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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 953 Introduced in Senate (IS)]

110th CONGRESS
  1st Session
                                 S. 953

  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 SENATE OF THE UNITED STATES

                             March 21, 2007

 Mr. Rockefeller (for himself, Mr. Craig, Mr. Dorgan, Mr. Vitter, Ms. 
  Klobuchar, Mr. Tester, Ms. Landrieu, Mr. Crapo, Mr. Baucus, and Ms. 
   Cantwell) introduced the following bill; which was read twice and 
   referred to the Committee on Commerce, Science, and Transportation

_______________________________________________________________________

                                 A BILL

 
  To amend title 49, United States Code, to 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.

    (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.
Sec. 2. References to 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. Damages due to the failure of timely delivery.
Sec. 204. 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 certain rail rate, service, and other 
                            disputes.
                   TITLE IV--AUTHORITY TO INVESTIGATE

Sec. 401. Authority of board to investigate and suspend certain 
                            railroad actions.

SEC. 2. REFERENCES TO 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''; 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 striking ``A rail carrier shall not'' and inserting 
        the following:
    ``(3) A rail carrier may not''; and
            (3) by inserting after paragraph (1) the following:
    ``(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 2 points on the system of that carrier at which 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:
    ``(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, a class of persons, a transaction, or a 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 or Class 
III rail carrier, and the activity would directly or indirectly--
            ``(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 
the Board determines, upon review of the activity, 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), 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'' and inserting 
                ``shall require'';
                    (B) by striking ``where it finds'' and inserting 
                ``if the Board determines'';
                    (C) by striking ``where such'' and inserting ``if 
                such''; and
                    (D) by striking the second sentence and inserting 
                the following: ``The rail carriers entering into such 
                an agreement shall establish the conditions and 
                compensation applicable to such agreement. If the rail 
                carriers cannot agree upon such conditions and 
                compensation within a reasonable period of time, the 
                Board shall establish such conditions and 
                compensation.''; and
            (2) by adding at the end the following:
    ``(3) In making any finding under paragraph (1), the Board may not 
require 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:
``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 1 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 in a 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 1 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 the State, or of a 
substantial part of the State, as an area of inadequate rail 
competition.
    ``(d) Actions.--Not later than 60 days after designating a State, 
or substantial part of a State, as an area of inadequate rail 
competition, the Board shall resolve the conditions described in 
subsection (a) that justify the designation. In taking such action, the 
Board may 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 the 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 1,500 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 to Congress, including 
        any recommendations that the Rail Customer Advocate may have 
        for improving the procedures.

             TITLE II--IMPROVING SERVICE TO RAIL CUSTOMERS

SEC. 201. RAIL SERVICE.

    (a) Public Notice.--
            (1) In general.--Not later than 7 days after receipt by the 
        Surface Transportation Board, or any member or staff of the 
        Board, of a complaint from a customer about rail service, the 
        Board shall post a description of the complaint on the Board's 
        Internet website, including--
                    (A) information identifying the railroad or 
                railroads providing the service that is the subject of 
                the complaint;
                    (B) the general geographic area of the customer's 
                movement;
                    (C) the date upon which the service problem 
                occurred; and
                    (D) the date notice of the complaint was made to 
                the Board or any member or staff of the Board.
            (2) 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 
        website to indicate that the complaint has been resolved, the 
        means of its resolution, and the date of its resolution.
    (b) Annual Report to Congress.--
            (1) In general.--Not later than March 15, 2008, and 
        annually thereafter, the Surface Transportation Board shall 
        submit 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.
            (2) Contents.--Each report submitted under paragraph (1) 
        shall include a description of each service complaint, 
        including--
                    (A) information identifying the railroad in 
                question;
                    (B) the geographic area of the customer's 
                movements;
                    (C) the date on which the service problem occurred;
                    (D) the date notice of the service complaint was 
                made to the Board, or any member or staff of the Board; 
                and
                    (E) the date of, and a detailed description of, the 
                resolution of the complaint.
            (3) Publication.--A copy of the report submitted under 
        paragraph (1) shall be posted on the Board's Internet website.
    (c) Time Limits on Petitions for Injunctive Relief.--Section 721(b) 
is amended--
            (1) by redesignating paragraphs (1) through (4) as 
        subparagraphs (A) through (D);
            (2) by inserting ``(1)'' before ``The Board may''; and
            (3) by adding at the end the following:
    ``(2)(A) If, not later than 20 days after the publication of a new 
or revised rail rate, rule, or practice, a complaint is filed, and 
injunctive or similar relief is sought, 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, not 
later than 90 days after receiving such a complaint, shall determine, 
based on applicable law, whether or not to grant the relief sought.
    ``(B) If the party requesting relief 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.
    ``(C) The Board may 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. DAMAGES DUE TO THE FAILURE OF TIMELY DELIVERY.

    Section 11704(b) is amended by inserting ``, including damages due 
to the failure of timely delivery'' after ``violation of this part''.

SEC. 204. RAIL CUSTOMER ADVOCATE.

    (a) Amendment.--Subchapter II of chapter 7 is amended--
            (1) by redesignating section 727 as section 728; and
            (2) by inserting after section 726 the following:
``Sec. 727. Office of Rail Customer Advocacy
    ``(a) In General.--There is established, within the Department of 
Transportation, the Office of Rail Customer Advocacy.
    ``(b) Rail Customer Advocate.--The Office of Rail Customer Advocacy 
shall be headed by 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.--The Rail Customer Advocate shall have 
access to information, including databases, of the Board to carry out 
the duties and powers under subsection (c).''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 7 is amended by striking the item relating to section 727 and 
inserting the following:

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

        TITLE III--PROVIDING ACCESS TO A REASONABLE RATE PROCESS

SEC. 301. RIGHTS OF RAIL CUSTOMERS.

    (a) In General.--Chapter 107 is amended by inserting before section 
10701 the following:
``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) Clerical Amendment.--The table of sections for chapter 107 is 
amended by inserting before the item relating to section 10701 the 
following:

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

SEC. 302. IMPROVEMENT OF RATE REASONABLENESS STANDARD.

    (a) In General.--Section 10701(d) is amended by adding at the end 
the following:
    ``(4)(A) Not later than 1 year after the date of the 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--
            ``(i) shall permit a final determination not later than 9 
        months after a complaint is filed;
            ``(ii) shall ensure that necessary cost and operational 
        information is available to the complainant;
            ``(iii) shall not require excessive litigation costs; and
            ``(iv) shall require, upon a showing by the shipper of 
        market dominance (as defined in section 10707), that the rail 
        carrier prove that the challenged rate is reasonable.
    ``(B) The Board may 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 shipper 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.''.
    (b) Definition of Market Dominance.--Section 10707(a) is amended to 
read as follows:
    ``(a) In this section, `market dominance' exists if a complainant 
shipper demonstrates that the challenged rate results in a revenue-
variable cost percentage for the transportation to which the rate 
applies that is not less than 180 percent.''.

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

    Section 721 is amended by adding at the end the following:
    ``(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 CERTAIN RAIL RATE, SERVICE, AND OTHER 
              DISPUTES.

    (a) In General.--Chapter 117 is amended by adding at the end the 
following:
``Sec. 11708. Arbitration of certain rail rate, service, and other 
              disputes
    ``(a) Election of Arbitration.--A dispute described in subsection 
(b) shall be submitted for resolution by arbitration upon the election 
of any party to the dispute.
    ``(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) Arbitration Procedures.--Not later than 1 year after the 
effective date of this section, the Board shall promulgate regulations 
governing voluntary arbitration that are consistent with the provisions 
of this section. Such modifications shall include the following:
            ``(1) Arbitration shall be mandatory if either party elects 
        arbitration in lieu of filing a formal or informal complaint 
        before the Board. Challenges to the reasonableness of rail 
        rates or charges may not be subjected to arbitration at the 
        sole election of a rail carrier imposing such rates or charges.
            ``(2) Arbitration shall be before an administrative law 
        judge of the Board, or arranged for by the Board, unless the 
        parties to the arbitration each select an arbitrator and the 2 
        selected arbitrators agree on a third arbitrator from a list of 
        neutral arbitrators maintained by the Board.
            ``(3) Disputes concerning rates and charges shall not be 
        considered or decided using any method based on stand-alone 
        cost, the costs of a hypothetical competitor, or in reliance on 
        precedent adopting or applying such methods.
            ``(4) Standards for rate reasonableness developed under 
        section 10701(d)(3) shall apply in arbitration under this 
        section. The arbitrator or arbitrators shall adopt the final 
        offer of 1 of the parties, without amendment or compromise, if 
        such position is consistent with this section.
            ``(5) A rate may not be prescribed in an arbitration if 
        such rate would result in a revenue-variable cost percentage 
        below 180 percent or if market dominance is not found. A rate 
        prescription may not remain in effect for longer than 5 years 
        after the date on which the arbitrator's decision becomes 
        final.
            ``(6) If a party to arbitration under this section seeks 
        damages from a rail carrier that do not exceed $500,000 per 
        year based on a claim of excessive rates or charges, the 
        arbitrator shall consider evidence of rates or charges on 
        comparable shipments.
            ``(7) Decisions issued in arbitration under this section 
        shall not be subject to appeal to the Board unless all parties 
        to the arbitration agree to such appeal. Appeals to a court, or 
        to the Board if both parties agree to Board review, shall be 
        based on a clear error standard, and consistency with the 
        requirements of this section.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 117 is amended by adding at the end the following:

``Sec. 11708. Arbitration of certain rail rate, service, and other 
                            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) If the Board receives a complaint alleging that a rail 
carrier may be violating this part, the Board shall initiate an 
investigation.
    ``(3) If the alleged violation under paragraph (2) applies to more 
than 1 person, 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--
            ``(A) shall suspend the rail carrier activity in question; 
        and
            ``(B) may not revoke such suspension unless the rail 
        carrier justifies the practice to the satisfaction of the 
        Board.''.
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