resolve the dispute under this section, as follows:
In the case of a dispute involving $1,000,000 or less, 120 days.
In the case of a dispute involving more than $1,000,000, 180 days.
Authorized Relief
A decision of an arbitrator or panel of arbitrators under this section shall grant relief in either or both of the following forms:
Monetary damages, to the extent authorized to be provided by the Board in such a dispute under this subtitle.
An order that requires specific performance under any applicable law, including any law limiting rates to reasonable rates, for any period not in excess of 2 years beginning on the date of the decision.
Judicial Confirmation and Review
The following provisions of title 9 shall apply to an arbitration decision issued in a dispute under this section:
Section 9 (relating to confirmation of an award in an arbitration decision), which shall be applied as if the parties had entered into an agreement under title 9 to submit the dispute to the arbitration and had provided in that agreement for a judgment of an unspecified court to be entered on the award made pursuant to the arbitration.
Section 10 (relating to judicial vacation of an award in an arbitration decision).
.
Clerical amendment
The chapter analysis for chapter 117 is amended by inserting after the item relating to section 11707 the following: The table of sections at the beginning of such chapter is amended by inserting after the item relating to section 11707 the following:
11708. Arbitration of certain rail rate, service, and other disputes
.
Time for Implementing Certain Requirements
Not later than 180 days after the date of the enactment of this Act, the Secretary of Transportation shall promulgate regulations, prescribe a roster of arbitrators, and complete any other action that is necessary for the implementation of section 11708 of title 49, United States Code (as added by subsection (a)).
Filing fees on petitions for captive rate relief
Section 721 is amended by adding at the end the following:
Limitation on Fees
The Board may not charge a fee for the filing of a complaint, protest, or other request for relief in an amount greater than fees charged by district courts of the United States for a comparable filing.
.
Rate reasonableness
Section 10701(d) is amended by adding at the end the following:
Not later than one year after the date of enactment of the Railroad Competition Act of 2006, the Board shall adopt an alternative method for determining the reasonableness of rail rates using the railroad’s actual costs, including a portion of fixed costs and an adequate return on equity. The method shall permit a final determination within nine months of filing a complaint, shall ensure that necessary cost, financial and operational information is available, and shall not require excessive litigation costs.
The Board may not, on or after the date of enactment of that Act, use any method for determining the reasonableness of challenged rail rates based on the costs of a hypothetical competitor, except in a proceeding pending on the date of enactment of that Act or where the complainant so elects. The simplified and expedited method for determining the reasonableness of challenged rail rates provided for in paragraph (3) shall remain available at the election of qualifying complainants.
The Board shall adopt a method for applying
the phasing constraint
in its existing rail rate method so that
it can be practically administered without substantial litigation-related costs
in any proceeding involving a challenge to a rail rate in which the Board
determines that the phasing constraint applies.
Upon a challenge made by a shipper to the reasonableness of any rate established by a rail carrier in accordance with subsection (c) or section 11101(a), the Board shall determine the reasonableness of the rate without regard to whether—
the rate is for part of a movement between a point of origin and a destination;
the shipper has made arrangements for transportation for any other part of that movement; or
the shipper currently has a contract with a rail carrier for any part of the rail traffic involved, except that any rate prescribed by the Board shall not apply to transportation covered by such a contract.
.
MISCELLANEOUS
Rail Customer Advocate in the Department of Agriculture
Participation of Rail Customer Advocate in STB Proceedings
Authority and responsibilities
Chapter 105, as amended by section 105 of this Act, is further amended by adding at the end the following:
Participation of Rail Customer Advocate in Board proceedings
Authority
The following persons are authorized to petition the Board for an exercise of authority of the Board regarding rail transportation of any agricultural or forestry commodity or product, and to participate in any proceeding of the Board regarding rail transportation of such a commodity or product:
The Rail Customer Advocate of the Department of Agriculture.
Any official of the government of a State whose functions are the same as or similar to the functions of the Rail Customer Advocate of the Department of Agriculture.
Consideration of Presentations by Advocate
The Board shall accord significant persuasive weight to any material evidence, proposal, or view that is presented by an official referred to in subsection (a) with respect to rail transportation of an agricultural or forestry commodity or product.
In disposing of any matter before the Board in which an official referred to in subsection (a) has participated under the authority of such subsection, the Board shall present in writing a detailed explanation of any disagreement of the Board with matters presented to the Board by that official.
.
Clerical amendment
The chapter analysis for chapter 105, as amended by section 105, is further amended by inserting after the item relating to section 10503 the following:
10504. Participation of Rail Customer Advocate in Board proceedings
.
Establishment and Duties
In general
Subtitle I of title II of the Department of Agriculture Reorganization Act of 1994 (7 U.S.C. 7005) is amended by adding at the end the following:
Rail Customer Advocate
Establishment of Office
There is established within the Department an Office of Rail Customer Advocacy.
Rail Customer Advocate
Appointment
The Secretary shall appoint the Rail Customer Advocate.
Head of office
The Rail Customer Advocate is the head of the Office of Rail Customer Advocacy.
Functions
The Rail Customer Advocate has the following functions:
Participation in stb proceedings
To participate as a party in proceedings of the Surface Transportation Board on petitions for action by the Board regarding the regulation of rail transportation of agricultural or forestry commodities or products, and to initiate any such action.
Compilation of information
To collect, compile, and maintain information regarding the cost and efficiency of rail transportation of agricultural commodities and products and forestry commodities and products.
Studies
To perform studies regarding rail transportation of agricultural commodities and products and forestry commodities and products.
Access to STB Information
To carry out the functions under subsection (c), the Rail Customer Advocate shall have access to information, including databases, of the Surface Transportation Board.
.
Conforming amendments
Section 296(b) of the Department of Agriculture Reorganization Act of 1994 (7 U.S.C. 7014(b)) is amended—
by striking or
after the
semicolon in paragraph (4);
by striking 218.
in
paragraph (5) and inserting 218; or
; and
by adding at the end the following:
the establishment of the Office of Rail Consumer Advocacy of the Department under section 286.
.
Study of competition among rail carriers
Requirement for Study
Chapter 101 is amended by adding at the end the following:
Study of rail carrier competition and processes of the Board
Requirement for Study
Within 2 years after the date of enactment of the Railroad Competition Act of 2006, the Secretary of Transportation shall conduct a comprehensive study of rail carrier competition and the processes of the Board, after consulting with the Department of Justice, the Department of Energy, the Department of Defense, the Department of Agriculture, rail users and railroads. The study shall include an assessment of—
the availability of effective competitive options among and between rail carriers;
the effectiveness of the processes of the Board, including the process used for determining the reasonableness of rates of rail carriers;
the availability to rail users of effective regulatory dispute resolution options;
the Board’s implementation of the Railroad Competition Act of 2006; and
the overall level of rail-to-rail competition in serving rail users in the United States.
Report to Congress
Not later than November 15 of the year in which the study is conducted under subsection (a), the Secretary shall submit a report on the results of the study to Congress. The report shall include—
the Secretary’s assessment of the overall level of rail-to-rail competition in the rail carrier industry in the United States;
the markets that have limited rail-to-rail competition;
recommendations for enhancing rail-to-rail competition, particularly in markets identified as having limited rail-to-rail competition;
an assessment of the Board’s performance of its purpose to promote and enhance competition among and between railroads by—
implementing the provisions and policies of the Railroad Competition Act of 2006;
addressing complaints regarding rates, charges, and service; and
promulgating regulations of general applicability or taking other actions;
recommendations for modification of any of the decisions of the Board (or decisions of the former Interstate Commerce Commission continuing in effect) or for modification of the general authority or jurisdiction of the Board; and
any other findings, analyses, assessments, and recommendations that result from the study.
Updates
The Secretary shall update the study every 3 years after the initial study is completed and report the results to the Congress.
.
Clerical Amendment
The chapter analysis for chapter 101 is amended by inserting after the item relating to section 10102 the following:
10103. Periodic study of rail carrier competition and processes of the Board
.