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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2125 Introduced in House (IH)]

110th CONGRESS
  1st Session
                                H. R. 2125

  To amend title 49, United States Code, to ensure competition in the 
 rail industry, enable rail customers to obtain reliable rail service, 
 and provide those customers with a reasonable process for challenging 
                       rate and service disputes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                              May 3, 2007

Mr. Oberstar (for himself, Mr. Baker, Mr. Berry, Mr. Walz of Minnesota, 
   Mr. Franks of Arizona, Mr. Kind, Mr. Alexander, Mr. Boustany, Ms. 
 Hirono, Mr. Simpson, Ms. Herseth Sandlin, and Mr. Pomeroy) introduced 
      the following bill; which was referred to the Committee on 
                   Transportation and Infrastructure

_______________________________________________________________________

                                 A BILL

 
  To amend title 49, United States Code, to ensure competition in the 
 rail industry, enable rail customers to obtain reliable rail service, 
 and provide those customers with a reasonable process for challenging 
                       rate and service disputes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS; AMENDMENT OF TITLE 49, 
              UNITED STATES CODE.

    (a) Short Title.--This Act may be cited as the ``Railroad 
Competition and Service Improvement Act of 2007''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents; amendment of title 49, United 
                            States Code.
           TITLE I--ENSURING COMPETITION IN THE RAIL INDUSTRY

Sec. 101. Clarification of rail transportation policy and directives 
                            for implementation.
Sec. 102. Requirement for Railroads to Provide Rates for 
                            Transportation.
Sec. 103. Elimination of barriers to competition between Class I, Class 
                            II, and Class III rail carriers.
Sec. 104. Reciprocal switching.
Sec. 105. Areas of inadequate rail competition.
             TITLE II--IMPROVING SERVICE TO RAIL CUSTOMERS

Sec. 201. Rail service.
Sec. 202. Railroad obligation to serve.
Sec. 203. Rail customer advocate.
        TITLE III--PROVIDING ACCESS TO A REASONABLE RATE PROCESS

Sec. 301. Rights of rail customers.
Sec. 302. Improvement of rate reasonableness standard.
Sec. 303. Filing fees on petitions for captive rate relief.
Sec. 304. Arbitration of rail disputes.
                   TITLE IV--AUTHORITY TO INVESTIGATE

Sec. 401. Authority of Board to investigate and suspend certain 
                            railroad actions.
    (c) Amendment of Title 49, United States Code.--Except as otherwise 
expressly provided, whenever in this Act an amendment or repeal is 
expressed in terms of an amendment to, or a repeal of, a section or 
other provision, the reference shall be considered to be made to a 
section or other provision of title 49, United States Code.

           TITLE I--ENSURING COMPETITION IN THE RAIL INDUSTRY

SEC. 101. CLARIFICATION OF RAIL TRANSPORTATION POLICY AND DIRECTIVES 
              FOR IMPLEMENTATION.

    Section 10101 is amended--
            (1) by inserting ``(a) In General.--'' before ``In 
        regulating''; and
            (2) by adding at the end the following:
    ``(b) Implementation Directives.--In implementing subtitle IV, the 
Board shall--
            ``(1) ensure, to the maximum extent possible, effective 
        competition among rail carriers at origins and destinations;
            ``(2) ensure reasonable rates for rail customers in the 
        absence of competition; and
            ``(3) ensure consistent, efficient, and reliable rail 
        transportation service for rail customers, including the timely 
        provision of rail cars requested by rail customers.''.

SEC. 102. REQUIREMENT FOR RAILROADS TO PROVIDE RATES FOR 
              TRANSPORTATION.

    Section 11101(a) is amended--
            (1) by inserting ``(1)'' after ``(a)'';
            (2) by redesignating the second and third sentences as 
        paragraph (3) and indenting accordingly; and
            (3) by inserting a new paragraph (2) as follows:
    ``(2) Upon the request of a shipper, a rail carrier shall establish 
a rate for transportation and provide service requested by the shipper 
between any two points on the system of that carrier where traffic 
originates, terminates, or may reasonably be interchanged. A carrier 
shall establish a rate and provide service upon such request without 
regard to--
            ``(A) the location of the movement on the rail system, 
        including terminal areas;
            ``(B) whether the rate established is for part of a 
        movement between a point of origin and a destination;
            ``(C) whether the shipper has made arrangements for 
        transportation for any other part of that movement; or
            ``(D) whether the shipper has a contract with any rail 
        carrier for part or all of its transportation needs over the 
        route of movement.''.

SEC. 103. ELIMINATION OF BARRIERS TO COMPETITION BETWEEN CLASS I, CLASS 
              II, AND CLASS III RAIL CARRIERS.

    (a) In General.--Section 10901 is amended by adding at the end the 
following new subsection:
    ``(e)(1) The Board may not issue a certificate authorizing an 
activity described in subsection (a), section 10902, or section 11323, 
or exempt a person, class of persons, or a transaction or service from 
the applicability of this section with respect to such an activity 
under section 10502, if the activity involves a transfer of interest in 
a line of railroad, from a Class I rail carrier to a Class II rail 
carrier or Class III rail carrier and the activity directly or 
indirectly would--
            ``(A) restrict or limit the ability of the Class II or 
        Class III rail carrier to interchange traffic with other rail 
        carriers;
            ``(B) restrict or limit competition of rail carriers in the 
        region affected by the activity in a manner that would violate 
        antitrust laws of the United States (notwithstanding any 
        exemption from the applicability of antitrust laws that is 
        provided under section 10706 or any other provision of law); or
            ``(C) require higher per car interchange rates for Class II 
        or Class III rail carriers to interchange traffic with other 
        rail carriers.
    ``(2) Any party to an activity described in paragraph (1) that has 
been carried out, or any rail shipper affected by such an activity, may 
request that the Board review the activity to determine whether the 
activity has resulted in a restriction described in that paragraph. If, 
upon review of the activity, the Board determines that the activity 
resulted in such a restriction, the Board shall declare the restriction 
to be unlawful and terminate the restriction unless the Board 
determines that the termination of the restriction would materially 
impair the ability of an affected rail carrier to provide service to 
the public or would otherwise be inconsistent with the public interest.
    ``(3) In this subsection, the term `antitrust laws' has the meaning 
given that term in subsection (a) of the first section of the Clayton 
Act (15 U.S.C. 12(a)), except that such term also means section 5 of 
the Federal Trade Commission Act (15 U.S.C. 45) to the extent that 
section 5 applies to unfair methods of competition.''.
    (b) Applicability.--Paragraph (2) of section 10901(e) (as added by 
subsection (a) of this section) shall apply with respect to any 
activity referred to in that paragraph for which the Surface 
Transportation Board issued a certificate authorizing the activity 
under section 10502 before, on, or after the date of enactment of this 
Act.

SEC. 104. RECIPROCAL SWITCHING.

    Section 11102(c) is amended--
            (1) in paragraph (1)--
                    (A) by striking ``may require'' in the first 
                sentence and inserting ``shall require''; and
                    (B) by striking ``may establish'' in the second 
                sentence and inserting ``shall establish''; and
            (2) by adding at the end the following new paragraph:
    ``(3) In making any finding under paragraph (1), the Board shall 
not require that there be evidence of anticompetitive conduct by a rail 
carrier from which access is sought.''.

SEC. 105. AREAS OF INADEQUATE RAIL COMPETITION.

    (a) Designation and Remedies.--
            (1) In general.--Chapter 105 is amended by adding at the 
        end the following new section:
``Sec. 10503. Areas of inadequate rail competition
    ``(a) In General.--The Board shall designate any State or 
substantial part of a State as an area of inadequate rail competition 
after finding that--
            ``(1) the State or substantial part of the State 
        encompasses rail shipping origins and destinations that are 
        served exclusively by one Class I railroad; and
            ``(2) persons that ship by rail or receive rail shipments 
        in the State or substantial part of the State--
                    ``(A) pay rates for the rail shipments that exceed 
                the rates necessary to yield recovery by the rail 
                carrier of 180 percent of revenue-variable costs, as 
                determined under standards applied in the 
                administration of section 10707(d); or
                    ``(B) have experienced competitive disadvantage in 
                the marketplace or other economic adversity because of 
                high cost or poor quality of rail service in the State 
                or substantial part of the State.
    ``(b) Specific Commodities.--An area of inadequate rail competition 
may be composed of the facilities of a group of shippers or receivers 
of one or more specific commodities within a geographic area.
    ``(c) Authorized Petitioners.--A Governor of a State is authorized 
to petition the Board for a designation of a State or substantial part 
of a State as an area of inadequate rail competition.
    ``(d) Actions.--Upon designating a State or substantial part of a 
State as an area of inadequate rail competition, the Board shall 
resolve, not later than 60 days after the date of the designation, the 
conditions described in subsection (a) that justify the designation. In 
taking such action, the Board shall not require rates lower than those 
necessary to yield recovery of 180 percent of revenue-variable costs. 
In addition to providing other remedies authorized by law, the Board 
may order any of the following actions:
            ``(1) Provision of reciprocal switching as provided for in 
        section 11102(c) and terminal trackage rights beyond the limits 
        specified in section 11102(a).
            ``(2) Haulage transportation of railroad cars by a rail 
        carrier to or from facilities that such carrier physically 
        serves on behalf of another rail carrier, for a fee prescribed 
        by the Board.
            ``(3) Regarding rates on any rail segments within or 
        connected to the area of inadequate rail competition on which 
        rail service is susceptible to delay or interruption due to 
        traffic congestion, expedited final offer arbitration under 
        section 11708(e).
            ``(4) Expedited review of whether a rate violates the 
        prohibition against discriminatory rates contained in section 
        10741, without regard to subsection (b)(2) of such section.
    ``(e) Procedures.--In the case of a petition for an order for 
reciprocal switching or terminal trackage rights under subsection 
(d)(1), the Board may not require that there be evidence of 
anticompetitive conduct by a rail carrier as a prerequisite for 
ordering such action.''.
            (2) Clerical amendment.--The table of sections at the 
        beginning of chapter 105 is amended by adding at the end the 
        following new item:

``10503. Areas of inadequate rail competition.''.
    (b) Study on Areas of Inadequate Rail Competition.--Not later than 
1 year after the date of enactment of this Act, the Rail Customer 
Advocate of the Department of Transportation shall--
            (1) review the effectiveness of the procedures under 
        section 10503 for challenging and remedying conditions 
        adversely affecting rail shippers of agricultural and forestry 
        commodities and products, including commodities and products 
        shipped by rail in annual volumes of 1500 rail cars or less, 
        and the applicability of such procedures for ameliorating rail 
        rate and service problems, in areas of inadequate rail 
        competition; and
            (2) report the results of the study, together with any 
        recommendations that the Rail Customer Advocate may have for 
        improving the procedures, to Congress.

             TITLE II--IMPROVING SERVICE TO RAIL CUSTOMERS

SEC. 201. RAIL SERVICE.

    (a) Public Notice.--The Surface Transportation Board shall, within 
7 days after receipt by the Board or any Member or staff of the Board 
of a complaint from a customer about rail service, post on the Board's 
Internet Web site a description of the complaint, including information 
identifying the railroad or railroads providing the service that is the 
subject of the complaint, the general geographic area of the customer's 
movement, the date upon which the service problem occurred and the date 
notice of the complaint was made to the Board or any Member or staff of 
the Board. The Internet posting shall identify the rail customer only 
upon the written consent of the rail customer. Not later than 5 days 
after the date the complaint is resolved, the Board shall update the 
information posted on the Board's Internet Web site to indicate that 
the complaint has been resolved, the means of its resolution, and the 
date of its resolution.
    (b) Annual Report to Congress.--Not later than March 15, 2008, and 
annually thereafter, the Surface Transportation Board shall transmit to 
Congress a report regarding the service complaints received by the 
Board, or any Member or staff of the Board, in the previous calendar 
year for each Class I railroad. The report shall include a description 
of each service complaint, including information identifying the 
railroad in question, the geographic area of the customer's movements, 
the date upon which the service problem occurred, the date notice of 
the service complaint was made to the Board or any Member or staff of 
the Board, and the date of, and a detailed description of, the 
resolution of the complaint. The report shall be posted on the Board's 
Internet Web site.
    (c) Time Limits on Petitions for Injunctive Relief.--Section 
721(b)(4) is amended by adding at the end the following: ``Where a 
complaint is filed and injunctive or similar relief is sought within 20 
days after the publication of a new or revised rail rate, rule, or 
practice, based on an allegation of unlawfulness other than an 
allegation that a rate level is not reasonable within the meaning of 
section 10701(d), the Board shall determine, based on applicable law, 
not later than 90 days after receiving the request for injunctive or 
similar relief, whether or not to grant such relief. If the moving 
party establishes that the rule or practice involved in the complaint 
is unlawful per se, there shall be a strong presumption of irreparable 
harm regardless of the availability of monetary relief. The Board shall 
not deny injunctive or similar relief based in whole or in part on the 
absence of irreparable harm due to the availability of adequate 
monetary relief unless monetary damages have been awarded to the 
complaining party.''.

SEC. 202. RAILROAD OBLIGATION TO SERVE.

    Section 11101(a) is amended by inserting ``The transportation 
provided shall be reliable and efficient.'' after ``on reasonable 
request.''.

SEC. 203. RAIL CUSTOMER ADVOCATE.

    (a) Amendment.--Subchapter II of chapter 7 is amended by adding at 
the end the following new section:
``Sec. 728. Office of Rail Customer Advocacy
    ``(a) In General.--The Office of Rail Customer Advocacy shall be an 
office in the Department of Transportation.
    ``(b) Rail Customer Advocate.--The head of the Office of Rail 
Customer Advocacy shall be the Rail Customer Advocate, who shall be 
appointed in the competitive service by the Secretary of 
Transportation, in consultation with the Secretary of Agriculture.
    ``(c) Duties and Powers of Rail Customer Advocate.--The Rail 
Customer Advocate shall--
            ``(1) accept rail customer complaints;
            ``(2) participate as a party in proceedings of the Board on 
        petitions for action by the Board regarding the regulation of 
        rail transportation, and may initiate such an action;
            ``(3) collect, compile, and maintain information regarding 
        the cost and efficiency of rail transportation; and
            ``(4) carry out other duties and powers prescribed by the 
        Board.
    ``(d) Access to Information.--To carry out the duties and powers 
under subsection (c), the Rail Customer Advocate shall have access to 
information, including databases, of the Board.''.
    (b) Conforming Amendment.--The table of sections for chapter 7 is 
amended by inserting after the item relating to section 727 the 
following:

``728. Office of Rail Customer Advocacy.''.

        TITLE III--PROVIDING ACCESS TO A REASONABLE RATE PROCESS

SEC. 301. RIGHTS OF RAIL CUSTOMERS.

    (a) Amendment.--Chapter 107 of title 49, United States Code, is 
amended by inserting before section 10701 the following new section:
``Sec. 10700. Rights of rail customers
    ``Rail customers that are subject to railroad market dominance 
shall have a right of access to a process maintained by the Board for 
determining if the rate in question is reasonable. The Board shall 
ensure that the process is accessible by all affected rail customers 
and is cost effective.''.
    (b) Table of Section Amendment.--The table of section for chapter 
107 of title 49, United States Code, is amended by inserting before the 
item relating to section 10701 the following new item:

``10700. Rights of rail customers.''.

SEC. 302. IMPROVEMENT OF RATE REASONABLENESS STANDARD.

    Section 10701(d) is amended by adding the following new paragraphs:
    ``(4)(A) Not later than one year after the date of enactment of 
this paragraph, the Board shall adopt a method for determining the 
reasonableness of rail rates based on the railroad's actual costs, 
including a portion of fixed costs and an adequate return on debt and 
equity. The method adopted shall permit a final determination within 9 
months after filing a complaint, shall ensure that necessary cost and 
operational information is available to the complainant, and shall not 
require excessive litigation costs.
    ``(B) The Board shall not use any method for determining the 
reasonableness of rail rates based on the costs of a hypothetical 
competitor, except that, in any rate reasonableness proceeding filed 
before the method required under subparagraph (A) is adopted, the 
complaint, upon the election of the complainant, shall be decided based 
on applicable rate standards in effect on the date of the filing, 
including small rate guidelines.
    ``(C) The Board shall adopt a method under this paragraph that 
applies the `phasing constraint' in its existing rail rate method so 
that it can be practically administered without substantial litigation-
related costs in any proceeding involving a challenge to a rail rate in 
which the Board determines that the phasing constraint applies.
    ``(5) Upon receiving notification of a challenge made by a shipper 
to the reasonableness of any rate established by a rail carrier, the 
Board shall determine the reasonableness of the rate without regard 
to--
            ``(A) whether the rate is for part of a movement between a 
        point of origin and a destination;
            ``(B) whether the shipper has made arrangements for 
        transportation for any other part of that movement; or
            ``(C) any other contract the shipper has with a rail 
        carrier for any part of the rail traffic involved.''.

SEC. 303. FILING FEES ON PETITIONS FOR CAPTIVE RATE RELIEF.

    Section 721 is amended by adding at the end the following new 
subsection:
    ``(f) Limitation on Fees.--The Board may not charge a fee for the 
filing of a complaint, protest, or other request for relief in an 
amount greater than fees charged by district courts of the United 
States for a comparable filing.''.

SEC. 304. ARBITRATION OF RAIL DISPUTES.

    (a) Amendment.--Chapter 117 is amended by adding the following 
section after section 11707:
``Sec. 11708. Arbitration of rail disputes
    ``(a) In General.--Whenever a dispute described in subsection (b) 
arises between a rail shipper and a rail carrier under this part, the 
Board shall, upon written request of any party to the dispute, submit 
the dispute to final offer arbitration.
    ``(b) Covered Disputes.--(1) Except as provided in paragraph (2), 
subsection (a) shall apply to any dispute between a party and a rail 
carrier that--
            ``(A) arises under section 10701(c), 10701(d), 10702, 
        10704(a)(1), 10707, 10741, 10745, 10746, 11101(a), 11102, 
        11121, 11122, or 11706;
            ``(B) involves the transportation of any agricultural 
        product, including timber, paper, and fertilizer; and
            ``(C) involves--
                    ``(i) the payment of money;
                    ``(ii) a rate or charge imposed by the rail 
                carrier; or
                    ``(iii) transportation or other service by the rail 
                carrier.
    ``(2) Subsection (a) shall not apply to a dispute if the resolution 
of the dispute would necessarily involve the promulgation of 
regulations generally applicable to all rail carriers.
    ``(c) Selection of Arbitrators.--The rail carrier or carriers that 
are parties to arbitration under this section shall collectively name 
one arbitrator, and the rail shipper or shippers that are parties to 
the arbitration shall collectively name one arbitrator. The two 
arbitrators thus chosen shall select a third arbitrator from the roster 
of arbitrators established under subsection (d). If the arbitrators 
chosen by the parties fail to name the third arbitrator within 5 days 
after their first meeting, such third arbitrator shall be named by the 
Secretary of Transportation from the roster of arbitrators established 
under subsection (d).
    ``(d) Roster of Arbitrators.--The Secretary of Transportation shall 
establish, maintain, and revise as necessary a roster of arbitrators 
who--
            ``(1) are experienced in transportation or economic issues;
            ``(2) satisfy requirements for neutrality and other 
        qualification requirements prescribed by the Secretary;
            ``(3) consent to serve as arbitrators under this section; 
        and
            ``(4) are not officers or employees of the United States.
    ``(e) Rules for Arbitration.--The arbitrators shall organize and 
select and make all necessary rules for conducting hearings. The 
arbitrators shall give the parties to the dispute a full and fair 
hearing, which shall include an opportunity to present evidence in 
support of their claims, and an opportunity to present their case in 
person, by counsel, or by other representative as they may elect.
    ``(f) Prohibited Methods of Decision.--Disputes concerning rates 
and charges shall not be considered or decided under this section using 
any method based on stand-alone cost or the costs of a hypothetical 
competitor, or in reliance on precedent adopting or applying such 
methods.
    ``(g) Decision.--The decision of the arbitrators shall be the final 
offer of one of the parties to the dispute.
    ``(h) Revenue-Variable Cost Percentage.--The decision may not 
provide for a rate for transportation by a rail carrier that would 
result in a revenue-variable cost percentage of such transportation 
that is less than 180 percent, as determined under standards applied in 
the administration of section 10707(d).
    ``(i) Consideration of Other Rates or Charges.--The arbitrators, in 
making an award on the dispute, shall consider the rates or charges 
that are imposed by rail carriers for the transportation of similar 
goods under similar circumstances in rail transportation markets where 
there is effective competition, as determined under standards applied 
by the Board in the administration of section 10707(a).
    ``(j) Duration of Rates Prescribed.--A rate prescribed under this 
section may not remain in effect for longer than 5 years after the date 
on which the arbitrators' decision becomes final.
    ``(k) Copies of Award.--The arbitrators shall furnish a certified 
copy of its award to the parties to the dispute, and shall transmit the 
original, together with the paper and proceedings and a transcript of 
the evidence taken at the hearings, certified under the hands of at 
least a majority of the arbitrators, to the Board, to be filed in its 
office. Not later than 7 days after receiving an award under this 
subsection, the Board shall make the award and all supporting documents 
available to the public.
    ``(l) Oaths; Subpoenas.--All testimony before arbitrators under 
this section shall be given under oath or affirmation, and any 
arbitrator shall have the power to administer oaths or affirmations. 
The arbitrators shall have the power to require the attendance of 
witnesses and the production of such books, papers, contracts, 
agreements, and documents as may be necessary to a just determination 
of the matters submitted to arbitration, and may request the district 
court of the United States for the district where the arbitration is 
being conducted to issue the necessary subpoenas. Any witness appearing 
before arbitrators under this section shall receive the same fees and 
mileage reimbursement as witnesses in courts of the United States, to 
be paid by the party securing the subpoena, or in the case of a 
subpoena secured by the arbitrators, to be paid by the Board.
    ``(m) Time for Issuance of Arbitration Decision.--The arbitration 
panel shall issue a final decision on a dispute under this section not 
later than 180 days after the date on which the panel of arbitrators is 
completed to resolve the dispute.
    ``(n) Regulations.--Not later than 90 days after the date of 
enactment of this section, the Secretary of Transportation shall issue 
final regulations establishing procedures for the resolution of 
disputes submitted for arbitration, in accordance with the requirements 
of this section.
    ``(o) Applicability of Title 9.--The following provisions of title 
9, United States Code, shall apply to an arbitration decision issued in 
a dispute under this section:
            ``(1) Section 9 (relating to confirmation of an award in an 
        arbitration decision), which shall be applied as if the parties 
        had entered into an agreement under title 9 to submit the 
        dispute to the arbitration and had provided in that agreement 
        for a judgement of an unspecified court to be entered on the 
        award made pursuant to the arbitration.
            ``(2) Sections 10 and 11 (relating to judicial vacation, 
        modification, or correction of an award in an arbitration 
        decision).''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
such chapter is amended by inserting after the item relating to section 
11707 the following:

``11708. Arbitration of rail disputes.''.

                   TITLE IV--AUTHORITY TO INVESTIGATE

SEC. 401. AUTHORITY OF BOARD TO INVESTIGATE AND SUSPEND CERTAIN 
              RAILROAD ACTIONS.

     Section 11701(a) is amended to read as follows:
    ``(a)(1) The Board may begin an investigation under this part on 
its own initiative. If the Board finds that a rail carrier is violating 
this part, the Board shall take appropriate action to compel compliance 
with this part.
    ``(2) When the Board receives a complaint alleging that a rail 
carrier may be violating this part, the Board shall initiate an 
investigation. When the alleged violation applies to more than one 
person and the Board has substantial reason to believe that the 
allegations in the complaint are likely to have merit and, if the 
allegations prove to have merit, it will be difficult to make complete 
restitution for the damage, the Board shall suspend the rail carrier 
activity in question, and shall not revoke that suspension unless the 
rail carrier justifies the practice to the satisfaction of the 
Board.''.
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