```

[Senate Report 111-9]
[From the U.S. Government Publishing Office]

                                                        Calendar No. 33
111th Congress                                                   Report
                                 SENATE
 1st Session                                                      111-9

======================================================================

 
             THE RAILROAD ANTITRUST ENFORCEMENT ACT OF 2009

                                _______
                                

                 March 18, 2009.--Ordered to be printed

                                _______
                                

Mr. Leahy, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                         [To accompany S. 146]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to which was referred the 
bill (S. 146), 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, reports favorably 
thereon without amendment and recommends that the bill do pass.

                                CONTENTS

                                                                   Page
  I. Background and Purpose of the Railroad Antitrust Enforcement Act 
     of 2009..........................................................1
 II. History of the Bill and Committee Consideration..................9
III. Section-by-Section Summary of the Bill..........................10
 IV. Congressional Budget Office Cost Estimate.......................12
  V. Regulatory Impact Evaluation....................................14
 VI. Conclusion......................................................14
VII. Changes to Existing Law Made by the Bill, as Reported...........14

  I. Background and Purpose of the Railroad Antitrust Enforcement Act

                            A. INTRODUCTION

    The purpose of S. 146, the Railroad Antitrust Enforcement 
Act of 2009, is to remove current exemptions and subject the 
American freight railroad industry to all the provisions of the 
Nation's antitrust laws. This legislation will ensure that 
interested parties suffering from anti-competitive railroad 
practices that would otherwise be actionable under U.S. 
antitrust law will have access to those causes of action in 
federal district court. In addition, government enforcement 
agencies, including the United States Department of Justice and 
the Federal Trade Commission, as well as state attorneys 
general acting on behalf of their citizens, will be able to 
fully enforce the antitrust laws to prevent anti-competitive 
mergers and anti-competitive business practices.
    Under current law, the railroad industry is exempted from 
antitrust law in most respects. Virtually no other industry 
enjoys such a broad exemption from the antitrust laws. There is 
no basis for this broad antitrust immunity, especially since 
the railroad industry has been largely deregulated since the 
passage of the Staggers Rail Act in 1980.
    The bill is prospective, but will apply to any current 
anti-competitive practices that continue after one hundred and 
eighty days following the date of enactment of this Act. The 
bill will allow the Justice Department and the Federal Trade 
Commission (FTC) to sue to enjoin any future railroad merger or 
acquisition, whether or not approved by the Surface 
Transportation Board (STB), if the Justice Department or FTC 
believes that merger or acquisition violates the antitrust 
laws. After the enactment of S. 146, anti-competitive business 
practices engaged in by railroads will be subject to antitrust 
scrutiny and could be subject to civil actions for treble 
damages and injunctive relief. Among these are two current 
practices that rail customers believe to be anti-competitive--
so-called ``paper barriers'' and so-called ``bottlenecks,'' as 
explained below.

                        B. NEED FOR LEGISLATION

1. The Staggers Rail Act of 1980

    This legislation is needed because there is a lack of 
competition in the national freight rail system today.\1\ In 
1980, Congress passed the Staggers Rail Act, the purpose of 
which was to deregulate partially the Nation's railroads and 
replace government regulation with market competition to the 
extent possible. When the legislation was passed, Congress did 
not remove the antitrust exemptions protecting the railroad 
industry. These antitrust exemptions had been extended to the 
Nation's railroads when they were subject to a pervasive 
regulatory system in which prior approval by the Interstate 
Commerce Commission (ICC) was required for most of their 
actions and transactions, a regulatory system that was no 
longer in place after the 1980 legislation.
---------------------------------------------------------------------------
    \1\This legislation addresses freight railroads, and is not 
intended to have any effect on the passenger operations of Amtrak. 
While Amtrak is deemed a ``railroad'' for the purpose of certain 
federal laws, most of the provisions of subtitle IV of title 49 do not 
apply to Amtrak. See 49 U.S.C. Sec. 24301(c). Specifically, the bill 
does not affect 49 U.S.C. Sec. 24301(j) (Section 306(e) of Pub. L. No. 
91-518 (1970), recodified without substantive change by Pub. L. No. 
103-272 (1994)), which provides that agreements entered into by Amtrak 
for the joint use or operation of facilities and equipment necessary 
for the provision of expeditious and efficient passenger service are 
exempt from the antitrust laws.
---------------------------------------------------------------------------
    The new regulatory system provided by Congress in the 
Staggers Rail Act of 1980 recognized that some customers who 
require railroad service would continue to have access to 
service by a single freight railroad and that these ``captive'' 
customers could be subject to railroad monopoly power. The ICC, 
which was replaced by the STB of the United States Department 
of Transportation through the ICC Termination Act of 1995, was 
directed by Congress to ensure rail customer access to 
competition where possible and protect rail customers from 
unreasonable rates and practices where competition is not 
available. The directions to the ICC, now the STB, for 
implementing the Staggers Rail Act of 1980 are contained in 49 
USC Sec. 10101 and stress the pro-competitive policy that was 
to guide implementation of the Act.

2. Lack of competition in the national rail system

    Despite the directive of Congress in 1980, the United 
States Senate Committee on the Judiciary received significant 
evidence that there is a lack of competition in the national 
rail system today. An October 2006 Government Accountability 
Office (GAO) report reviewing the effectiveness of the Staggers 
Rail Act of 1980 found that there remains a lack of competition 
in the freight rail industry resulting in the continued 
existence of captive rail customers. That report found that 
shippers in many geographic areas ``may be paying excessive 
rates due to a lack of competition in these markets.'' These 
unjustified cost increases cause harm throughout the economy. 
Consumers suffer higher electricity bills because a utility 
must pay for the high cost of transporting coal; manufacturers 
who rely on railroads to transport raw materials charge a 
higher price for their goods; and American farmers who ship 
their products by rail pass on these cost increases in the form 
of higher food prices. The GAO also found that the STB is not 
exercising its powers effectively to ensure rail customers 
access to competition.
    The GAO's findings were echoed by the Attorneys General of 
17 states and the District of Columbia. In an August 2006 
letter to Congress calling for an abolition of the railroad 
antitrust exemption, the Attorneys General wrote that ``rail 
customers in our states in a variety of industries are 
suffering from the classic symptoms of unrestrained monopoly 
power: unreasonably high and arbitrary rates and poor 
service.''\2\
---------------------------------------------------------------------------
    \2\In addition, the American Bar Association's Section of Antitrust 
Law expressed support for the enactment of the Railroad Antitrust 
Enforcement Act of 2007 (S. 772 in the 110th Congress, identical to S. 
146 in the 111th Congress), stating that ``[t]he Section supports these 
steps and encourages Congress to move forward quickly to dismantle the 
antitrust exemption for the railroad industry, through the Railroad 
Antitrust Enforcement Act.'' December 10, 2008 Comments of the ABA 
Section of Antitrust Law on the Railroad Antitrust Enforcement Act at 
1.
---------------------------------------------------------------------------
    The severe consolidation in the railroad industry has 
greatly exacerbated this lack of competition. In 1976, there 
were 30 independent Class I railroad systems operating in the 
Nation, consisting of 63 Class I railroads. There are currently 
only seven Class I railroads operating in the Nation, only four 
of which carry 90% of all freight railroad traffic in the 
United States. The evidence received by the Committee indicates 
that the current lack of competition in the national freight 
rail system is the result of this drastic consolidation as well 
as several rulings by the ICC and the STB that have allowed a 
number of anti-competitive practices to exist.

3. Disparate treatment of the railroad industry from other regulated 
        industries

    One important purpose of S. 146 is to have the railroad 
industry treated the same as other regulated industries, 
including transportation industries. Many industries in our 
economy are subject to regulation--including notably the 
telecommunications sector, extensively regulated by the Federal 
Communications Commission--yet enjoy no antitrust exemption. 
Telecommunications mergers, for example, are reviewed by the 
FCC under a public interest standard, yet are fully subject to 
antitrust law and also reviewed by the Justice Department under 
the Clayton Act.
    Importantly, even transportation industries similarly 
situated to the railroad industry enjoy no antitrust exemption. 
For example, the aviation industry comes under the regulatory 
supervision of the Transportation Department and Federal 
Aviation Administration. The Transportation Department is 
empowered under the Transportation Act to take action to 
prevent an ``unfair method of competition'' in aviation.\3\ 
Yet, the aviation industry is generally subject to antitrust 
law and aviation mergers are reviewed by the Justice Department 
under the Clayton Act. Other transportation industries that are 
subject to the supervision of the Surface Transportation 
Board--such as trucking and domestic marine shipping--do not 
enjoy the same broad antitrust exemption as that enjoyed by the 
railroad industry. Removal of the special railroad antitrust 
exemption will result in the railroad industry being treated in 
the same manner under antitrust law as other industries subject 
to regulatory oversight.
---------------------------------------------------------------------------
    \3\49 U.S.C. Sec. 41712.
---------------------------------------------------------------------------

4. Mergers and acquisitions

    Under current law, railroad mergers and acquisitions are 
exempt from the Nation's antitrust laws. The railroad industry 
is exempted from section 7 of the Clayton Act, which bans 
mergers which may substantially ``lessen competition'' or 
``tend to create a monopoly'' does not apply to mergers in the 
railroad industry. Instead, the Surface Transportation Board 
decides whether and under what conditions mergers and 
acquisitions of railroads may occur pursuant to a ``public 
interest'' test. The Justice Department's role is limited to 
filing comments with the STB, which are not binding in any 
respect and which the STB is free to ignore. On at least one 
occasion since 1980, the Justice Department filed comments with 
the STB against a proposed merger, but the comments were 
ignored and the merger approved (the 1996 merger of the Union 
Pacific Railroad and the Southern Pacific Railroad). On a 
number of other occasions, the Justice Department filed 
comments with the STB recommending certain conditions on 
proposed mergers that were not adopted by the STB. In all of 
these cases, neither the Justice Department nor the Federal 
Trade Commission was empowered to sue in federal district court 
to ensure that the merger or acquisition was consistent with 
the Nation's antitrust laws.
    The Railroad Antitrust Enforcement Act of 2009 will bring 
railroad mergers inside the ambit of section 7 of the Clayton 
Act and empower the antitrust enforcement agencies (likely the 
Justice Department)\4\ to file suit to block anti-competitive 
mergers and acquisitions. It will therefore ensure that future 
railroad mergers and acquisitions will not only meet the 
``public interest'' test implemented by the STB but also meet 
the merger standard of the Nation's antitrust laws. The STB 
will continue to approve mergers and acquisitions pursuant to 
its ``public interest'' test. However, the merger also will 
have to satisfy antitrust law, and will be subject to antitrust 
enforcement in federal court by the Justice Department, 
regardless of what the STB determines under its public interest 
test. In this regard, mergers and acquisitions in the railroad 
industry will be treated in an identical manner as mergers and 
acquisitions in many other industries subject to federal 
regulatory review. For example, mergers and acquisitions in the 
telecommunications industry are reviewed under a public 
interest test by the Federal Communications Commission, while 
also being subject to antitrust law and challenge by the 
Justice Department under the Clayton Act. There is no reason 
for the railroad industry to be treated any differently.
---------------------------------------------------------------------------
    \4\Although both the Justice Department and the Federal Trade 
Commission have the authority to enforce the antitrust laws, 
traditionally the Justice Department reviews mergers in the 
transportation sector.
---------------------------------------------------------------------------

5. Bottlenecks or refusal to quote rates

    Many rail customers are served by a single railroad at 
either the origin or the destination of their rail shipment, 
the so-called ``captive shippers.'' These customers do not have 
the benefit of competition and often face very high rail rates. 
Even though they are ``captive'' to a single railroad at origin 
or destination, often a competing railroad is available for at 
least part of the distance between origin and destination 
through an interconnection with the railroad that holds the 
customer captive. In the mid-1990's the question arose before 
the STB of whether the railroad that holds the customer captive 
at origin or destination must provide a rate for moving the 
customer's freight to the competing railroad. Stated simply, 
does a railroad have an obligation to allow its captive 
customer to have access to the competing railroad or can a 
railroad hold the customer captive for the entire length of the 
shipment?
    This question was decided by the STB on December 27, 1996, 
in a case referred to as the ``bottleneck'' decision.\5\ In 
this case, the STB ruled that the rail carrier providing single 
line service to the customer was not required to provide a rate 
that would allow the customer to reach a competing rail line. 
Such conduct would be subject to antitrust scrutiny, were it 
not for the railroad antitrust exemption.
---------------------------------------------------------------------------
    \5\The decision was made in case No. 41242, Central Power and Light 
Company v. Southern Pacific Transportation Company and covered two 
other cases with which it was consolidated: No. 41295, Pennsylvania 
Power and Light Company v. Consolidated Rail Corporation, and No. 
41626, MidAmerican Energy Company v. Union Pacific Railroad Company and 
Chicago and North Western Railway Company.
---------------------------------------------------------------------------
    In 2004, the then-Chairman of the House Judiciary 
Committee, Congressman F. James Sensenbrenner, Jr., asked the 
Justice Department to comment on whether the practice of 
refusing to provide rates to points of competition would 
violate the Nation's antitrust laws if the railroad industry 
exemption from those laws did not exist. On September 27, 2004, 
Assistant Attorney General William E. Moschella responded as 
follows:

         The first practice is the refusal by a railroad that 
        controls one segment of a freight movement to quote 
        rates separately for that ``bottleneck'' segment, 
        instead quoting rates only for the entire freight 
        movement. You note that this practice denies shippers 
        the benefits of competition on segments of the move 
        where an alternative carrier might compete for the 
        business. Because of the Surface Transportation Board's 
        involvement in approving these rates, and its 
        acceptance of this practice, relief may not be 
        available under the antitrust laws. If this practice 
        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. 
        Whether it would constitute an antitrust violation 
        would depend on the particular facts.

    The Committee believes that this conduct should properly be 
subject to scrutiny under the antitrust laws. The Railroad 
Antitrust Enforcement Act of 2009 will remove the freight 
railroad industry's exemption from the antitrust law and allow 
a plaintiff to bring an antitrust lawsuit to seek to enjoin 
this practice in federal district court as a violation of the 
Sherman Act.\6\
---------------------------------------------------------------------------
    \6\As is plain from the text of S. 146, the bill does not create 
any presumption that any railroad conduct or practice specified herein 
is or is not illegal; whether or not any conduct or practice is illegal 
will be determined by the application of substantive antitrust law.
---------------------------------------------------------------------------

6. Paper barriers or tying agreements

    One of the objectives of the Staggers Rail Act of 1980 was 
to allow the Class I railroads--that is, large railroads with 
extensive route structures--increased flexibility to 
``rationalize'' their systems by discarding under-utilized and 
excess rail capacity. The railroad industry responded by 
petitioning the ICC, later the STB, to allow the abandonment of 
tens of thousands of miles of track. In addition, the Class I 
railroads began to transfer the operating rights of other track 
to ``short line'' railroads, many of which were created to 
operate track formerly operated by a major railroad. Each of 
these transactions required approval of the ICC, later the STB, 
but the agreements between the major railroad and the short-
line railroad were kept confidential as part of the public 
review of the transaction. In many cases, the short-line 
railroad involved had the physical ability to deliver freight 
to more than one Class I railroad.
    Often long after the transaction was approved by the ICC or 
the STB, customers of the short line railroad found that there 
were provisions in the agreement between the Class I and short 
line railroad that prevented the short line from delivering or 
receiving a meaningful amount of freight from any Class I 
railroad except the Class I railroad with which it has the 
operating agreement. Thus, even though the short line has the 
physical ability to deliver or receive freight from more than 
one Class I railroad, a ``paper barrier'' or ``tying 
agreement'' prevents access to a competing railroad.
    In his 2004 letter, then-House Judiciary Committee Chairman 
Sensenbrenner asked the Justice Department about these ``paper 
barriers.'' The September 27, 2004 response by Assistant 
Attorney General Moschella states:

          The second industry practice you describe is ``paper 
        barriers.'' Paper barriers are created when Class I 
        railroads spin off segments of their trackage to short-
        line or low-density carriers with contractual terms 
        that prohibit the acquiring carriers from competing 
        with the Class I railroads for business. Since these 
        contractual terms are part of an underlying sale 
        transaction that is reviewed and approved by the 
        Surface Transportation Board, they may be exempted from 
        the reach of the antitrust laws, depending on the scope 
        of the approval language in each of the Board's 
        relevant orders. If 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.

    The Committee believes that that these ``paper barriers'' 
should be subject to scrutiny under the antitrust laws. The 
Railroad Antitrust Enforcement Act of 2009 will remove the 
railroad industry's antitrust exemption, allowing a plaintiff 
to bring an antitrust action to seek to enjoin these 
restrictive provisions--or obtain treble damages for losses 
caused by these provisions--in a federal district court.

7. Removal of STB primary jurisdiction

    The Railroad Antitrust Enforcement Act of 2009 also removes 
any requirement that a district court defer to the primary 
jurisdiction doctrine of the STB in railroad antitrust cases. 
Without this provision, parties may be able to avoid antitrust 
scrutiny by convincing a court it is required to defer to the 
STB. Clarifying the law in this area is necessary to ensure 
that the elimination of the antitrust exemptions is 
effective.\7\
---------------------------------------------------------------------------
    \7\Without Congressional action, the primary jurisdiction doctrine 
would apply in the antitrust cases that S. 146 would make possible. 
First, the lead case on the general primary jurisdiction doctrine 
involved the ICC: United States v. W. Pac. R.R. Co., 352 U.S. 59, 64-
65, 65-66 (1956) (mandating suspension of judicial proceedings pending 
referral to the ICC). Second, the doctrine is applicable in antitrust 
cases. See e.g. Ricci v. Chicago Mercantile Exch., 409 U.S. 289 (1973). 
The Ricci case tries to reconcile cases in which the Supreme Court has 
held that the doctrine does not apply in some antitrust cases (e.g., 
California v. Federal Power Comm'n, 369 U.S. 482 (1962); Silver v. New 
York Stock Exch., 373 U.S. 341 (1963)), but does apply in others. Thus, 
the primary jurisdiction doctrine has become a substantial obstacle for 
the application of antitrust law in regulated industries.
    Moreover, the need for an express statement that the courts need 
not defer to the administrative agency would seem even more necessary 
in light of recent Supreme Court decisions involving the role of 
antitrust law in regulated industries, including its 2007 ruling that 
antitrust law was preempted by a regulatory scheme when the law was 
silent regarding a conflict between antitrust law and the regulation of 
the securities industry. See Credit Suisse Sec v. Billing, 127 S. Ct. 
2383 (2007); see also Verizon Commc'n v. Trinko, 540 U.S. 398 (2004).
---------------------------------------------------------------------------
    The Committee believes that the STB's shortcomings in 
failing to protect consumers from anti-competitive actions by 
regulated railroads, including mergers and acquisitions, 
warrants making the federal courts, applying antitrust law, the 
primary protectors of competition in all aspects of the rail 
freight industry. If courts were required to defer to the STB 
under the primary jurisdiction doctrine, then the whole purpose 
of S. 146 would be undermined because antitrust scrutiny may be 
avoided. Railroads would be able to use the STB's primary 
jurisdiction as a kind of ``stealth preemption'' of the 
antitrust courts' newly-restored role. The STB has no 
experience in applying antitrust law and many of its decisions 
reach results contrary to antitrust principles. For this 
reason, section 4 of S. 146 provides that in any antitrust 
action, a federal district court is not required to defer to 
the primary jurisdiction of the STB.

                        C. EFFECT OF LEGISLATION

    The elimination of the railroad antitrust exemption will 
change the law in several respects. First, private plaintiffs 
(such as rail customers) will be able to bring complaints in 
federal district court for treble damages and/or injunctive 
relief that specific actions of the railroads violate the 
antitrust laws. Unlike under current law, whether or not the 
Surface Transportation Board has reviewed or approved railroad 
conduct will be irrelevant to the application of antitrust law. 
The fact that railroad conduct is approved by the STB will no 
longer divest courts from jurisdiction over the application of 
antitrust law to that conduct.
    Conduct subject to such private antitrust litigation will 
include (but not be limited to) actions challenging: 
arrangements where major railroads spin off or lease segments 
of their tracks to short line carriers with contractual terms 
that prohibit the acquiring carrier from competing with the 
major railroads (known as ``paper barriers,'' as described 
above); situations where there is competition for a portion, 
but not all, of the journey, and railroads refuse to quote 
rates for the ``bottleneck'' portion of the trip (the 
``bottleneck'' situation, as described above); and the practice 
of railroads publicly disclosing tentative prospective shipping 
rates, which could facilitate collusion among competing 
railroads and result in increased prices.\8\
---------------------------------------------------------------------------
    \8\However, one type of railroad industry practice, if reviewed and 
approved by the STB, will continue to be exempt from the application of 
antitrust law--specifically, any transaction relating the pooling of 
railroad cars approved by the STB pursuant to 49 U.S.C. Sec. 11322. 
Railroad car pooling arrangements are generally efficiency enhancing 
because they integrate economic activity in a way that promotes 
competition.
---------------------------------------------------------------------------
    The federal antitrust enforcement agencies (the Justice 
Department and Federal Trade Commission) will also be empowered 
to bring antitrust lawsuits in federal court to enjoin conduct 
by railroads which violates the antitrust laws. The legislation 
removes the railroad common carrier exemption prohibiting the 
Federal Trade Commission from bringing antitrust lawsuits 
against the railroads, so both the FTC and Justice Department 
will have full authority to enforce the antitrust laws with 
respect to the railroad industry. In addition, state attorneys 
general could bring actions in federal court on behalf of their 
citizens challenging allegedly anti-competitive railroad 
practices as violative of antitrust law.
    Second, the legislation will allow the Justice 
Department,\9\ state Attorneys General, and private citizens to 
challenge under antitrust law in federal district court 
railroad mergers and acquisitions, regardless of whether they 
are approved by the STB. This is a substantial change from 
current law under which only the STB may take action to block 
or modify a railroad merger or acquisition, and which divests 
authority from the Justice Department to file suit under the 
Clayton Act to enjoin a railroad merger or acquisition.
---------------------------------------------------------------------------
    \9\Because of the bill's removal of the railroad common carrier 
exemption that currently prevents the FTC from enforcing antitrust law 
against railroad common carriers, the FTC would also have jurisdiction 
to review railroad mergers and acquisitions. See supra note 4. 
Traditionally, however, the Justice Department is the agency that 
reviews mergers and acquisitions in transportation industries (for 
example, the aviation industry). Which agency ultimately assumed this 
responsibility would be decided by the Justice Department and FTC.
---------------------------------------------------------------------------
    The bill is intended to apply prospectively, including to 
any on-going conduct previously immunized from antitrust law 
that is still in place six months after enactment of the 
legislation. The bill provides in section 8 that no antitrust 
action may be brought with respect to any on-going conduct 
exempted from antitrust law by the STB, or its predecessor the 
ICC, unless the conduct is still ongoing 180 days after 
enactment of the legislation. This provision is intended to 
give those affected by the termination of the railroad 
antitrust exemption six months to bring their conduct into 
compliance with antitrust law.

                               D. SUMMARY

    The objective of the Railroad Antitrust Enforcement Act is 
simply to remove the antitrust exemption protecting the 
railroad industry and allow antitrust enforcement of railroad 
industry practices. The current antitrust exemption enjoyed by 
the railroad industry is unwarranted due to the substantial de-
regulation of the railroad industry in recent decades, and has 
resulted in anti-competitive behavior harming railroad 
customers and consumers. The bill will remove this outmoded 
exemption so that the railroad industry is treated for purposes 
of antitrust law like virtually every other industry in the 
economy.
    By requiring railroads to comply with the antitrust laws 
like other major industries operating service networks, S. 146 
will restore to railroad customers the benefits of open 
competition that prevail elsewhere in the economy, resulting in 
lower prices and more efficient and more economical rail 
transportation of grain, coal, chemicals and other products 
essential to the Nation's domestic and foreign commerce.

          II. History of the Bill and Committee Consideration

    The Railroad Antitrust Enforcement Act was first introduced 
in the 109th Congress by Senator Kohl on June 29, 2006 (S. 
3612).\10\ The bill had one co-sponsor (Senator Feingold). It 
was referred to the Committee on the Judiciary. No further 
action was taken on S. 3612 in the 109th Congress.
---------------------------------------------------------------------------
    \10\S. 3612 in 109th Congress was identical to S. 772 as introduced 
in the 110th Congress, with the sole exception that the version 
introduced in the 109th Congress did not include section 8 of the 
current legislation (``Effective Date'').
---------------------------------------------------------------------------
    On March 6, 2007, Senator Kohl introduced the Railroad 
Antitrust Enforcement Act in the 110th Congress (S. 772). The 
legislation now had eleven co-sponsors (Senators Feingold, 
Coleman, Rockefeller, Vitter, Leahy, Harkin, Dorgan, Biden, 
Schumer, Lincoln and Klobuchar). It was reported favorably, 
with an amendment, by the Committee on the Judiciary by voice 
vote on September 20, 2007.
    The amendment, proposed by Senator Kohl, was mainly 
technical in nature. Its two non-technical provisions (i) 
clarified language to make clear that standard of review for 
reviewing mergers and acquisitions by the Justice Department 
would not be changed by the bill; and (ii) amended the bill so 
that railroad car pooling arrangements approved by the Surface 
Transportation Board currently exempt under antitrust law under 
49 U.S.C. Sec. 11321(a) would continue to be exempt. It was 
adopted by unanimous consent.
    A hearing on the bill titled ``An Examination of S. 772, 
the Railroad Antitrust Enforcement Act'' was held at the 
Committee on the Judiciary's Subcommittee on Antitrust, 
Competition Policy and Consumer Rights on October 3, 2007.
    On January 6, 2009, the Railroad Antitrust Enforcement Act 
of 2009 (S. 146) was introduced in the 111th Congress by 
Senator Kohl. The bill has eight co-sponsors (Senators Leahy, 
Vitter, Feingold, Schumer, Rockefeller, Dorgan, Klobuchar, and 
Kaufman). The language of the bill is identical to the bill as 
reported by the Judiciary Committee in the 110th Congress on 
September 20, 2007. It was referred to the Committee on the 
Judiciary.
    In its business meeting of March 5, 2009, the Committee 
voted to report the Railroad Antitrust Enforcement Act of 2009, 
without amendment, favorably to the Senate. The Committee 
proceeded by roll call vote as follows:
    Tally: 14 Yeas, 0 Nays, 5 Pass
    Yeas (14): Leahy (D-VT), Kohl (D-WI), Feinstein (D-CA), 
Feingold (D-WI), Schumer (D-NY), Durbin (D-IL), Cardin (D-MD), 
Whitehouse (D-RI), Wyden (D-OR), Klobuchar (D-MN), Kaufman (D-
DE), Hatch (R-UT), Grassley (R-IA), Kyl (R-AZ).
    Pass (5): Specter (R-PA), Sessions (R-AL), Graham (R-SC), 
Cornyn (R-TX), Coburn (R-OK).

              III. Section-by-Section Summary of the Bill

Section 1. Short title

    This section provides that the legislation may be cited as 
the ``Railroad Antitrust Enforcement Act.''

Section 2. Injunctions against railroad common carriers

    Section 2 of the bill amends Section 16 of the Clayton Act 
of 1914 (15 U.S.C. Sec. 26), which sets forth the principal 
remedies available for violations of the federal antitrust 
laws. Section 16 permits private parties threatened with loss 
or damage by a violation of the federal antitrust laws to sue 
for injunctive relief against such violations by a civil action 
in the courts of the United States. Section 16, however, 
presently contains a proviso that this fundamental antitrust 
remedy is not available against common carriers subject to 
regulation by the Surface Transportation Board (``STB''), 
successor to the functions of the former Interstate Commerce 
Commission under subtitle IV of Title 49 of the United States 
Code. Section 2 of the bill revises this proviso so that it 
will apply only to non-railroad common carriers subject to STB 
jurisdiction. It thereby makes injunctive relief available to 
parties threatened with economic injury by antitrust violations 
of railroad common carriers.

Section 3. Mergers and acquisitions of railroads

    Section 3 amends section 7 of the Clayton Act of 1914, 
which incorporates the Cellar-Kefauver Antimerger Act of 1950 
(15 U.S.C. Sec. 18), to make railroad combinations subject to 
its provisions. Section 7 bars anticompetitive mergers, 
consolidations and acquisitions. It declares unlawful 
acquisitions of the stock or assets of persons engaged in or 
affecting interstate commerce ``where in any line of commerce 
in any section of the country, the effect of such acquisition 
may be substantially to lessen competition, or to tend to a 
monopoly.'' Proposed or consummated transactions that are 
unlawful under section 7 can be enjoined by federal courts in 
civil actions by Federal antitrust authorities or private 
parties. The fifth paragraph in section 7, however, provides 
that nothing contained in that section shall apply to 
transactions duly approved by a number of federal agencies 
acting under other statutes authorizing such approvals. Among 
the agencies listed in the fifth paragraph is the STB, which 
has statutory authority to approve railroad combinations under 
49 U.S.C. Sec. Sec. 11322 (combinations relating to the pooling 
or division of traffic and earnings) and 11323 (consolidations, 
mergers, and acquisitions of control). Section 3 creates an 
exception to the fifth paragraph that eliminates this exemption 
with respect to STB-approved transactions described in 49 
U.S.C. Sec. 11321, i.e. STB-approved rate agreements or 
combinations subject to Sec. Sec. 11322 and 11323.

Section 4. Limitation of primary jurisdiction

    Section 4 removes any requirement that a federal district 
court defer to the primary jurisdiction of the STB in any civil 
antitrust action against a common carrier railroad (1) by a 
private party seeking treble damages (15 U.S.C. Sec. 15); (2) 
by the United States seeking an injunction (15 U.S.C. Sec. 25); 
or (3) by a private party seeking an injunction (15 U.S.C. 
Sec. 26).

Section 5. Federal Trade Commission enforcement

    Section 5 changes existing law so that the Federal Trade 
Commission (``FTC'') may enforce the antimerger and other 
provisions of the Clayton Act against railroad common carriers. 
Section 11(a) of the Clayton Act, 15 U.S.C. Sec. 21(a), 
presently vests such authority in the STB. Section 5 of the 
bill amends this provision to create an exception to the STB's 
enforcement jurisdiction under the Clayton Act with respect to 
two categories of transactions: STB-approved agreements among 
two or more rail carriers relating to rates subject to 49 
U.S.C. Sec. 10706; and transactions described in 49 U.S.C. 
Sec. 11321, i.e. STB-approved agreements or combinations 
subject to Sec. Sec. 11322 and 11323. Since section 11(a) of 
the Clayton Act vests in the FTC authority to enforce its 
provisions where enforcement authority is not assigned to other 
agencies, the exceptions from the STB's authority enacted by 
section 5 will fall within the jurisdiction of the FTC.

Section 6. Expansion of treble damages to rail common carriers

    Section 6 eliminates the judicially-created barrier against 
recovery of private antitrust damages from railroad carriers 
under the ``Keogh Doctrine,'' which holds that shippers injured 
by a railroad's antitrust violations are limited to the 
railroad's filed rate. Keogh v. Chicago & Northwestern Railway, 
260 U.S. 152 (1922). Section 6 of the bill adds a new 
subsection to the treble damage provision in section 4 of the 
Clayton Act. It provides that treble damages shall be available 
in civil antitrust suits to parties injured by railroad 
antitrust violations without regard to whether such railroads 
have filed rates or whether a complaint challenging rates has 
been filed.

Section 7. Termination of antitrust exemptions in Title 49

    Section 7 eliminates certain exemptions from the antitrust 
laws presently enjoyed by railroad common carriers under 
subchapter IV of Title 49. First, 49 U.S.C. 
Sec. 10706(a)(2)(A), (4) and (5) currently exempt from the 
antitrust laws ratemaking agreements among railroads that are 
approved by the STB. Section 7(a)(1) of the bill amends this 
provision by striking the exemption. Second, 49 U.S.C. 
Sec. 10706(e) currently provides for a periodic report by the 
FTC and the Antitrust Division of the Department of Justice on 
possible anti-competitive features of railroad rate agreements 
approved by or submitted to the STB. Section 7(a)(2) of the 
bill strikes this provision and substitutes a command that 
nothing in section 10706 exempts proposed agreements described 
in section 10706 from the antitrust laws, and a requirement 
that the STB and any other reviewing agency consider the impact 
of the proposed agreement on shippers and on affected 
communities. Third, 49 U.S.C. Sec. 11321 currently exempts from 
the antitrust laws transactions described therein, i.e. STB-
approved railroad agreements or combinations subject to 49 
U.S.C. Sec. 11322 (combinations relating to the pooling or 
division of traffic and earnings), or to 49 U.S.C. Sec. 11323 
(consolidations, mergers, and acquisitions of control). Section 
7(b)(1) strikes this exemption. However, any transaction 
relating the pooling of railroad cars approved by the STB 
pursuant to 49 U.S.C. Sec. 11322 is excluded from this 
language; such railroad car pooling arrangements will continue 
to be exempt from antitrust law. Section 7(b)(2) adds to 49 
U.S.C. Sec. 11321 a new subsection (c) commanding that nothing 
in section 10706 exempts proposed agreements described in 
section 10706 from the antitrust laws, and requiring that the 
STB consider the impact of the proposed agreement on shippers 
and on affected communities.

Section 8. Effective date

    Section 8 provides that a civil action under Sections 4, 
15, or 16 of the Clayton Act, or Section 5 of the Federal Trade 
Commission Act (the antitrust laws revived with respect to 
railroads by this bill) may not be filed with respect to 
conduct exempted from the antitrust laws by the Surface 
Transportation Board or Interstate Commerce Commission. 
However, under subsection (b) of section 8, such an action may 
be brought with respect to previously exempted conduct or 
activity that is continued subsequent to the date of enactment 
of this Act when such a civil action is filed 180 days after 
the date of enactment of the Act.

             IV. Congressional Budget Office Cost Estimate

    The Committee sets forth, with respect to the bill, S. 146, 
the following estimate and comparison prepared by the Director 
of the Congressional Budget Office under section 402 of the 
Congressional Budget Act of 1974:

                                                    March 12, 2009.
Hon. Patrick J. Leahy,
Chairman, Committee on the Judiciary,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 146, 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 Leigh Angres.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

S. 146--The Railroad Antitrust Enforcement Act

    S. 146 would expand the authority of the Department of 
Justice (DOJ) and the Federal Trade Commission (FTC) to 
prosecute, under the Clayton Act, 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 generally are 
limited to investigating potential antitrust violations and 
providing advice to the STB.
    Based on information provided by DOJ, CBO estimates that 
implementing S. 146 would have no significant effect on the 
federal budget. CBO expects 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 the 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 S. 146 could increase revenues 
and direct spending, but CBO estimates that any such effects 
would be insignificant given the small number of cases that 
would likely be affected.
    S. 146 would impose a private-sector mandate, as defined in 
the Unfunded Mandates Reform Act (UMRA), on railroads by 
eliminating 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 are also uncertain. Because of those 
uncertainties, CBO has no basis for estimating the costs to 
railroad carriers or whether those costs would exceed the 
annual threshold established in UMRA for private-sector 
mandates ($139 million in 2009, adjusted annually for 
inflation).
    S. 146 contains no intergovernmental mandates as defined in 
UMRA and would impose no costs on state, local, or tribal 
governments.
    The CBO staff contacts for this estimate are Leigh Angres 
(for federal costs) and Jacob Kuipers (for the private-sector 
impact). The estimate was approved by Theresa Gullo, Deputy 
Assistant Director for Budget Analysis.

                    V. Regulatory Impact Evaluation

    In compliance with rule XXVI of the Standing Rules of the 
Senate, the Committee finds that no significant regulatory 
impact will result from the enactment of S. 146.

                             VI. Conclusion

    The Railroad Antitrust Enforcement Act of 2009, S. 146, 
will remove current exemptions and subject the freight railroad 
industry to the provisions of the Nation's antitrust laws. By 
requiring railroads to comply with the antitrust laws like 
other major industries operating service networks, S. 146 will 
restore to railroad customers the benefits of open competition 
that prevail elsewhere in the economy.

       VII. Changes to Existing Law Made by the Bill, as Reported

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 146 as reported, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italic, and existing law in which no change is 
proposed is shown in roman):

CLAYTON ACT (15 U.S.C. Sec. Sec. 12, ET SEQ.)

           *       *       *       *       *       *       *

SEC. 4. SUITS BY PERSONS INJURED (15 U.S.C. Sec. 15).

    (a) Amount of Recovery; Prejudgment Interest.--Except as 
provided in subsection (b) of this section, any person who 
shall be injured in his business or property by reason of 
anything forbidden in the antitrust laws may sue therefore in 
any district court of the United States in the district in 
which the defendant resides or is found or has an agent, 
without respect to the amount in controversy, and shall recover 
threefold the damages by him sustained, and the cost of suit, 
including a reasonable attorney's fee. The court may award 
under this section, pursuant to a motion by such person 
promptly made, simple interest on actual damages for the period 
beginning on the date of service of such person's pleading 
setting forth a claim under the antitrust laws and ending on 
the date of judgment, or for any shorter period therein, if the 
court finds that the award of such interest for such period is 
just in the circumstances. In determining whether an award of 
interest under this section for any period is just in the 
circumstances, the court shall consider only--
          (1) whether such person or the opposing party, or 
        either party's representative, made motions or asserted 
        claims or defenses so lacking in merit as to show that 
        such party or representative acted intentionally for 
        delay, or otherwise acted in bad faith;
          (2) whether, in the course of the action involved, 
        such person or the opposing party, or either party's 
        representative, violated any applicable rule, statute, 
        or court order providing for sanctions for dilatory 
        behavior or otherwise providing for expeditious 
        proceedings; and
          (3) whether such person or the opposing party, or 
        either party's representative, engaged in conduct 
        primarily for the purpose of delaying the litigation or 
        increasing the cost thereof.
    (b) Subsection (a) shall apply to a common carrier by 
railroad subject to the jurisdiction of the Surface 
Transportation Board under subtitle IV of title 49, United 
States Code, without regard to whether such railroads have 
filed rates or whether a complaint challenging a rate has been 
filed.
    [(b)](c) Amount of Damages Payable to Foreign States and 
Instrumentalities of Foreign States.--
          (1) Except as provided in paragraph (2), any person 
        who is a foreign state may not recover under subsection 
        (a) of this section an amount in excess of the actual 
        damages sustained by it and the cost of suit, including 
        a reasonable attorney's fee.
          (2) Paragraph (1) shall not apply to a foreign state 
        if--
                  (A) such foreign state would be denied, under 
                section 1605(a)(2) of title 28, immunity in a 
                case in which the action is based upon a 
                commercial activity, or an act, that is the 
                subject matter of its claim under this section;
                  (B) such foreign state waives all defenses 
                based upon or arising out of its status as a 
                foreign state, to any claims brought against it 
                in the same action;
                  (C) such foreign state engages primarily in 
                commercial activities; and
                  (D) such foreign state does not function, 
                with respect to the commercial activity, or the 
                act, that is the subject matter of its claim 
                under this section as a procurement entity for 
                itself or for another foreign state.
    [(c)](d) Definitions.--For purposes of this section--
          (1) the term ``commercial activity'' shall have the 
        meaning given it in section 1603(d) of title 28, and
          (2) the term ``foreign state'' shall have the meaning 
        given it in section 1603(a) of title 28.

           *       *       *       *       *       *       *

SEC. 7. ACQUISITION BY ONE CORPORATION OF STOCK OF ANOTHER (15 U.S.C. 
                    Sec. 18).

    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 make 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 (except for transactions described 
in section 11321 of title 49, United States Code), the 
Securities and Exchange Commission in the exercise of its 
jurisdiction under section 79j of this title, 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. ENFORCEMENT PROVISIONS (15 U.S.C. Sec. 21).

    (a) Commission, Board, or Secretary Authorized To Enforce 
Compliance.--Authority to enforce compliance with sections 13, 
14, 18, and 19 of this title by the persons respectively 
subject thereto is vested in the Surface Transportation Board 
where applicable to common carriers subject to jurisdiction 
under subtitle IV of title 49 (except for agreements described 
in section 10706 of that title and transactions described in 
section 11321 of that 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 part A of subtitle VII of 
title 49; in the Board of Governors of the Federal Reserve 
System 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. INJUNCTIVE RELIEF FOR PRIVATE PARTIES; EXCEPTION; COSTS (15 
                    U.S.C. Sec. 26).

    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 13, 14, 18, and 19 of this title, 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 that is 
not a railroad subject to the jurisdiction of the Surface 
Transportation Board under subtitle IV of title 49. 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.

           *       *       *       *       *       *       *

SEC. 29.

    In any civil action against a common carrier railroad under 
section 4, 4C, 15, or 16 of this Act, the district court shall 
not be required to defer to the primary jurisdiction of the 
Surface Transportation Board.

FEDERAL TRADE COMMISSION ACT (15 U.S.C. Sec. 41 et seq.)

           *       *       *       *       *       *       *

SEC. 5. UNFAIR METHODS OF COMPETITION UNLAWFUL; PREVENTION BY 
                    COMMISSION (15 U.S.C. Sec. 45).

    (a) Declaration of Unlawfulness; Power To Prohibit Unfair 
Practices; Inapplicability to Foreign Trade.--
          (1) Unfair methods of competition in or affecting 
        commerce, and unfair or deceptive acts or practices in 
        or affecting commerce, are hereby declared unlawful.
          (2) The Commission is hereby empowered and directed 
        to prevent persons, partnerships, or corporations, 
        except banks, savings and loan institutions described 
        in section 57a(f)(3) of this title, Federal credit 
        unions described in section 57a(f)(4) of this title, 
        common carriers, except for railroads, subject to the 
        Acts to regulate commerce, air carriers and foreign air 
        carriers subject to part A of subtitle VII of title 49, 
        and persons, partnerships, or corporations insofar as 
        they are subject to the Packers and Stockyards Act, 
        1921, as amended (7 U.S.C. 181 et seq.), except as 
        provided in section 406(b) of said Act (7 U.S.C. 
        227(b)), from using unfair methods of competition in or 
        affecting commerce and unfair or deceptive acts or 
        practices in or affecting commerce.
          (3) This subsection shall not apply to unfair methods 
        of competition involving commerce with foreign nations 
        (other than import commerce) unless--
                  (A) such methods of competition have a 
                direct, substantial, and reasonably foreseeable 
                effect--
                          (i) on commerce which is not commerce 
                        with foreign nations, or on import 
                        commerce with foreign nations; or
                          (ii) on export commerce with foreign 
                        nations, of a person engaged in such 
                        commerce in the United States; and
                  (B) such effect gives rise to a claim under 
                the provisions of this subsection, other than 
                this paragraph.
    If this subsection applies to such methods of competition 
only because of the operation of subparagraph (A)(ii), this 
subsection shall apply to such conduct only for injury to 
export business in the United States.

           *       *       *       *       *       *       *

TITLE 49, UNITED STATES CODE--TRANSPORTATION

           *       *       *       *       *       *       *

                 Subtitle IV--Interstate Transportation

PART A--RAIL

           *       *       *       *       *       *       *

                           CHAPTER 107--RATES

Subchapter I--General Authority

           *       *       *       *       *       *       *

SEC. 10706. [RATE AGREEMENTS: EXEMPTION FROM ANTITRUST LAWS] RATE 
                    AGREEMENTS.

    (a)(1) In this subsection--
          (A) the term ``affiliate'' means a person 
        controlling, controlled by, or under common control or 
        ownership with another person and ``ownership'' refers 
        to equity holdings in a business entity of at least 5 
        percent;
          (B) the term ``single-line rate'' refers to a rate or 
        allowance proposed by a single rail carrier that is 
        applicable only over its line and for which the 
        transportation (exclusive of terminal services by 
        switching, drayage or other terminal carriers or 
        agencies) can be provided by that carrier; and
          (C) the term ``practicably participates in the 
        movement'' shall have such meaning as the Board shall 
        by regulation prescribe.
    (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 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.
    (B) The Board may approve an agreement under subparagraph 
(A) of this paragraph only when the rail carriers applying for 
approval file a verified statement with the Board. Each 
statement must specify for each rail carrier that is a party to 
the agreement--
          (i) the name of the carrier;
          (ii) the mailing address and telephone number of its 
        headquarter's office; and
          (iii) the names of each of its affiliates and the 
        names, addresses, and affiliates of each of its 
        officers and directors and of each person, together 
        with an affiliate, owning or controlling any debt, 
        equity, or security interest in it having a value of at 
        least $1,000,000.
    (3)(A) An organization established or continued under an 
agreement approved under this subsection shall make a final 
disposition of a rule or rate docketed with it by the 120th day 
after the proposal is docketed. Such an organization may not--
          (i) permit a rail carrier to discuss, to participate 
        in agreements related to, or to vote on single-line 
        rates proposed by another rail carrier, except that for 
        purposes of general rate increases and broad changes in 
        rates, classifications, rules, and practices only, if 
        the Board finds at any time that the implementation of 
        this clause is not feasible, it may delay or suspend 
        such implementation in whole or in part;
          (ii) permit a rail carrier to discuss, to participate 
        in agreements related to, or to vote on rates related 
        to a particular interline movement unless that rail 
        carrier practicably participates in the movement; or
          (iii) If there are interline movements over two or 
        more routes between the same end points, permit a 
        carrier to discuss, to participate in agreements 
        related to, or to vote on rates except with a carrier 
        which forms part of a particular single route. If the 
        Board finds at any time that the implementation of this 
        clause is not feasible, it may delay or suspend such 
        implementation in whole or in part.
    (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.
    (C) An organization described in subparagraph (A) of this 
paragraph shall provide that transcripts or sound recordings be 
made of all meetings, that records of votes be made, and that 
such transcripts or recordings and voting records be submitted 
to the Board and made available to other Federal agencies in 
connection with their statutory responsibilities over rate 
bureaus, except that such material shall be kept confidential 
and shall not be subject to disclosure under section 552 of 
title 5, United States Code.
    (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.
    (B) If the Board approves an agreement described in 
subparagraph (A) of this paragraph and the shippers entering 
into such agreement and the rail carriers proposing to use 
rolling stock owned or leased by such shippers, under payment 
by such carriers or under a published allowance, are unable to 
agree upon the amount of compensation to be paid for the use of 
such rolling stock, any party directly involved in the 
negotiations may require that the matter be settled by 
submitting the issues in dispute to the Board. The Board shall 
render a binding decision, based upon a standard of 
reasonableness and after taking into consideration any past 
precedents on the subject matter of the negotiations, no later 
than 90 days after the date of the submission of the dispute to 
the Board.
    (C) Nothing in this paragraph shall be construed to change 
the law in effect prior to October 1, 1980, with respect to the 
obligation of rail carriers to utilize rolling stock owned or 
leased by shippers.
    (b) The Board may require an organization established or 
continued under an agreement approved under this section to 
maintain records and submit reports. The Board may inspect a 
record maintained under this section.
    (c) The Board may review an agreement approved under 
subsection (a) of this section and shall change the conditions 
of approval or terminate it when necessary to comply with the 
public interest and subsection (a). The Board shall postpone 
the effective date of a change of an agreement under this 
subsection for whatever period it determines to be reasonably 
necessary to avoid unreasonable hardship.
    (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) Application of Antitrust Laws.--
          (1) In general--Nothing in this section exempts a 
        proposed agreement described in subsection (a) from the 
        application of the Sherman Act (15 U.S.C. 1 et seq.), 
        the Clayton Act (15 U.S.C. 12, 14 et seq.), the Federal 
        Trade Commission Act (15 U.S.C. 41 et seq.), section 73 
        or 74 of the Wilson Tariff Act (15 U.S.C. 8 and 9), or 
        the Act of June 19, 1936 (15 U.S.C. 13, 13a, 13b, 21a).
          (2) Antitrust analysis to consider impact--In 
        reviewing any such proposed agreement for the purpose 
        of any provision of law described in paragraph (1), the 
        Board shall take into account, among other 
        considerations, the impact of the proposed agreement on 
        shippers, on consumers, and on affected communities.

           *       *       *       *       *       *       *

CHAPTER 113--FINANCE

           *       *       *       *       *       *       *

Subchapter II--Combinations

           *       *       *       *       *       *       *

SEC. 11321. SCOPE OF AUTHORITY.

    (a) [The authority] Except as provided in sections 4 (15 
U.S.C. 15), 4C (15 U.S.C. 15c), and section 16 (15 U.S.C. 26) 
of the Clayton Act (15 U.S.C. 21(a), 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 
antitrust 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.
    (b) A power granted under this subchapter to a carrier or 
corporation is in addition to and changes its powers under its 
corporate charter and under State law. Action under this 
subchapter does not establish or provide for establishing a 
corporation under the laws of the United States.
    (c) Application of Antitrust Laws.--
          (1) In general--Nothing in this section exempts a 
        proposed agreement described in subsection (a) from the 
        application of the Sherman Act (15 U.S.C. 1 et seq.), 
        the Clayton Act (15 U.S.C. 12, 14 et seq.), the Federal 
        Trade Commission Act (15 U.S.C. 41 et seq.), section 73 
        or 74 of the Wilson Tariff Act (15 U.S.C. 8 and 9), or 
        the Act of June 19, 1936 (15 U.S.C. 13, 13a, 13b, 21a). 
        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 of Title 
        49, United States Code.
          (2) Antitrust analysis to consider impact--In 
        reviewing any such proposed agreement for the purpose 
        of any provision of law described in paragraph (1), the 
        Board shall take into account, among other 
        considerations, the impact of the proposed agreement on 
        shippers, on consumers, and on affected communities.

                                  

```