U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

1

19–010

" SENATE ! 108TH CONGRESS

1st Session 

REPORT

2003

108–129

Calendar No. 253

SURFACE TRANSPORTATION BOARD 

REAUTHORIZATION ACT OF 2003

REPORT

OF THE

COMMITTEE ON COMMERCE, SCIENCE, AND 

TRANSPORTATION

ON

S. 1389

AUGUST 26, 2003.—Ordered to be printed

Filed, under the authority of the order of the Senate of July 29 

(legislative day, July 21), 2003


congress.#13
(II)

SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION 

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

JOHN MCCAIN, Arizona, Chairman 

TED STEVENS, Alaska 

CONRAD BURNS, Montana 

TRENT LOTT, Mississippi 

KAY BAILEY HUTCHISON, Texas 

OLYMPIA J. SNOWE, Maine 

SAM BROWNBACK, Kansas 

GORDON SMITH, Oregon 

PETER G. FITZGERALD, Illinois 

JOHN ENSIGN, Nevada 

GEORGE ALLEN, Virginia 

JOHN E. SUNUNU, New Hampshire 

ERNEST F. HOLLINGS, South Carolina 

DANIEL K. INOUYE, Hawaii 

JOHN D. ROCKEFELLER IV, West Virginia 

JOHN F. KERRY, Massachusetts 

JOHN B. BREAUX, Louisiana 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

BARBARA BOXER, California 

BILL NELSON, Florida 

MARIA CANTWELL, Washington 

FRANK LAUTENBERG, New Jersey 

JEANNE BUMPUS, Staff Director and General Counsel 

ANN BEGEMAN, Deputy Staff Director 

ROBERT W. CHAMBERLIN, Chief Counsel 

KEVIN D. KAYES, Democratic Staff Director and Chief Counsel 

GREGG ELIAS, Democratic General Counsel

Calendar No. 253

108TH CONGRESS REPORT " SENATE ! 1st Session 108–129

SURFACE TRANSPORTATION BOARD REAUTHORIZATION 

ACT OF 2003

AUGUST 26, 2003.—Ordered to be printed

Filed, under authority of the order of the Senate of JULY 29 (legislative day, JULY

21), 2003

Mr. MCCAIN, from the Committee on Commerce, Science, and 

Transportation, submitted the following 

R E P O R T 

[To accompany S. 1389]

The Committee on Commerce, Science, and Transportation, to 

which was referred the bill (S. 1389) ‘‘A Bill To authorize appropriations for the Surface Transportation Board for fiscal years 2004 

through 2008, and for other purposes’’, having considered the same, 

reports favorably thereon with amendment and recommends that 

the bill (as amended) do pass. 

PURPOSE OF THE BILL

The primary purpose of S. 1389 is to authorize funds for the Surface Transportation Board (STB) for fiscal years (FYs) 2004 

through 2008. 

BACKGROUND AND NEEDS

The STB was established on January 1, 1996, by the ICC Termination Act of 1995 (ICCTA), as an independent agency within the 

Department of Transportation (DOT). The STB’s primary function 

is to oversee the economic regulation of the nation’s freight railroads. The Board has jurisdiction over railroad rate and service 

matters, railroad restructuring transactions (mergers, line sales, 

line construction, and abandonments), and related labor issues. In 

addition to these responsibilities, the STB oversees certain trucking 

company, moving van, and non-contiguous ocean shipping company 

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1The ICCTA became effective December 29, 1995. The following October, Congress approved 

legislation to codify transportation laws (P.L. 104-287) that, among other provisions, modified 

the due date for the expedited procedures to January 1, 1997. 

rate matters; certain intercity passenger bus company structure, financial, and operational matters; and certain pipeline matters, including rate-related matters, not regulated by the Federal Energy 

Regulatory Commission. 

The STB is comprised of three members appointed by the President and confirmed by the Senate. Not more than two members of 

the STB may belong to the same political party. The Board’s Chairman is designated by the President. The term of each member is 

for five years and no individual may serve as a member of the 

Board for more than two terms. Upon the expiration of a term, the 

law permits a member to continue to serve until a successor is appointed, but not for more than a one-year period. 

The Board has approximately 145 employees and its FY 2003 appropriation was $19.5 million. The agency has remained unauthorized since the end of fiscal year 1998. 

SUMMARY OF PROVISIONS

S. 1389 would authorize funding for the activities of the STB for 

FYs 2004 through 2008. It would also amend current law to provide that the designation by the President of one STB member to 

serve as Chairman is subject to Senate confirmation. 

During consideration of the bill, the Senate Committee on Commerce, Science, and Transportation (the Committee) adopted an 

amendment offered by Senators McCain and Hollings to address a 

long-standing concern about the ability of small shippers to challenge railroad rates at the STB. The amendment would direct the 

Board, within 180 days following enactment, to supplement its existing guidelines for handling challenges to the reasonableness of 

rail rates in those cases in which a full stand-alone cost presentation is too costly. 

A rulemaking proceeding to develop simplified rate guidelines 

was first initiated in 1986 by the Interstate Commerce Commission 

(ICC), the STB’s predecessor. In 1995, because little had been accomplished, Congress, in the ICCTA, directed the newly-created 

STB to complete the rulemaking proceeding within one year following enactment 1 and established that the guidelines were to 

apply to ‘‘. . . cases in which a full stand-alone cost presentation 

is too costly, given the value of the case.’’ Those guidelines were 

adopted in Rate Guidelines -- Non-Coal Proceedings, 1 S.T.B. 1004 

(1996). 

Not a single case has been filed under the simplified guidelines. 

Shippers charge that the guidelines are unclear as to who may be 

eligible to use them and how the simplified rate criteria would be 

applied. They also have expressed concern about the potential cost 

and duration of the regulatory process. At the same time, the Association of American Railroads, the trade association for the freight 

rail industry, has challenged the new guidelines in Federal court, 

contending that the guidelines did not fulfill Congress’s directive to 

establish a simple and expedited method to determine whether 

rates in small cases are reasonable. 

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The Committee is concerned that these uncertainties have had 

the effect of deterring small shippers with low-value cases and little negotiating leverage from seeking regulatory relief. Accordingly, 

the amendment would direct the Board to provide clarity in both 

the eligibility criteria and the tests for rate reasonableness. The 

amendment also would set a time limit for the Board to decide 

such cases and caps the filing fee that may apply to these cases. 

The Committee will take further steps if the STB fails to meet the 

requirements of S. 1389 or the supplemental guidelines are not utilized in small rate cases because they are difficult to use or conducive to dilatory tactics by litigants. 

The amendment would direct the STB to consider the size of the 

shipper, the value of the case, and other relevant factors in determining the types of rate challenges that will be eligible for the expedited procedures. The Committee expects the Board to have the 

flexibility to consider any and all factors it considers relevant in defining eligibility. However, the Committee believes that the expedited procedures should apply to small rate cases and not be limited to small shippers. Whether a rate is reasonable or unreasonable is unrelated to a shipper’s size, revenues, or ability to pay, and 

the same rate standards should apply to any shipper who brings 

a small rate case. 

Reflecting the need for expedited handling of these cases, the 

amendment directs the Board to streamline the evidentiary requirements in these cases. The amendment also would permit an 

initial decision in expedited rate cases to be made by an administrative law judge (ALJ). This authority is intended to further accelerate the timetable for adjudicating small rate cases. ALJ’s would 

be bound by the legal standards for determining rate reasonableness established by the Staggers Rail Act of 1980 and subsequent 

legislation. The Committee intends that the parties will retain the 

ability to obtain a review by the full Board of the initial decision 

by an ALJ. 

The amendment also would limit the filing fee in small rate cases 

to the fee charged to bring a civil action in United States District 

Court. The filing fee for District Court cases is currently $150. STB 

filing fees have been a topic of debate and concern for some time. 

In 1984, the ICC adopted a fee of $500 for all rate cases. The fee 

was subsequently raised to $550 in 1990, to $600 in 1991, and to 

$1,000 in 1992. In 1996, the Board proposed increasing fees dramatically for all rate cases, suggesting a fee of $23,100 for smaller 

complaints not filed under the Board’s coal rate guidelines. Ultimately, the Board maintained the $1,000 fee for small rate cases 

(the filing fee for large rate cases was raised and is now a maximum of $64,000) and in August 2002, proposed a filing fee at the 

level charged to file a case in United States District Court, based 

on legislation introduced by Senator Rockefeller. The Committee 

believes this is a reasonable fee for small rate cases. However, the 

filing fees for all rate cases, both large and small, do not nearly 

cover the STB’s actual costs for handling such rate cases. In the 

event that the supplemental small rate case procedures are widely 

used, it may be necessary to supplement the STB’s annual appropriation. 

The Committee also approved an amendment offered by Senators 

Smith and Wyden that would codify the voluntary agreement 

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reached by 11 railroad labor unions and 6 Class I railroads in 

March 2001 with respect to the implementation of collective bargaining agreements in the event of new mergers. In past mergers, 

decisions by arbitrators about the terms of collective bargaining 

agreements that will apply after a merger have usually been decided in favor of the carrier. These new agreements are not reached 

through the collective bargaining process. While the Railway Labor 

Act normally protects unions from a railroad’s unilateral changes 

to collective bargaining agreements, this protection is lost during 

the merger process. 

The labor/management agreement will provide that when newly 

consolidated rail operations involving signatories to the agreement 

are subject to multiple collective bargaining agreements, the labor 

union parties, rather than the rail management parties, may 

choose which collective bargaining agreement will govern the new 

operations. Codifying this agreement would ensure that it will not 

be set aside by STB appointed arbitrators. 

The Committee’s adoption of the amendment in no way indicates 

the Committee’s support of additional railroad mergers. There are 

now only 7 Class I carriers, including 2 based in Canada. Any further consolidation would require close scrutiny by the STB and the 

Congress. 

LEGISLATIVE HISTORY

S. 1389, the Surface Transportation Board Reauthorization Act of 

2003, was introduced by Senators McCain and Hollings on July 10, 

2003, and was referred to the Committee on Commerce, Science, 

and Transportation. 

On July 17, 2003, the Committee ordered S. 1389 to be favorably 

reported to the Senate with two amendments. 

By voice vote, the Committee adopted an amendment offered by 

Senators McCain and Hollings to require the STB to issue new 

rules to address small rate challenges within 180 days following 

enactment. The amendment also would lower the filing fee in small 

rate cases and allow an initial decision in small rate cases to be 

made by an ALJ with an opportunity for appeal to the Board. 

Also by voice vote, the Committee adopted an amendment offered 

by Senators Smith and Wyden to adopt the terms of an agreement 

negotiated between all of the railroads and labor organizations that 

participate in national collective bargaining. The agreement provides that in any future merger or consolidation involving the signatories, rail labor organizations will choose the collective bargaining agreements that will apply upon consummation. 

ESTIMATED COSTS

In accordance with paragraph 11(a) of rule XXVI of the Standing 

Rules of the Senate and section 403 of the Congressional Budget 

Act of 1974, the Committee provides the following cost estimate, 

prepared by the Congressional Budget Office:

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U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, July 29, 2003. 

Hon. JOHN MCCAIN,

Chairman, Committee on Commerce, Science, and Transportation, 

U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 1389, the Surface Transportation Board Reauthorization Act of 2003. 

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

to provide them. The CBO staff contact is Rachel Milberg. 

Sincerely, 

ROBERT A. SUNSHINE

(For Douglas Holtz-Eakin, Director). 

Enclosure. 

S. 1389—Surface Transportation Board Reauthorization Act of 

2003

Summary: The Surface Transportation Board (STB) regulates 

rates, services, and company structures for firms involved in interstate transportation, including railroads, truckers, ocean shippers, 

and intercity buses. The STB also provides a forum for resolving 

disputes among firms in these industries. S. 1389 would authorize 

the appropriation of about $112 million for the STB’s operations 

over the 2004–2008 period. 

Assuming appropriation of the authorized amounts, CBO estimates that implementing S. 1389 would cost $109 million over the 

2004–2008 period. enacting S. 1389 would not affect direct spending or revenues. 

S. 1389 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA) 

and would impose no costs on state, local, or tribal governments. 

Estimated Cost to the Federal Government: The estimated budgetary impact of S. 1389 is shown in the following table. The costs 

of this legislation fall within budget function 400 (transportation). 

For this estimate, CBO assumes that S. 1389 will be enacted near 

the start of fiscal year 2004, and that the authorized amounts will 

be appropriated for each year. Estimates of outlays are based on 

information from the Surface Transportation Board and historical 

spending patterns for its operations.

By fiscal year, in millions of dollars—

2003 2004 2005 2006 2007 2008

SPENDING SUBJECT TO APPROPRIATION

STB spending under current law: 

Budget authority .................................................................. 18 0 0 0 0 0 

Estimated outlays ................................................................ 18 2 0 0 0 0 

Proposed changes: 

Authorization level ............................................................... 0 21 21 24 23 23 

Estimated outlays ................................................................ 0 18 21 24 23 23 

STB spending under S. 1389: 

Authorization level ............................................................... 18 21 21 24 23 23 

Estimated outlays ................................................................ 18 20 21 24 23 23 

1 The 2003 level is the amount appropriated for that year. 

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Intergovernmental and Private-Sector Impact: S. 1389 contains 

no intergovernmental or private-sector mandates as defined in 

UMRA and would impose no costs on state, local, or tribal governments. 

Estimate Prepared by: Federal Costs: Rachel Milberg. Impact on 

State, Local, and Tribal Governments: Gregory Waring. Impact on 

the Private Sector: Jean Talarico. 

Estimate Approved by: Peter H. Fontaine, Deputy Assistant Director for Budget Analysis. 

REGULATORY IMPACT STATEMENT

In accordance with paragraph 11(b) of rule XXVI of the Standing 

Rules of the Senate, the Committee provides the following evaluation of the regulatory impact of the legislation, as reported:

NUMBER OF PERSONS COVERED

The legislation reauthorizes existing programs. Therefore, the 

number of persons covered should be consistent with current levels. 

ECONOMIC IMPACT

S. 1389 would authorize appropriations of $20.5 million for fiscal 

year 2004, rising to $23.5 million by fiscal year 2008. These funding levels are modest and are not expected to have an inflationary 

impact on the nation’s economy. 

PRIVACY

This legislation will not have any adverse impact on the personal 

privacy of the individuals affected. 

PAPERWORK

An amendment to the bill adopted by the Committee would require the STB to issue new rules to address small rate challenges, 

defined in existing law as ‘‘. . . cases in which a full stand-alone 

cost presentation is too costly, given the value of the case’’ (49 

U.S.C. Sec. 10701(d)(3)). The new rules may create additional paperwork for shippers involved in challenging small rate cases, as 

that term is defined by the STB as part of the new rules, and for 

railroads affected by such rate challenges. However, new paperwork requirements will only arise because the new rules provide an 

effective means of challenging rates before the STB. Similar paperwork requirements exist today, but no cases have been filed under 

the STB’s existing rules for small shippers. 

SECTION-BY-SECTION ANALYSIS

Sec. 1. Short Title 

This Act may be cited as the ‘‘Surface Transportation Board Reauthorization Act of 2003’’. 

Sec. 2. Authorization of Appropriations 

Section 2 would authorize the following sums to be appropriated 

to the STB: $20,516,000 for FY 2004; $21,215,000 for FY 2005; 

$23,770,000 for FY 2006; $22,564,000 for FY 2007; and $23,488,000 

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for FY 2008. The somewhat higher authorization for FY 2006 includes $2.2 million for relocating the Board’s offices. 

Sec. 3. Chairman Designated with Senate Confirmation 

Section 3 would make the President’s designation of one of the 

STB members to serve as Chairman subject to Senate confirmation. 

Sec. 4. Expedited Procedure for Small Rate Challenges 

Section 4 would require the STB to issue new regulations to address small rate challenges within 180 days following enactment. 

The rules would establish standards for determining what rate 

cases will be eligible to use expedited procedures taking into account the size of the shipper, the value of the case and other relevant factors, and establish the specific test or tests for determining whether the challenged rate is reasonable. Filing fees in 

small rate cases would not exceed the fee charged to bring a civil 

action in United States District Court. An initial decision could be 

made by an ALJ, with an opportunity to appeal the ALJ’s decision 

to the Board. Finally, the amendment would require the STB to 

make recommendations to Congress for any additional legislative 

changes the Board determines are necessary to address the handling of small rate cases. 

Sec. 5. Application of Certain Agreements 

This section would codify the voluntary agreement reached by 

railroad labor and railroad management in March 2001 with respect to the implementation of collective bargaining agreements in 

the event of additional mergers. It provides that when newly consolidated rail operations involving the signatories to the agreement 

are subject to multiple collective bargaining agreements, the labor 

union parties, rather than the rail management parties, may 

choose which collective bargaining agreement will govern the new 

operations. Codifying this agreement would ensure that it will not 

be set aside by STB-appointed arbitrators in the event of another 

round of mergers. 

CHANGES IN EXISTING LAW

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, 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 material is printed in italic, existing law in which no change is proposed is shown in roman):

TITLE 49, UNITED STATES CODE 

SUBTITLE I—DEPARTMENT OF TRANSPORTATION

CHAPTER 7. SURFACE TRANSPORTATION BOARD

SUBCHAPTER I. ESTABLISHMENT

§ 701. Establishment of Board 

(a) ESTABLISHMENT.—There is hereby established within the Department of Transportation the Surface Transportation Board. 

(b) MEMBERSHIP.— 

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(1) The Board shall consist of 3 members, to be appointed by 

the President, by and with the advice and consent of the Senate. Not more than 2 members may be appointed from the 

same political party. 

(2) At any given time, at least 2 members of the Board shall 

be individuals with professional standing and demonstrated 

knowledge in the fields of transportation or transportation regulation, and at least one member shall be an individual with 

professional or business experience (including agriculture) in 

the private sector. 

(3) The term of each member of the Board shall be 5 years 

and shall begin when the term of the predecessor of that member ends. An individual appointed to fill a vacancy occurring 

before the expiration of the term for which the predecessor of 

that individual was appointed, shall be appointed for the remainder of that term. When the term of office of a member 

ends, the member may continue to serve until a successor is 

appointed and qualified, but for a period not to exceed one 

year. The President may remove a member for inefficiency, neglect of duty, or malfeasance in office. 

(4) On January 1, 1996, the members of the Interstate Commerce Commission serving unexpired terms on December 29, 

1995, shall become members of the Board, to serve for a period 

of time equal to the remainder of the term for which they were 

originally appointed to the Interstate Commerce Commission. 

Any member of the Interstate Commerce Commission whose 

term expires on December 31, 1995, shall become a member of 

the Board, subject to paragraph (3). 

(5) No individual may serve as a member of the Board for 

more than 2 terms. In the case of an individual who becomes 

a member of the Board pursuant to paragraph (4), or an individual appointed to fill a vacancy occurring before the expiration of the term for which the predecessor of that individual 

was appointed, such individual may not be appointed for more 

than one additional term. 

(6) A member of the Board may not have a pecuniary interest in, hold an official relation to, or own stock in or bonds of, 

a carrier providing transportation by any mode and may not 

engage in another business, vocation, or employment. 

(7) A vacancy in the membership of the Board does not impair the right of the remaining members to exercise all of the 

powers of the Board. The Board may designate a member to 

act as Chairman during any period in which there is no Chairman designated by the President. 

(c) CHAIRMAN.— 

(1) There shall be at the head of the Board a Chairman, who 

shall be designated by the øPresident¿ President, by and with 

the advice and consent of the Senate, from among the members 

of the Board. The Chairman shall receive compensation at the 

rate prescribed for level III of the Executive Schedule under 

section 5314 of title 5. 

(2) Subject to the general policies, decisions, findings, and 

determinations of the Board, the Chairman shall be responsible for administering the Board. The Chairman may delegate 

9

the powers granted under this paragraph to an officer, employee, or office of the Board. The Chairman shall— 

(A) appoint and supervise, other than regular and fulltime employees in the immediate offices of another member, the officers and employees of the Board, including attorneys to provide legal aid and service to the Board and 

its members, and to represent the Board in any case in 

court; 

(B) appoint the heads of offices with the approval of the 

Board; 

(C) distribute Board business among officers and employees and offices of the Board; 

(D) prepare requests for appropriations for the Board 

and submit those requests to the President and Congress 

with the prior approval of the Board; and 

(E) supervise the expenditure of funds allocated by the 

Board for major programs and purposes. 

§ 11326. Employee protective arrangements in transactions 

involving rail carriers 

(a) Except as otherwise provided in this section, when approval 

is sought for a transaction under sections 11324 and 11325 of this 

title, the Board shall require the rail carrier to provide a fair arrangement at least as protective of the interests of employees who 

are affected by the transaction as the terms imposed under section 

5(2)(f) of the Interstate Commerce Act before February 5, 1976, and 

the terms established under section 24706(c) of this title. Notwithstanding this part, the arrangement may be made by the rail carrier and the authorized representative of its employees. The arrangement and the order approving the transaction must require 

that the employees of the affected rail carrier will not be in a worse 

position related to their employment as a result of the transaction 

during the 4 years following the effective date of the final action 

of the Board (or if an employee was employed for a lesser period 

of time by the rail carrier before the action became effective, for 

that lesser period). 

(b) When approval is sought under sections 11324 and 11325 for 

a transaction involving one Class II and one or more Class III rail 

carriers, there shall be an arrangement as required under subsection (a) of this section, except that such arrangement shall be 

limited to one year of severance pay, which shall not exceed the 

amount of earnings from the railroad employment of that employee 

during the 12-month period immediately preceding the date on 

which the application for approval of such transaction is filed with 

the Board. The amount of such severance pay shall be reduced by 

the amount of earnings from railroad employment of that employee 

with the acquiring carrier during the 12-month period immediately 

following the effective date of the transaction. The parties may 

agree to terms other than as provided in this subsection. 

(c) When approval is sought under sections 11324 and 11325 for 

a transaction involving only Class III rail carriers, this section 

shall not apply.

(d) CERTAIN AGREEMENTS.—The terms of the agreement entitled 

‘‘Revised Standards for Preemption of Collective Bargaining Agreements for Transactions Initiated Pursuant to Section 11323 of the 

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Interstate Commerce Act’’ dated March 21, 2001, by and between 6 

Class I railroads and 11 labor organizations, and the terms of the 

agreement entitled ‘‘Revised Standards for Preemption of Collective 

Bargaining Agreements for Transactions Initiated Pursuant to Section 11323 of the Interstate Commerce Act’’ dated February 11, 

2000, by and between 5 Class I railroads, the National Carriers’ 

Conference Committee, and the United Transportation Union (except for the provisions in both agreements stating ‘‘The terms of this 

agreement will become null and void when enacted into law’’), shall 

apply to the signatories to such agreements in connection with 

transactions that are approved under sections 11324 and 11325 and 

that are covered by such agreements, unless the affected rail carriers 

and the applicable labor organization or organizations agree on alternative terms. The terms of such agreements shall not be subject 

to the exemption provisions of section 11321(a) or any future exemption provisions.

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