99–006 

111TH CONGRESS REPT. 111–669 " ! HOUSE OF REPRESENTATIVES 2d Session Part 1 

RAILROAD ANTITRUST ENFORCEMENT ACT OF 2009 

NOVEMBER 30, 2010.—Committed to the Committee of the Whole House on the 

State of the Union and ordered to be printed 

Mr. CONYERS, from the Committee on the Judiciary, 

submitted the following 

R E P O R T 

together with 

ADDITIONAL VIEWS 

[To accompany H.R. 233] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on the Judiciary, to whom was referred the bill 

(H.R. 233) to amend the Federal antitrust laws to provide expanded coverage and to eliminate exemptions from such laws that 

are contrary to the public interest with respect to railroads, having 

considered the same, report favorably thereon with an amendment 

and recommend that the bill as amended do pass. 

CONTENTS 

Page 

The Amendment ...................................................................................................... 2 

Purpose and Summary ............................................................................................ 3 

Background and Need for the Legislation ............................................................. 4 

Hearings ................................................................................................................... 9 

Committee Consideration ........................................................................................ 9 

Committee Votes ...................................................................................................... 9 

Committee Oversight Findings ............................................................................... 9 

New Budget Authority and Tax Expenditures ...................................................... 9 

Congressional Budget Office Cost Estimate .......................................................... 10 

Performance Goals and Objectives ......................................................................... 11 

Constitutional Authority Statement ...................................................................... 11 

Advisory on Earmarks ............................................................................................. 11 

Section-by-Section Analysis .................................................................................... 11 

Changes in Existing Law Made by the Bill, as Reported ..................................... 13 

Additional Views ...................................................................................................... 20 


sroberts on DSK3CLS3C1PROD with REPORTS
2 

THE AMENDMENT

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Railroad Antitrust Enforcement Act of 2009’’. 

SEC. 2. APPLICATION OF THE ANTITRUST LAWS TO RAIL CARRIERS. 

(a) MERGERS AND ACQUISITIONS.—The last undesignated paragraph of section 7 of 

the Clayton Act (15 U.S.C. 18) is amended by inserting ‘‘(excluding transactions involving a rail carrier as defined in section 10102 of title 49 of the United States 

Code)’’ after ‘‘Surface Transportation Board’’. 

(b) VESTING OF AUTHORITY IN ANTITRUST AGENCIES.—Section 11(a) of the Clayton 

Act (15 U.S.C. 21(a)) is amended by inserting ‘‘(excluding a rail carrier as defined 

in section 10102 of such title)’’ after ‘‘Code’’. 

(c) INJUNCTIONS.—The proviso in section 16 of the Clayton Act (15 U.S.C. 26) is 

amended by inserting ‘‘, except against a rail carrier (as defined in section 10102 

of such title)’’ after ‘‘Code’’. 

(d) FEDERAL TRADE COMMISSION AUTHORITY.—Section 5(a)(2) of the Federal Trade 

Commission Act (15 U.S.C. 45(a)(2)) is amended by adding at the end the following: 

‘‘For purposes of this paragraph with respect to unfair methods of competition, the 

term ‘common carriers’ excludes a rail carrier as defined in section 10102 of title 

49 of the United States Code.’’. 

SEC. 3. TERMINATION OF ANTITRUST EXEMPTIONS IN TITLE 49. 

(a) IN GENERAL.—Section 10706 of title 49, United States Code, is amended— 

(1) in subsection (a)— 

(A) beginning in the 3d sentence of paragraph (2)(A) by striking ‘‘, and 

the Sherman Act (15 U.S.C. 1, et seq.),’’ and all that follows through ‘‘However, the’’ and inserting ‘‘. The’’, 

(B) in paragraph (3)(B)— 

(i) by striking ‘‘(i)’’, and 

(ii) by striking clause (ii), 

(C) in paragraph (4)— 

(i) by striking the 2d sentence, and 

(ii) in the 3d sentence by striking ‘‘However, the’’ and inserting ‘‘The’’, 

and 

(D) in paragraph (5)(A) by striking ‘‘, and the antitrust laws set forth in 

paragraph (2) of this subsection do not apply to parties and other persons 

with respect to making or carrying out the agreement’’, 

(2) in subsection (d) by striking the last sentence, and 

(3) by striking subsection (e) and inserting the following: 

‘‘(e) Nothing in this section exempts an agreement approved, or submitted for approval, under subsection (a) from the application of the antitrust laws (as defined 

in subsection (a) of the 1st section of the Clayton Act, but including section 5 of the 

Federal Trade Commission Act to the extent such section 5 applies to unfair methods of competition). 

‘‘(f) In reviewing any agreement submitted for approval under subsection (a), the 

Board shall take into account, among any other considerations, the impact of such 

agreement on shippers, consumers, and affected communities. The Board shall make 

findings regarding such impact, which shall be— 

‘‘(1) made part of the administrative record; 

‘‘(2) submitted to any other reviewing agency for consideration in making its 

determination; and 

‘‘(3) available in any judicial review of the Board’s decision regarding such 

agreement.’’. 

(b) COMBINATIONS.—Section 11321 of title 49, United States Code, is amended— 

(1) in subsection (a)— 

(A) by striking ‘‘The authority’’ and inserting ‘‘Subject to subsection (c), 

the authority’’, and 

(B) in the 3d sentence by striking ‘‘is exempt from the antitrust laws and 

from all other law,’’ and inserting ‘‘is exempt from all other law (except the 

laws referred to in subsection (c)),’’, and 

(2) by adding at the end the following: 

‘‘(c) Nothing in this subchapter exempts a transaction described in subsection (a) 

from the application of the antitrust laws (as defined in subsection (a) of the 1st 

section of the Clayton Act, but including section 5 of the Federal Trade Commission 

Act to the extent such section 5 applies to unfair methods of competition). The preVerDate Mar 15 2010 06:32 Dec 01, 2010 Jkt 099006 PO 00000 Frm 00002 Fmt 6659 Sfmt 6621 E:\HR\OC\HR669P1.XXX HR669P1

sroberts on DSK3CLS3C1PROD with REPORTS
3 

ceding sentence shall not apply to any transaction relating to the pooling of railroad 

cars approved by the Surface Transportation Board or its predecessor agency pursuant to section 11322. 

‘‘(d) In reviewing any transaction described in subsection (a), the Board shall take 

into account, among any other considerations, the impact of the transaction on shippers and affected communities.’’. 

(c) CONFORMING AMENDMENTS.— (1) HEADING.—The heading for section 10706 of title 49, United States Code, 

is amended to read as follows: ‘‘Rate agreements’’. 

(2) ANALYSIS OF SECTIONS.—The analysis of sections of chapter 107 of such 

title is amended by striking the item relating to section 10706 and insert the 

following: 

‘‘10706. Rate agreements.’’. 

SEC. 4. CLARIFICATIONS REGARDING APPLICABILITY OF REGULATORY DOCTRINES. 

(a) FILED RATE DOCTRINE.—The antitrust laws shall apply to a rail carrier (as defined in section 10102 of title 49 of the United States Code), without regard to 

whether such rail carrier filed a rate or whether a complaint challenging a rate is 

filed. 

(b) DOCTRINE OF PRIMARY JURISDICTION.—In any civil action under the antitrust 

laws against a rail carrier (as defined in section 10102 of title 49 of the United 

States Code), the district court shall retain the discretion to defer to the jurisdiction 

of the Surface Transportation Board. 

(c) DEFINITION.—For purposes of subsections (a) and (b), the term ‘‘antitrust laws’’ 

has the meaning given it in subsection (a) of the 1st section of the Clayton Act (15 

U.S.C. 12(a)), but includes section 5 of the Federal Trade Commission Act to the 

extent such section 5 applies to unfair methods of competition. 

SEC. 5. EFFECTIVE DATE. 

(a) IN GENERAL.—Except as provided in subsections (b) and (c), this Act and the 

amendments made by this Act shall take effect on the date of enactment of this Act. 

(b) LIMITATION.—No civil action under the antitrust laws may be filed with respect to any conduct or activity, including any agreement or provision thereof, 

that— 

(1) concluded or terminated before the expiration of the 180-day period beginning on the date of the enactment of this Act, and 

(2) was exempted by statute from the antitrust laws as the result of an order 

of the Interstate Commerce Commission or the Surface Transportation Board 

issued before the date of the enactment of this Act. 

(c) EXCLUSION.—No civil action under the antitrust laws may be filed for the purpose of dissolving or otherwise undoing any merger, acquisition, or transfer of control consummated before the date of the enactment of this Act that was exempted 

by statute from the antitrust laws as the result of an order described in subsection 

(b)(2). 

(d) DEFINITION.—For purposes of subsections (b) and (c), the term ‘‘antitrust laws’’ 

has the meaning given it in subsection (a) of the 1st section of the Clayton Act (15 

U.S.C. 12(a)), but includes section 5 of the Federal Trade Commission Act (15 U.S.C. 

45) to the extent such section 5 applies to unfair methods of competition. 

PURPOSE AND SUMMARY

H.R. 233, the Railroad Antitrust Enforcement Act of 2009, will 

subject rail carrier industry practices to the pro-competitive influence of the antitrust laws by eliminating certain industry-specific 

statutory antitrust exemptions. These statutory exemptions are a 

holdover from a bygone period in which rail carriers were subject 

to extensive regulation. In the modern deregulated environment 

that commenced more than thirty years ago with the passage of the 

Railroad Revitalization and Regulatory Reform (4R) Act and the 

Staggers Rail Act, these holdover exemptions work primarily to 

subvert healthy free-market dynamics that would otherwise prevail 

in the industry. 

H.R. 233 will apply to the rail carrier industry the remedies and 

enforcement mechanisms generally applicable to other industries 

under the Federal antitrust laws. Those harmed by antitrust violations committed by rail carriers will now be able to avail themVerDate Mar 15 2010 06:32 Dec 01, 2010 Jkt 099006 PO 00000 Frm 00003 Fmt 6659 Sfmt 6601 E:\HR\OC\HR669P1.XXX HR669P1

sroberts on DSK3CLS3C1PROD with REPORTS
4 

selves of the rights and remedies available under the Federal antitrust laws. In addition, the Federal Trade Commission (FTC) and 

the Department of Justice (DOJ) (collectively, the Antitrust Agencies) and State attorneys general acting in parens patriae on behalf 

of their citizens will be able to enforce the Federal antitrust laws 

with respect to anticompetitive business practices and mergers and 

acquisitions in the rail carrier industry. 

The bill is prospective in effect. Any merger or acquisition consummated prior to the date of the bill’s enactment, or conduct occurring prior to that date and immunized at that time under an 

order by the Surface Transportation Board (STB) or its predecessor, the Interstate Commerce Commission, will not become subject to antitrust action as a result of the bill. Any merger or acquisition or conduct taking place after the bill’s enactment will be subject to the bill’s provisions. 

There is an additional 180-day grace period for conduct that 

began pursuant to immunity under the previous law and that is 

continuing at the date of enactment. After the expiration of that 

180-day period, that conduct, should it continue, will also become 

subject to the new law. 

Except with respect to conferring antitrust immunity, H.R. 233 

fully preserves the STB’s regulatory authority. With respect to reviewing rail carrier mergers and acquisitions, the STB will retain 

its public interest authority, alongside the Antitrust Agencies’ antitrust authority. The two reviews will be conducted concurrently yet 

separately. 

H.R. 233 is not intended to create any inference that the railroads have been, or currently are, engaged in conduct that would 

violate the antitrust laws. No provision of the bill or other statement in this Report should be interpreted to suggest a contrary legislative intent. Those are legal determinations that the Committee 

intends to be made by the courts and the Antitrust Agencies. 

BACKGROUND AND NEED FOR THE LEGISLATION

H.R. 233 would subject rail carrier industry practices to appropriate antitrust enforcement by removing the special Federal antitrust exemptions that currently apply in that industry. This completes a process begun nearly three decades ago, with the pro-competitive deregulation of the rail carrier industry. Absent the bill’s 

corrective measures, the rail carrier industry can only partially 

achieve the pro-competitive benefits of deregulation. 

BACKGROUND

In the 1920’s, when the rail carrier industry was heavily regulated under the Interstate Commerce Act, Congress enacted a number of antitrust exemptions for activities in the industry that were 

regulated. Thirty years ago, following the enactment of the 4R Act 

and the Staggers Act, the industry was largely deregulated, giving 

rail carriers greater flexibility in setting their own rates. However, 

the industry’s antitrust exemptions were left in place. As a result, 

the Antitrust Agencies remain severely restricted in their ability to 

enforce the antitrust laws in the rail carrier industry to protect 

competition and consumers. 


sroberts on DSK3CLS3C1PROD with REPORTS
5 

1STB-approved transactions under 49 U.S.C. § 11321–11328 (consolidations, mergers, acquisitions, some leases, trackage rights, pooling arrangements, and agreements to divide traffic) are 

exempt from antitrust enforcement. Certain rate- and charge-related agreements approved by 

the STB under 49 U.S.C. § 10706 are similarly exempt. 2 15 U.S.C. § 26. 

3Keogh v. Chicago & Northwestern Railway, 260 U.S. 156 (1922); see Square D Co. v. Niagara 

Frontier Tariff Bureau, Inc., 476 U.S. 409 (1986). 4Letter from Assistant Attorney General William E. Moschella to Rep. F. James Sensenbrenner, Jr. (September 27, 2004). 

The STB has exclusive authority to approve, and immunize, rail 

carrier mergers and acquisitions, as well as other joint conduct that 

alters the competitive landscape.1 The Board evaluates mergers 

and acquisitions under a broad ‘‘public interest’’ standard, which 

differs markedly from the standard used by the Antitrust Agencies 

in performing an antitrust review. Because mergers subject to the 

STB’s jurisdiction are expressly exempt from the FTC Act, the FTC 

has no authority to conduct antitrust review. The role of the Department of Justice is limited to submitting advisory comments to 

the STB for its consideration, which the STB is free to reject. 

Private parties are likewise denied recourse to the antitrust laws 

for protection and redress. In addition to the remaining exemptions 

from the Interstate Commerce Act, a corollary provision inserted in 

Section 16 of the Clayton Act 2 when it was enacted in 1914 denies 

them the right to seek injunctive relief against rail carriers subject 

to the STB’s jurisdiction, and the Keogh Doctrine 3 precludes them 

from recovering monetary damages. 

Businesses that ship by rail believe that the antitrust exemptions have enabled rail carriers to engage in a number of anticompetitive practices. Some shippers believe that when they have 

no competing rail options—i.e., when they are ‘‘captive shippers’’— 

the rail carriers charge unfairly inflated rates, which the shippers 

are left to recover from their customers in the form of higher 

prices. Shippers also complain that the rate appeal process at the 

STB favors the rail carriers. 

Other rail carrier practices that shippers believe are anticompetitive and result in inflated rates include (1) entering into ‘‘paper 

barrier’’ contracts that unduly punish operators of connecting 

short-line tracks for doing business with competing carriers, and 

(2) using ‘‘bottleneck’’ segments of track, where one rail carrier has 

a monopoly, to eliminate competition on other portions of long-haul 

transportation routes passing through the bottleneck, by refusing 

to break long-haul quotes into separate segments. The Department 

of Justice indicated in a September 2004 letter that these practices 

could very well violate Federal antitrust laws.4

ANTITRUST ANALYSIS

H.R. 233 will enhance competition by enabling the Antitrust 

Agencies to enforce the antitrust laws in the rail carrier industry, 

and by enabling private parties to seek the relief and remedies ordinarily available under the antitrust laws. 

Empowering Federal Agencies to Enforce Antitrust Laws 

Enactment of this legislation would enable the Antitrust Agencies to enforce the antitrust laws in the rail carrier industry. Under 

current law, the STB evaluates rail carrier mergers and acquisitions under a broad public interest standard, outlined in 49 U.S.C. 


sroberts on DSK3CLS3C1PROD with REPORTS
6 

5 Union Pac. Corp., S.T.B. 233, 1996 WL 467636 (August 12, 1996), petition for review denied, 

Western Coal Traffic League v. STB, 169 F. 3d 775 (1999), opinion clarified, Union Pac. Corp., 

2002 WL 335181 (February 28, 2002). 6October 2006 United States Government Accountability Office Report to Congressional Requesters, ‘‘Freight Railroads: Industry Health Has Improved, but Concerns about Competition 

and Capacity Should Be Addressed,’’ available at http://www.gao.gov/new.items/d0794.pdf. Because the total number of rail shippers has increased over the past twenty years, the percentage 

represented by captive shippers has decreased, but their actual number may not have. 

§ 11324. Unlike the antitrust standard, which is focused on preventing mergers and acquisitions that substantially lessen competition and result in restrictions on output or increases in price, the 

STB’s public interest standard is more diffuse; competition concerns can be disregarded or overruled. 49 U.S.C. § 11321 provides 

that a rail carrier merger or acquisition approved or exempted by 

the STB is exempt from the antitrust laws. The FTC has no role 

whatsoever in rail mergers, and the Department of Justice can do 

no more than offer the STB a non-binding advisory evaluation. 

Although section 11324(d)(2) requires the STB to ‘‘accord substantial weight to any recommendations of the Attorney General’’ 

when making its determination regarding a proposed rail carrier 

merger or acquisition, the STB remains free to ultimately disregard 

them. The STB’s 1996 decision approving the Union Pacific/Southern Pacific merger over DOJ’s vigorous objections, subsequently affirmed on appeal by the Eighth Circuit,5 starkly demonstrates the 

limits of DOJ’s current role under the antitrust laws. The STB 

ruled that its statutory mandate ‘‘sharply contrasts with the approach to mergers taken by the DOJ and the Federal Trade Commission. The policies embodied in the antitrust laws provide guidance, but are not determinative. . . . Thus the [STB] can . . . approve transactions even if they otherwise would violate the antitrust laws.’’ 

Enactment of this legislation would subject rail carriers to the 

same kind of concurrent oversight by both a Federal enforcement 

agency and a regulatory body found in other modern industries 

subject to regulation, including electricity transmission, the operation of liquid natural gas import terminals, and the transportation 

of oil and natural gas by interstate pipeline. The STB would maintain its public interest supervision, with antitrust oversight by the 

Antitrust Agencies operating alongside the regulatory authority. 

Enhanced Ability of Shippers to Challenge Anticompetitive Rail 

Rates 

H.R. 233 would also allow shippers to challenge other anticompetitive rail practices under the antitrust laws. Currently, socalled ‘‘captive’’ shippers who have only one rail carrier option are 

frequently charged higher rates, due to a lack of competition among 

rail carriers, and the ability of carriers to charge differential pricing under the Staggers Act. Although some of these rating practices might ordinarily violate the antitrust laws, neither shippers 

nor the Antitrust Agencies have any effective recourse to challenge 

them under existing law. 

According to an October 2006 U.S. Government Accountability 

Office report, the volume of traffic traveling at significantly noncompetitive rates (defined as above 300% of variable cost) has increased since 1985.6 The rates paid by these captive shippers are, 


sroberts on DSK3CLS3C1PROD with REPORTS
7 

7Testimony of Curtis Grimm to the U.S. House of Representatives Committee on Transportation and Infrastructure, Subcommittee on Railroads (March 31, 2004). 8 Hearing on H.R. 233, the Railroad Antitrust Enforcement Act of 2009, Before the Subcomm. 

on Courts and Competition Policy of the H. Comm. on the Judiciary, 111th Cong. 62 (2009) 

(statement of Dr. Mark N. Cooper, Consumer Federation of America). 9 Id. 

10See Central Power & Light Co. v. Southern Pacific Transportation Co., 1 S.T.B. 1059 (1996), 

clarified at 2 S.T.B. 235 (1997), aff’d sub nom. MidAmerican Energy Co. v. STB, 169 F.3d 1099 

(8th Cir. 1999). The Eighth Circuit’s review was limited to determining whether there were compelling indications that the Board’s interpretations of the applicable statutes were not correct. 

169 F.3d at 1106. 11Letter from Assistant Attorney General William Moschella to Hon. F. James Sensenbrenner, Jr. (September 27, 2004). 

on average, 20.9% higher, costing captive shippers an estimated excess of $1.3 billion on an annual basis.7

A May 2009 study by the Consumer Federation of America (CFA) 

found that captive shippers pay on average between 75 and 100 

percent more than shippers in more competitive markets.8 CFA estimates that the lack of competition costs captive shippers an additional $3 billion per year.9

Subjecting ‘‘Bottlenecks’’ to Antitrust Scrutiny 

Enactment of this legislation would subject so-called ‘‘bottlenecks’’ to appropriate antitrust scrutiny. Bottlenecks are situations 

in which shippers have, for some segment of the shipping route, 

only a single rail line transportation option to a point of interconnection with other carriers. Oftentimes, the rail carrier operating the bottleneck will quote the shipper a single quote for the 

entire, or ‘‘long haul,’’ route, and will refuse to offer the alternative 

of a separate price for the single-carrier portion of the route. This 

practice, upheld by the STB in a 1996 decision and affirmed by the 

Eighth Circuit,10 denies captive shippers the benefits of competition on the other portions of the route where they are not otherwise 

captive. 

Under current law, it is legal for rail carriers controlling bottleneck situations to use their monopoly power in the segment they 

control to extract the maximum profit possible from shippers who 

depend on that segment, and deny them compartmentalized rates. 

The higher cost borne by the shippers generally translates into 

higher costs for consumers for the goods being transported. 

H.R. 233 would subject post-Enactment Date bottleneck pricing 

to the antitrust laws. In a 2004 letter to then-Chairman Sensenbrenner, the Department of Justice stated that ‘‘[i]f [bottlenecking] 

were subject to the antitrust laws, it could be evaluated as a refusal to deal in possible violation of Section 2 of the Sherman Act, 

or as a tying arrangement in possible violation of Section 1 of the 

Sherman Act.’’ 11

Subjecting ‘‘Paper Barriers’’ to Antitrust Scrutiny 

Enactment of this legislation would also subject so-called ‘‘paper 

barriers’’ to appropriate antitrust scrutiny. ‘‘Paper barriers,’’ also 

known as ‘‘interchange commitments,’’ are a range of contractual 

obligations between smaller railways (so-called ‘‘short line’’ rail carriers) and the owners of the larger interstate (or ‘‘trunk line’’) railways off of which the short lines branch. Many of these contracts 

limit the short line rail carriers from doing meaningful business 

with any major rail carrier other than the one from which they 

leased or purchased their track. 


sroberts on DSK3CLS3C1PROD with REPORTS
8 

12 Id. 13 Antitrust Modernization Commission, Report and Recommendations 335 (April 2007). 14 Id. 15 Hearing on H.R. 233, the Railroad Antitrust Enforcement Act of 2009, Before the Subcomm. 

on Courts and Competition Policy of the H. Comm. on the Judiciary, 111th Cong. 3 (2009) (statement of M. Howard Morse, Chair, Exemptions and Immunities Committee, ABA Section of Antitrust Law). 16 Id. 

The terms of these leases can be anticompetitive. The rent due 

on the track leases typically decreases markedly with increasing 

volumes of traffic sent to the trunk line. This has the effect of substantially lessening the competitive presence of other railways that 

connect to the short line, and effectively eliminating the competitive options available to shippers using the short line. 

H.R. 233 would subject post-Enactment Date enforcement of 

paper barriers to the antitrust laws. In its 2004 letter to thenChairman Sensenbrenner, DOJ stated that ‘‘[i]f paper barriers 

were subject to the antitrust laws, they would be evaluated under 

section 1 of the Sherman Act. The Department would examine 

whether the restraint is ancillary to the sale of the trackage—i.e., 

whether the restraint is reasonably necessary to achieve the procompetitive benefits of the sale.’’ 12

Effectuating the Recommendations of Antitrust Experts 

H.R. 233 is consistent with the recommendations of the Antitrust 

Modernization Commission established by Congress to assess and 

make recommendations regarding antitrust issues. The Commission concluded that ‘‘[s]tatutory exemptions from the antitrust laws 

undermine, rather than upgrade, the competitiveness and efficiency 

of the U.S. economy’’ in that they ‘‘reduce the competitiveness of 

the industries that have sought antitrust exemptions.’’ 13 The Commission observed that ‘‘antitrust exemptions create economic benefits that flow to small . . . groups, while the costs . . . are . . . 

usually passed to a large population of consumers through higher 

prices, reduced output, lower quality, and reduced innovation.’’ 14

Shippers forced to pay anticompetitively high rates for rail transportation would naturally pass along the additional costs in the 

form of higher retail prices for the goods being shipped, such as 

household items and food products. When the goods being shipped 

are for use in providing another product or service, higher shipping 

costs would similarly be passed along; for example, higher shipping 

costs for coal used in electric power generation would result in 

higher electricity rates. Passage of H.R. 233 would open industry 

practices to scrutiny by the Antitrust Agencies, which could lead to 

more competitive rates for shippers and, ultimately, lower prices 

for end consumers. 

The Section of Antitrust Law of the American Bar Association 

(Antitrust Section) has endorsed this legislation, stating that it 

supports the removal of the industry’s exemptions, thereby ‘‘completing the industry’s transition to competition.’’ 15 The Antitrust 

Section observed that ‘‘[a]ntitrust exemptions for the railroad industry . . . do not appear to be justified by any non-competition related value’’ and appear to be little more than ‘‘naked economic protectionism.’’ 16


sroberts on DSK3CLS3C1PROD with REPORTS
9 

HEARINGS

The Committee on the Judiciary’s Task Force on Antitrust and 

Competition Policy held a hearing on February 25, 2008, on H.R. 

1650 (the predecessor bill in the 110th Congress). Testimony was 

received from Representative Tammy Baldwin (D-WI); Susan M. 

Diehl, Senior Vice President for Logistics and Supply Chain Management, Holcim, Inc.; Terry Huval, Director of Utilities, Lafayette 

Utilities System (Lafayette, Louisiana) and Chairman, American 

Public Power Association; G. Paul Moates, Partner, Sidley Austin 

LLP, on behalf of Association of American Railroads; and Dr. 

Darren Bush, Associate Professor of Law, University of Houston 

Law Center (Houston, Texas). 

The Subcommittee on Courts and Competition Policy held a 

hearing on May 19, 2009, on H.R. 233. Testimony was received 

from Representative Rodney Alexander (R-LA); M. Howard Morse, 

Chair, Exemptions and Immunities Committee, American Bar Association Section of Antitrust Law; J. Michael Hemmer, Vice Chairman, Policy and Advocacy Committee, Association of American 

Railroads; Terry Huval, Director of Utilities, Lafayette Utilities 

System (Lafayette, Louisiana) and Chairman, American Public 

Power Association; and Dr. Mark N. Cooper, Director of Research, 

Consumer Federation of America. 

COMMITTEE CONSIDERATION

On July 30, 2009, the Subcommittee on Courts and Competition 

Policy met in open session and ordered the bill H.R. 233 favorably 

reported, with an amendment in the nature of a substitute, by 

voice vote, a quorum being present. On September 16, 2009, the 

Committee met in open session and ordered the bill H.R. 233 favorably reported with an amendment, by voice vote, a quorum being 

present. 

COMMITTEE VOTES

In compliance with clause 3(b) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that there were 

no recorded votes during the Committee’s consideration of H.R. 

233. 

COMMITTEE OVERSIGHT FINDINGS

In compliance with clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that the findings 

and recommendations of the Committee, based on oversight activities under clause 2(b)(1) of rule X of the Rules of the House of 

Representatives, are incorporated in the descriptive portions of this 

report. 

NEW BUDGET AUTHORITY AND TAX EXPENDITURES

Clause 3(c)(2) of rule XIII of the Rules of the House of Representatives is inapplicable because this legislation does not provide new 

budgetary authority or increased tax expenditures. 


sroberts on DSK3CLS3C1PROD with REPORTS
10 

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

In compliance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, the Committee sets forth, with respect to 

the bill, H.R. 233, the following estimate and comparison prepared 

by the Director of the Congressional Budget Office under section 

402 of the Congressional Budget Act of 1974: 

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, October 6, 2009. 

Hon. JOHN CONYERS, Jr., Chairman, 

Committee on the Judiciary, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 233, the Railroad Antitrust Enforcement Act of 2009. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Mark Grabowicz, who 

can be reached at 226–2860. 

Sincerely, 

DOUGLAS W. ELMENDORF, 

DIRECTOR. 

Enclosure 

cc: Honorable Lamar S. Smith. 

Ranking Member 

H.R. 233—Railroad Antitrust Enforcement Act of 2009. 

H.R. 233 would expand the authority of the Department of Justice (DOJ) and the Federal Trade Commission (FTC) to prosecute, 

under the Sherman and Clayton Acts, certain antitrust violations 

relating to railroads. Currently, the Surface Transportation Board 

(STB) has the primary authority to regulate mergers, acquisitions, 

rate-setting, and pooling arrangements under the Interstate Commerce Act. The roles of DOJ and FTC are generally limited to investigating potential violations and providing advice to the STB. 

Based on information provided by DOJ, CBO estimates that implementing H.R. 233 would have no significant effect on the Federal budget. We expect that DOJ would continue to perform investigations of railroads (investigations under current law are similar 

to those that would be performed under the bill) and that few of 

those investigations would result in enforcement actions. Accordingly, CBO expects that DOJ’s workload would not increase substantially under the bill. CBO also expects that DOJ, rather than 

FTC, would handle antitrust enforcement matters specified under 

the bill; thus, we do not anticipate that FTC would incur significant additional enforcement costs. 

Anyone convicted of antitrust violations specified in the bill 

would be subject to criminal fines, which are recorded as revenues, 

deposited in the Crime Victims Fund, and later spent. Thus, enacting H.R. 233 could increase revenues and direct spending, but CBO 

estimate that any such effects would be insignificant given the 

small number of cases that would likely be affected. 


sroberts on DSK3CLS3C1PROD with REPORTS
11 

H.R. 233 contains no intergovernmental mandates as defined in 

the Unfunded Mandates Reform Act (UMRA) and would impose no 

costs on State, local, or tribal governments. 

H.R. 233 would impose a private-sector mandate, as defined in 

UMRA, on railroads because it would eliminate their exemptions 

from certain antitrust laws. It is unclear how making railroads 

subject to the standards of those antitrust statutes would affect 

current business practices, if at all. The extent to which railroad 

carriers would have to forgo business opportunities and what the 

value of those lost opportunities would be are also uncertain. Because of those uncertainties, CBO has no basis for estimating the 

cost to railroad carriers or whether that cost would exceed the annual threshold established in UMRA for private-sector mandates 

($139 million in 2009, adjusted annually for inflation). 

On March 12, 2009, CBO transmitted a cost estimate for S. 146, 

the Railroad Antitrust Enforcement Act of 2009, as ordered reported by the Senate Committee on the Judiciary on March 5, 

2009. The two bills are similar, and the cost estimates are identical. 

The CBO staff contact for this estimate is Mark Grabowicz. The 

estimate was approved by Theresa Gullo, Deputy Assistant Director for Budget Analysis. 

PERFORMANCE GOALS AND OBJECTIVES

The Committee states that pursuant to clause 3(c)(4) of rule XIII 

of the Rules of the House of Representatives, H.R. 233 will bring 

the pro-competitive benefits of the antitrust laws into the rail carrier industry by eliminating certain antitrust exemptions from current law. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee finds the authority for this legislation in article I, section 8, clause 3 of the Constitution. 

ADVISORY ON EARMARKS

In accordance with clause 9 of rule XXI of the Rules of the House 

of Representatives, H.R. 233 does not contain any congressional 

earmarks, limited tax benefits, or limited tariff benefits as defined 

in clause 9(e), 9(f), or 9(g) of Rule XXI. 

SECTION-BY-SECTION ANALYSIS

The following discussion describes the bill as reported by the 

Committee. 

Sec. 1. Short title. Section 1 sets forth the short title of the bill 

as the ‘‘Railroad Antitrust Enforcement Act of 2009.’’ 

Sec. 2. Application of the Antitrust Laws to Rail Common Carriers. Section 2 of the bill applies the antitrust laws to the railroad 

industry by eliminating industry-specific antitrust exemptions. Section 2(a) of the bill modifies Section 7 of the Clayton Act to empower the Antitrust Agencies to enforce the Federal antitrust laws 

against mergers and acquisitions involving rail carriers. Section 7 

of the Clayton Act prohibits mergers and acquisitions that are likeVerDate Mar 15 2010 06:32 Dec 01, 2010 Jkt 099006 PO 00000 Frm 00011 Fmt 6659 Sfmt 6601 E:\HR\OC\HR669P1.XXX HR669P1

sroberts on DSK3CLS3C1PROD with REPORTS
12 

17 49 U.S.C. § 10706(a)(2)(A). 18 49 U.S.C. § 10706(a)(4). 19 49 U.S.C. § 10706(a)(5)(A). 

ly to substantially lessen competition. The sixth undesignated 

paragraph of Section 7 currently exempts ‘‘transactions duly consummated pursuant to the authority’’ of specified agencies, including the STB. Section 2(a) of the bill removes that exemption with 

respect to transactions involving rail carriers. 

Section 2(b) of the bill modifies section 11(a) of the Clayton Act 

to extend ordinary application of other antitrust provisions to rail 

carriers. Section 11(a) of the Clayton Act currently vests enforcement authority for sections 2, 3, 7, and 8 of the Clayton Act (prohibiting anticompetitive price discrimination, anticompetitive exclusive dealing requirements, anticompetitive mergers, and anticompetitive interlocking directorates, respectively) in the STB with 

respect to common carriers subject to its jurisdiction, instead of in 

the Antitrust Agencies, where it would ordinarily be vested. Section 

2(b) of the bill removes rail carriers from that provision, so that the 

enforcement authority for those sections is vested in the Antitrust 

Agencies. 

Section 2(c) of the bill modifies section 16 of the Clayton Act to 

remove the prohibition on private parties seeking injunctive relief 

against a rail carrier for a violation of the antitrust laws. Section 

16 of the Clayton Act permits private parties threatened with loss 

or damage by a violation of the antitrust laws to sue for injunctive 

relief. Under current law, section 16 exempts common carriers subject to the jurisdiction of the STB from suit for injunctive relief by 

anyone except the United States. Section 2(c) of the bill removes 

this exemption with respect to rail carriers, so that private parties 

can seek injunctive relief where appropriate as in other industries. 

Section 2(d) of the bill removes the rail carrier exemption from 

the prohibition in section 5 of the FTC Act against unfair methods 

of competition, the source of the FTC’s antitrust enforcement authority. Section 5(a)(2) of the FTC Act excludes certain industries, 

including ‘‘common carriers subject to the Act to regulate commerce.’’ Section 2(d) of the bill adds a sentence to section 5(a)(2) of 

the FTC Act that removes rail carriers from this exclusion. 

Sec. 3. Termination of Antitrust Exemptions in Title 49. Section 

3 of the bill removes rail carrier antitrust exemptions currently in 

title 49 of the United States Code. Section 3(a)(1) removes exemptions pertaining to STB-approved rate agreements; 17 agreements 

for ‘‘compilation, publication, and other distribution of rates in effect or to become effective;’’ 18 and STB-approved discussions among 

shippers regarding compensation to be paid by rail carriers for the 

use of rolling stock owned or leased by the shippers.19

Section 3(a)(2) of the bill removes a sentence in 49 U.S.C. 

§ 10706(d) pertaining to the effect of STB actions on the antitrust 

laws. 

Section 3(a)(3) of the bill revises 49 U.S.C. § 10706(e), removing 

a requirement that the Antitrust Agencies provide the STB with a 

competitive assessment of the rate and other agreements currently 

exempted from the antitrust laws under 49 U.S.C. § 10706(a), and 

adding in its place a provision clarifying that the antitrust laws 

apply to those agreements. It also adds a new 49 U.S.C. § 10706(f), 

requiring the STB to make findings regarding the impact of any 


sroberts on DSK3CLS3C1PROD with REPORTS
13 

20Keogh v. Chicago & Northwestern Railway, 260 U.S. 156 (1922). 

such agreement it is reviewing on shippers, consumers, and affected communities. 

Section 3(b)(1) of the bill removes the antitrust exemption in 49 

U.S.C. § 11321(a) for Board-approved or -exempted mergers, acquisitions, and related agreements. Section 3(b)(2) of the bill adds a 

new 49 U.S.C. § 11321(c) that clarifies that the antitrust laws apply 

to them, except for STB-approved pooling agreements under 49 

U.S.C. § 11322, for which the current exemption is preserved. Section 3(b)(2) of the bill also creates a new 49 U.S.C. § 11321(d) that 

requires the STB to take into account the impact of any rail merger 

or acquisition on shippers and affected communities. 

Sec. 4. Clarifications Regarding Applicability of Regulatory Doctrines. Section 4 of the bill clarifies the applicability of two judicial 

doctrines to disputes involving rail carriers, the filed rate doctrine 

(Keogh Doctrine) and the primary jurisdiction doctrine. 

Section 4(a) of the bill overturns the filed rate doctrine with respect to rail carriers. This judicial doctrine, created by the Supreme 

Court 20 during the era of pervasive regulation of the rail carrier 

industry, precludes recovery of damages in a civil antitrust suit 

where the rail carrier has filed a rate. Section 4(a) of the bill will 

allow recovery of antitrust damages regardless of whether the rail 

carrier has filed a rate. 

Section 4(b) of the bill clarifies that in a civil antitrust action 

brought against a rail carrier, the district court may, but is not required to, defer to the primary jurisdiction of the STB as to issues 

within the STB’s authority. 

Section 4(c) of the bill defines the term ‘‘antitrust laws’’ in the 

customary manner. 

Sec. 5. Effective Date. Section 5 of the bill sets forth effective 

dates. Section 5(a) provides that generally the bill and its amendments take effect on the date of enactment. Section 5(b) specifies 

that conduct that was exempted under the antitrust laws as the result of approval under an STB order issued before the date of enactment, and occurring before that date or within a 180-day grace 

period following enactment, would not be subject to civil action 

under the antitrust laws. Section 5(c) specifies that a merger or acquisition consummated before the date of enactment and exempted 

from the antitrust laws as the result of approval under an order 

issued by the STB before the date of enactment would not be subject to civil action to retroactively dissolve or otherwise undo it. 

Mergers and acquisitions that take place after the bill’s enactment will be subject to the antitrust laws, as will conduct that 

takes place after the bill’s enactment, subject to the 180-day grace 

period for previously approved conduct. 

Subsection (d) defines the term ‘‘antitrust laws’’ for purposes of 

the effective date provisions, again in the customary manner. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italics, 

existing law in which no change is proposed is shown in roman): 


sroberts on DSK3CLS3C1PROD with REPORTS
14 

CLAYTON ACT 

* * * * * * * 

SEC. 7. That no person engaged in commerce or in any activity 

affecting commerce shall acquire, directly or indirectly, the whole 

or any part of the stock or other share capital and no person subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another person engaged 

also in commerce or in any activity affecting commerce, where in 

any line of commerce or in any activity affecting commerce in any 

section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly. 

No person shall acquire, directly or indirectly, the whole or any 

part of the stock or other share capital and no person subject to 

the jurisdiction of the Federal Trade Commission shall acquire the 

whole or any part of the assets of one or more persons engaged in 

commerce or in any activity affecting commerce, where in any line 

of commerce, or in any activity affecting commerce in any section 

of the country, the effect of such acquisition, of such stocks or assets, or of the use of such stock by the voting or granting of proxies 

or otherwise, may be substantially to lessen competition, or to tend 

to create a monopoly. 

This section shall not apply to persons purchasing such stock 

solely for investment and not using the same by voting or otherwise to bring about, or in attempting to bring about, the substantial lessening of competition. Nor shall anything contained in this 

section prevent a corporation engaged in commerce or in any activity affecting commerce from causing the formation of subsidiary 

corporations for the actual carrying on of their immediate lawful 

business, or the natural and legitimate branches or extensions 

thereof, or from owning and holding all or a part of the stock of 

such subsidiary corporations, when the effect of such formation is 

not to substantially lessen competition. 

Nor shall anything herein contained be construed to prohibit any 

common carrier subject to the laws to regulate commerce from aiding in the construction of branches or short lines so located as to 

become feeders to the main line of the company so aiding in such 

construction or from acquiring or owning all or any part of the 

stock of such branch lines, nor to prevent any such common carrier 

from acquiring and owning all or any part of the stock of a branch 

or short line constructed by an independent company where there 

is no substantial competition between the company owning the 

branch line so constructed and the company owning the main line 

acquiring the property or an interest therein, nor to prevent such 

common carrier from extending any of its lines through the medium of the acquisition of stock or otherwise of any other common 

carrier where there is no substantial competition between the company extending its lines and the company whose stock, property, or 

an interest therein is so acquired. 

Nothing contained in this section shall be held to affect or impair 

any right heretofore legally acquired: Provided, That nothing in 

this section shall be held or construed to authorize or made lawful 

anything heretofore prohibited or made illegal by the antitrust 

laws, nor to exempt any person from the penal provisions thereof 

or the civil remedies therein provided. 


sroberts on DSK3CLS3C1PROD with REPORTS
15 

Nothing contained in this section shall apply to transactions duly 

consummated pursuant to authority given by the Secretary of 

Transportation, Federal Power Commission, Surface Transportation Board (excluding transactions involving a rail carrier as defined in section 10102 of title 49 of the United States Code), the Securities and Exchange Commission in the exercise of its jurisdiction 

under section 10 of the Public Utility Holding Company Act of 

1935, the United States Maritime Commission, or the Secretary of 

Agriculture under any statutory provision vesting such power in 

such Commission, Board, or Secretary. 

* * * * * * * 

SEC. 11. (a) That authority to enforce compliance with sections 

2, 3, 7, and 8 of this Act by the persons respectively subject thereto 

is hereby vested in the Surface Transportation Board where applicable to common carriers subject to jurisdiction under subtitle IV 

of title 49, United States Code (excluding a rail carrier as defined 

in section 10102 of such title); in the Federal Communications Commission where applicable to common carriers engaged in wire or 

radio communication or radio transmission of energy; in the Secretary of Transportation where applicable to air carriers and foreign air carriers subject to the Federal Aviation Act of 1958; in the 

Federal Reserve Board where applicable to banks, banking associations, and trust companies; and in the Federal Trade Commission 

where applicable to all other character of commerce to be exercised 

as follows: 

* * * * * * * 

SEC. 16. That any person, firm, corporation, or association shall 

be entitled to sue for and have injunctive relief, in any court of the 

United States having jurisdiction over the parties, against threatened loss or damage by a violation of the antitrust laws, including 

sections two, three, seven and eight of this Act, when and under 

the same conditions and principles as injunctive relief against 

threatened conduct that will cause loss or damage is granted by 

courts of equity, under the rules governing such proceedings, and 

upon the execution of proper bond against damages for an injunction improvidently granted and a showing that the danger of irreparable loss or damage is immediate, a preliminary injunction may 

issue: Provided, That nothing herein contained shall be construed 

to entitle any person, firm, corporation, or association, except the 

United States, to bring suit for injunctive relief against any common carrier subject to the jurisdiction of the Surface Transportation Board under subtitle IV of title 49, United States Code, except against a rail carrier (as defined in section 10102 of such title). 

In any action under this section in which the plaintiff substantially 

prevails, the court shall award the cost of suit, including a reasonable attorney’s fee, to such plaintiff. 

* * * * * * * 

FEDERAL TRADE COMMISSION ACT 

* * * * * * * 

SEC. 5. (a)(1) * * * 


sroberts on DSK3CLS3C1PROD with REPORTS
16 

(2) The Commission is hereby empowered and directed to prevent 

persons, partnerships, or corporations, except banks, savings and 

loan institutions described in section 18(f)(3), Federal credit unions 

described in section 18(f)(4), common carriers subject to the Acts to 

regulate commerce, air carriers and foreign air carriers subject to 

the Federal Aviation Act of 1958, and persons, partnerships, or corporations insofar as they are subject to the Packers and Stockyards 

Act, 1921, as amended, except as provided in section 406(b) of said 

Act, from using unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce. For purposes of this paragraph with respect to unfair methods of competition, the term ‘‘common carriers’’ excludes a rail carrier as defined in section 10102 of title 49 of the United States Code. 

* * * * * * * 

TITLE 49, UNITED STATES CODE 

* * * * * * * 

Subtitle IV—Interstate Transportation 

* * * * * * * 

PART A—RAIL 

* * * * * * * 

CHAPTER 107—RATES 

Sec. 

10701. Standards for rates, classifications, through routes, rules, and practices. 

* * * * * * * 

ø10706. Rate agreements: exemption from antitrust laws.¿ 

10706. Rate agreements. 

* * * * * * * 

SUBCHAPTER I—GENERAL AUTHORITY 

* * * * * * * 

§ 10706. øRate agreements: exemption from antitrust laws¿ 

Rate agreements 

(a)(1) * * * 

(2)(A) A rail carrier providing transportation subject to the jurisdiction of the Board under this part that is a party to an agreement of at least 2 rail carriers that relates to rates (including 

charges between rail carriers and compensation paid or received for 

the use of facilities and equipment), classifications, divisions, or 

rules related to them, or procedures for joint consideration, initiation, publication, or establishment of them, shall apply to the 

Board for approval of that agreement under this subsection. The 

Board shall approve the agreement only when it finds that the 

making and carrying out of the agreement will further the transportation policy of section 10101 of this title and may require comVerDate Mar 15 2010 06:32 Dec 01, 2010 Jkt 099006 PO 00000 Frm 00016 Fmt 6659 Sfmt 6601 E:\HR\OC\HR669P1.XXX HR669P1

sroberts on DSK3CLS3C1PROD with REPORTS
17 

pliance with conditions necessary to make the agreement further 

that policy as a condition of its approval. If the Board approves the 

agreement, it may be made and carried out under its terms and 

under the conditions required by the Boardø, and the Sherman Act 

(15 U.S.C. 1, et seq.), the Clayton Act (15 U.S.C. 12, et seq.), the 

Federal Trade Commission Act (15 U.S.C. 41, et seq.), sections 73 

and 74 of the Wilson Tariff Act (15 U.S.C. 8 and 9), and the Act 

of June 19, 1936 (15 U.S.C. 13, 13a, 13b, 21a) do not apply to parties and other persons with respect to making or carrying out the 

agreement. However, the¿. The Board may not approve or continue 

approval of an agreement when the conditions required by it are 

not met or if it does not receive a verified statement under subparagraph (B) of this paragraph. 

* * * * * * * 

(3)(A) * * * 

(B)ø(i)¿ In any proceeding in which a party alleges that a rail 

carrier voted or agreed on a rate or allowance in violation of this 

subsection, that party has the burden of showing that the vote or 

agreement occurred. A showing of parallel behavior does not satisfy 

that burden by itself. 

ø(ii) In any proceeding in which it is alleged that a carrier was 

a party to an agreement, conspiracy, or combination in violation of 

a Federal law cited in subsection (a)(2)(A) of this section or of any 

similar State law, proof of an agreement, conspiracy, or combination may not be inferred from evidence that two or more rail carriers acted together with respect to an interline rate or related 

matter and that a party to such action took similar action with respect to a rate or related matter on another route or traffic. In any 

proceeding in which such a violation is alleged, evidence of a discussion or agreement between or among such rail carrier and one 

or more other rail carriers, or of any rate or other action resulting 

from such discussion or agreement, shall not be admissible if the 

discussion or agreement— 

ø(I) was in accordance with an agreement approved under 

paragraph (2) of this subsection; or 

ø(II) concerned an interline movement of the rail carrier, and 

the discussion or agreement would not, considered by itself, 

violate the laws referred to in the first sentence of this clause. 

In any proceeding before a jury, the court shall determine whether 

the requirements of subclause (I) or (II) are satisfied before allowing the introduction of any such evidence.¿ 

* * * * * * * 

(4) Notwithstanding any other provision of this subsection, one or 

more rail carriers may enter into an agreement, without obtaining 

prior Board approval, that provides solely for compilation, publication, and other distribution of rates in effect or to become effective. 

øThe Sherman Act (15 U.S.C. 1 et seq.), the Clayton Act (15 U.S.C. 

12 et seq.), the Federal Trade Commission Act (15 U.S.C. 41 et 

seq.), sections 73 and 74 of the Wilson Tariff Act (15 U.S.C. 8 and 

9), and the Act of June 19, 1936 (15 U.S.C. 13, 13a, 13b, 21a) shall 

not apply to parties and other persons with respect to making or 

carrying out such agreement. However, the¿ The Board may, upon 

application or on its own initiative, investigate whether the parties 

to such an agreement have exceeded its scope, and upon a finding 


sroberts on DSK3CLS3C1PROD with REPORTS
18 

that they have, the Board may issue such orders as are necessary, 

including an order dissolving the agreement, to ensure that actions 

taken pursuant to the agreement are limited as provided in this 

paragraph. 

(5)(A) Whenever two or more shippers enter into an agreement 

to discuss among themselves that relates to the amount of compensation such shippers propose to be paid by rail carriers providing transportation subject to the jurisdiction of the Board under 

this part, for use by such rail carriers of rolling stock owned or 

leased by such shippers, the shippers shall apply to the Board for 

approval of that agreement under this paragraph. The Board shall 

approve the agreement only when it finds that the making and carrying out of the agreement will further the transportation policy 

set forth in section 10101 of this title and may require compliance 

with conditions necessary to make the agreement further that policy as a condition of approval. If the Board approves the agreement, it may be made and carried out under its terms and under 

the terms required by the Boardø, and the antitrust laws set forth 

in paragraph (2) of this subsection do not apply to parties and 

other persons with respect to making or carrying out the agreement¿. The Board shall approve or disapprove an agreement under 

this paragraph within one year after the date application for approval of such agreement is made. 

* * * * * * * 

(d) The Board may begin a proceeding under this section on its 

own initiative or on application. øAction of the Board under this 

section— 

ø(1) approving an agreement; 

ø(2) denying, ending, or changing approval; 

ø(3) prescribing the conditions on which approval is granted; 

or 

ø(4) changing those conditions, 

has effect only as related to application of the antitrust laws referred to in subsection (a) of this section.¿ 

ø(e)(1) The Federal Trade Commission, in consultation with the 

Antitrust Division of the Department of Justice, shall prepare periodically an assessment of, and shall report to the Board on— 

ø(A) possible anticompetitive features of— 

ø(i) agreements approved or submitted for approval 

under subsection (a) of this section; and 

ø(ii) an organization operating under those agreements; 

and 

ø(B) possible ways to alleviate or end an anticompetitive feature, effect, or aspect in a manner that will further the goals 

of this part and of the transportation policy of section 10101 

of this title. 

ø(2) Reports received by the Board under this subsection shall be 

published and made available to the public under section 552(a) of 

title 5.¿ 

(e) Nothing in this section exempts an agreement approved, or 

submitted for approval, under subsection (a) from the application of 

the antitrust laws (as defined in subsection (a) of the 1st section of 

the Clayton Act, but including section 5 of the Federal Trade Commission Act to the extent such section 5 applies to unfair methods 

of competition). 


sroberts on DSK3CLS3C1PROD with REPORTS
19 

(f) In reviewing any agreement submitted for approval under subsection (a), the Board shall take into account, among any other considerations, the impact of such agreement on shippers, consumers, 

and affected communities. The Board shall make findings regarding 

such impact, which shall be— 

(1) made part of the administrative record; 

(2) submitted to any other reviewing agency for consideration 

in making its determination; and 

(3) available in any judicial review of the Board’s decision regarding such agreement. 

* * * * * * * 

CHAPTER 113—FINANCE 

* * * * * * * 

SUBCHAPTER II—COMBINATIONS 

§ 11321. Scope of authority 

(a) øThe authority¿ Subject to subsection (c), the authority of the 

Board under this subchapter is exclusive. A rail carrier or corporation participating in or resulting from a transaction approved by or 

exempted by the Board under this subchapter may carry out the 

transaction, own and operate property, and exercise control or franchises acquired through the transaction without the approval of a 

State authority. A rail carrier, corporation, or person participating 

in that approved or exempted transaction øis exempt from the antitrust laws and from all other law,¿ is exempt from all other law (except the laws referred to in subsection (c)), including State and municipal law, as necessary to let that rail carrier, corporation, or person carry out the transaction, hold, maintain, and operate property, 

and exercise control or franchises acquired through the transaction. 

However, if a purchase and sale, a lease, or a corporate consolidation or merger is involved in the transaction, the carrier or corporation may carry out the transaction only with the assent of a majority, or the number required under applicable State law, of the votes 

of the holders of the capital stock of that corporation entitled to 

vote. The vote must occur at a regular meeting, or special meeting 

called for that purpose, of those stockholders and the notice of the 

meeting must indicate its purpose. 

* * * * * * * 

(c) Nothing in this subchapter exempts a transaction described in 

subsection (a) from the application of the antitrust laws (as defined 

in subsection (a) of the 1st section of the Clayton Act, but including 

section 5 of the Federal Trade Commission Act to the extent such 

section 5 applies to unfair methods of competition). The preceding 

sentence shall not apply to any transaction relating to the pooling 

of railroad cars approved by the Surface Transportation Board or 

its predecessor agency pursuant to section 11322. 

(d) In reviewing any transaction described in subsection (a), the 

Board shall take into account, among any other considerations, the 

impact of the transaction on shippers and affected communities. 


sroberts on DSK3CLS3C1PROD with REPORTS
20 

ADDITIONAL VIEWS

The bill that the Judiciary Committee reported out of Committee 

on September 16, 2009 marks a significant improvement over previous efforts to repeal the Federal antitrust exemptions for rail carriers. The concerns of the shipping community are real. Rising 

costs mean that when their existing long-term contracts for the 

shipment of coal expire, for example, some power companies will 

face drastically higher rates from the railroads. 

To that end, the elimination of some antitrust exemptions for the 

railroad industry, such as subjecting mergers in the industry to review by the Antitrust Division of the Department of Justice, is justified. However, when eliminating Federal antitrust exemptions, 

Congress should be careful about the unintended consequences of 

its actions. The railroads have spent significant capital on business 

plans that are based, in part, on these existing exemptions. Removal of the exemptions may lead to reductions in service, which 

would harm not only the railroads, but also the shippers, and the 

American economy as a whole. 

Accordingly, while the elimination of antitrust exemptions may 

help shippers, there remain issues with this legislation that must 

be addressed before we can fully support it. Primarily, those concerns are: 

(1) Ensuring that the legislation does not create a presumption 

of illegality with respect to railroad conduct. 

(2) Appropriately limiting the remedies available to shippers 

so that rail traffic is not unduly burdened. For example, 

the shippers’ ability to seek injunctive relief throughout the 

country could lead to conflicting judgments in adjoining jurisdictions. 

(3) Restoring the procedural protections relating to joint rate 

quotes. 

(4) Finding the appropriate balance between the need to protect the railroads’ investment backed interests and the necessity of opening up some of the railroads’ most concerning practices to antitrust challenge. The railroads, understandably, feel that all previously immunized transactions should remain immunized. The shippers, equally 

understandably, feel that they should be able to challenge 

those very transactions. 

It is this last concern that makes passage of this legislation most 

problematic. There is no easy solution to this problem, but both 

sides should remain at the negotiating table and be willing to make 

concessions. The American people and our economy deserve no less. 

Finally, it has been clear from the Judiciary Committee’s hearings on this issue that one of the primary concerns of the shippers 

is the lack of what they view as an effective regulatory body. While 

Surface Transportation Board reform remains the province of other 

committees, it is clear to us that passage of this bill, alone, will do 

very little to improve the shippers’ situation. 

While significant progress has been made on this legislation in 

the last year, the bill as reported must change before we are able 

to support it without reservation. We are encouraged by the discusVerDate Mar 15 2010 06:32 Dec 01, 2010 Jkt 099006 PO 00000 Frm 00020 Fmt 6602 Sfmt 6602 E:\HR\OC\HR669P1.XXX HR669P1

sroberts on DSK3CLS3C1PROD with REPORTS
21 

sions that we have had with the railroads and with the shipping 

community and remain hopeful that there are compromises possible that will garner our support and result in the bill becoming 

law. 

LAMAR SMITH. 

BOB GOODLATTE. 

Æ 


sroberts on DSK3CLS3C1PROD with REPORTS