```

[House Report 111-669]
[From the U.S. Government Publishing Office]

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

                             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 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.''.
  (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 themselves 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.
    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.
---------------------------------------------------------------------------
    \1\STB-approved transactions under 49 U.S.C. Sec. 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. Sec. 10706 are similarly exempt.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \2\15 U.S.C. Sec. 26.
    \3\Keogh v. Chicago & Northwestern Railway, 260 U.S. 156 (1922); 
see Square D Co. v. Niagara Frontier Tariff Bureau, Inc., 476 U.S. 409 
(1986).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \4\Letter from Assistant Attorney General William E. Moschella to 
Rep. F. James Sensenbrenner, Jr. (September 27, 2004).
---------------------------------------------------------------------------

                           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. Sec. 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. Sec. 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.''
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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, so-called ``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 
non-competitive rates (defined as above 300% of variable cost) 
has increased since 1985.\6\ The rates paid by these captive 
shippers are, on average, 20.9% higher, costing captive 
shippers an estimated excess of $1.3 billion on an annual 
basis.\7\
---------------------------------------------------------------------------
    \6\October 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.
    \7\Testimony of Curtis Grimm to the U.S. House of Representatives 
Committee on Transportation and Infrastructure, Subcommittee on 
Railroads (March 31, 2004).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
    \10\See 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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \11\Letter from Assistant Attorney General William Moschella to 
Hon. F. James Sensenbrenner, Jr. (September 27, 2004).
---------------------------------------------------------------------------
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.
    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 
then-Chairman 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 pro-competitive benefits of the 
sale.''\12\
---------------------------------------------------------------------------
    \12\Id.
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
    \13\Antitrust Modernization Commission, Report and Recommendations 
335 (April 2007).
    \14\Id.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------

                                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.

               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.
    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 likely 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\
---------------------------------------------------------------------------
    \17\49 U.S.C. Sec. 10706(a)(2)(A).
    \18\49 U.S.C. Sec. 10706(a)(4).
    \19\49 U.S.C. Sec. 10706(a)(5)(A).
---------------------------------------------------------------------------
    Section 3(a)(2) of the bill removes a sentence in 49 U.S.C. 
Sec. 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. 
Sec. 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. Sec. 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. Sec. 10706(f), 
requiring the STB to make findings regarding the impact of any 
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. Sec. 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. Sec. 11321(c) that clarifies 
that the antitrust laws apply to them, except for STB-approved 
pooling agreements under 49 U.S.C. Sec. 11322, for which the 
current exemption is preserved. Section 3(b)(2) of the bill 
also creates a new 49 U.S.C. Sec. 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.
---------------------------------------------------------------------------
    \20\Keogh v. Chicago & Northwestern Railway, 260 U.S. 156 (1922).
---------------------------------------------------------------------------
    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):

                              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.
  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) * * *
  (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.
     * * * * * * *
[10706. Rate agreements: exemption from antitrust laws.]
10706. Rate agreements.
     * * * * * * *

SUBCHAPTER I--GENERAL AUTHORITY

           *       *       *       *       *       *       *

Sec. 10706. [Rate 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 compliance 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 Board[, 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)[(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.
  [(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--
          [(I) was in accordance with an agreement approved 
        under paragraph (2) of this subsection; or
          [(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. [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) 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 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 Board[, 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. [Action of the Board 
under this section--
          [(1) approving an agreement;
          [(2) denying, ending, or changing approval;
          [(3) prescribing the conditions on which approval is 
        granted; or
          [(4) changing those conditions,
has effect only as related to application of the antitrust laws 
referred to in subsection (a) of this section.]
  [(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--
          [(A) possible anticompetitive features of--
                  [(i) agreements approved or submitted for 
                approval under subsection (a) of this section; 
                and
                  [(ii) an organization operating under those 
                agreements; and
          [(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.
  [(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).
  (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

Sec. 11321. Scope of authority

  (a) [The 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 [is 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.
                            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 discussions 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.

                                  
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