II

106TH CONGRESS

1ST SESSION S. 621

To enhance competition among and between rail carriers in order to ensure

efficient rail service and reasonable rail rates in any case in which

there is an absence of effective competition.

IN THE SENATE OF THE UNITED STATES

MARCH 15, 1999

Mr. ROCKEFELLER (for himself, Mr. DORGAN, Mr. BURNS, and Mr. ROBERTS

and Mr. CONRAD) introduced the following bill; which was read twice and

referred to the Committee on Commerce, Science, and Transportation

A BILL

To enhance competition among and between rail carriers

in order to ensure efficient rail service and reasonable

rail rates in any case in which there is an absence

of effective competition.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Railroad Competition

5 and Service Improvement Act of 1999’’.

6 SEC. 2. PURPOSES.

7 The purposes of this Act are—
2

•S 621 IS

1 (1) to clarify the rail transportation policy of

2 the United States by requiring the Surface Trans3 portation Board to accord greater weight to the need

4 for increased competition between and among rail

5 carriers and consistent and efficient rail service in

6 its decision making;

7 (2) to eliminate unreasonable barriers to com8 petition among rail carriers serving the same geo9 graphic areas and ensure that smaller carload or

10 intermodal shippers are not precluded from access11 ing rail systems due to volume requirements;

12 (3) to ensure reasonable rail rates for captive

13 rail shippers;

14 (4) to provide relief for certain agricultural fa15 cilities lacking effective competitive alternatives; and

16 (5) to remove unnecessary regulatory burdens

17 from the rate reasonableness procedures of the Sur18 face Transportation Board.

19 SEC. 3. FINDINGS.

20 The Congress finds that:

21 (1) Prior to 1976, the Interstate Commerce

22 Commission regulated most of the rates that rail23 roads charged shippers. The Railroad Revitalization

24 and Regulatory Act (1976) and the Staggers Rail

25 Act (1980) limited the regulation of the rail industry
3

•S 621 IS

1 by allowing the Interstate Commerce Commission to

2 regulate rates only where railroads have no effective

3 competition and established the Interstate Com4 merce Commission’s process for resolving rate dis5 putes.

6 (2) In 1976, when the Congress began the proc7 ess of railroad deregulation, there were 63 class I

8 railroads in the United States. By 1997, through

9 mergers and other factors, the number of class I

10 railroads shrunk to nine.

11 (3) The nine class I carriers accounted for more

12 than 90 percent of the industry’s freight revenue

13 and 71 percent of the industry’s mileage operated in

14 1997.

15 (4) Rail industry consolidation has diminished

16 competition, creating an even greater dependence

17 upon a rate relief process through a regulatory body

18 such as the Surface Transportation Board.

19 (5) Agricultural, chemical, and utility industries

20 in particular rely heavily upon rail transportation,

21 and unreasonable rail rates and inadequate service

22 have a dramatic impact on these important indus23 tries.

24 (6) According to a report issued by the General

25 Accounting Office, ‘‘ . . . [t]he Surface Transpor-
4

•S 621 IS

1 tation Board’s standard procedures for obtaining

2 rate relief are highly complex and time-consuming’’

3 and the General Accounting Office estimates that

4 over ‘‘70 percent [of shippers] believe that the time,

5 complexity, and costs of filing complaints are bar6 riers that often preclude them from seeking relief.’’

7 (7) The General Accounting Office analyzed all

8 41 rate complaints filed with the Interstate Com9 merce Commission and its successor, the Surface

10 Transportation Board, since 1990 and found that

11 each complaint cost shippers between $500,000 to

12 $3 million apiece and took between a few months

13 and 16 years to resolve.

14 (8) The General Accounting Office surveyed

15 over 700 shippers and found that—

16 (A) 75 percent of the shippers believed

17 that they are overcharged with unreasonable

18 rates and

19 (B) over 70 percent of the shippers be20 lieved that the time, complexity, and costs of fil21 ing complaints create unsurmountable barriers

22 and therefore preclude them from pursuing the

23 rate relief they are entitled to under the law.
5

•S 621 IS

1 (9) The General Accounting Office survey of

2 shippers identified the following barriers to obtain3 ing rate relief under the current process:

4 (A) The costs associated with filing com5 plaints outweighs the benefits of winning relief.

6 (B) The rate complaint process is too com7 plex and too lengthy.

8 (C) Developing the stand-alone revenue-to9 variable cost model is too costly.

10 (D) Most shippers believe that the STB is

11 most likely to decide in favor of the railroad.

12 (E) The discovery process is too difficult

13 because the shipper is dependent upon the rail14 road for all the necessary data.

15 (F) Responding to the railroads requests

16 for discovery is too difficult and time con17 suming.

18 (G) Shippers fear reprisal from the rail19 roads.

20 (H) The Surface Transportation Board fil21 ing fee is too high.

22 (10) According to the General Accounting Of23 fice report, the vast majority of shippers believe that

24 the following changes in the rate relief process are
6

•S 621 IS

1 necessary to provide them with the ability to seek

2 the rate relief:

3 (A) The Surface Transportation Board’s

4 time limit for deciding a rate relief case should

5 be shortened.

6 (B) The complaint fee required upon filing

7 should be eliminated or reduced.

8 (C) The market dominance requirement

9 should be simplified.

10 (D) Mandatory binding arbitration should

11 be used to resolve rate disputes.

12 (E) The Surface Transportation Board’s

13 jurisdictional threshold of 180% revenue-to14 variable cost should be lowered.

15 (11) According to the General Accounting Of16 fice report, shippers believe that increasing competi17 tion in the railroad industry would lower rates and

18 diminish the need for a rate complaint process. Pro19 posals to increase railroad competition identified in

20 the report include the following:

21 (A) Require the STB to grant trackage

22 rights; require reciprocal switching at the near23 est junction or interchange upon request of a

24 shipper or competing railroad; and increase rail

25 access for shortline and regional railroads.
7

•S 621 IS

1 (B) Overturn the STB’s ‘‘bottle neck’’ de2 cision by requiring railroads to quote a rate for

3 all route segments.

4 (12) Consolidation in the railroad industry has

5 diminished competition, thwarting the intended ob6 jectives of deregulation to allow competition to lower

7 rates and improve service.

8 (13) The rate protection intended for shippers

9 without effective competition has been de-railed by a

10 complex, costly, and time-consuming maze of dis11 covery, findings, and appeals that take years and

12 cost millions of dollars.

13 (14) Because of diminished rail competition, a

14 rate relief process plagued with unsurmountable bar15 riers and blanket antitrust immunity unique to the

16 railroad industry, captive shippers have no effective

17 recourse under the current system.

18 SEC. 4. CLARIFICATION OF RAIL TRANSPORTATION POL19 ICY.

20 Section 10101 of title 49, United States Code, is

21 amended—

22 (1) by inserting ‘‘(a) IN GENERAL.—’’ before

23 ‘‘In regulating’’; and

24 (2) by adding at the end the following:
8

•S 621 IS

1 ‘‘(b) PRIMARY OBJECTIVES.—The primary objectives

2 of the rail transportation policy of the United States shall

3 be—

4 ‘‘(1) to ensure effective competition among rail

5 carriers at origin and destination;

6 ‘‘(2) to maintain reasonable rates in the ab7 sence of effective competition; and

8 ‘‘(3) to maintain consistent and efficient rail

9 transportation service to shippers, including the

10 timely provision of railcars requested by shippers;

11 and

12 ‘‘(4) to ensure that smaller carload and inter13 modal shippers are not precluded from accessing rail

14 systems due to volume requirements.’’.

15 SEC. 5. FOSTERING RAIL TO RAIL COMPETITION.

16 (a) ESTABLISHMENT OF RATE.—Section 11101(a) of

17 title 49, United States Code, is amended by inserting after

18 the first sentence the following: ‘‘Upon the request of a

19 shipper, a rail carrier shall establish a rate for transpor20 tation and provide service requested by the shipper be21 tween any two points on the system of that carrier where

22 traffic originates, terminates, or may reasonably be inter23 changed. A carrier shall establish a rate and provide serv24 ice upon such request without regard to—
9

•S 621 IS

1 ‘‘(1) whether the rate established is for only

2 part of a movement between an origin and a destina3 tion;

4 ‘‘(2) whether the shipper has made arrange5 ments for transportation for any other part of that

6 movement; or

7 ‘‘(3) whether the shipper currently has a con8 tract with any rail carrier for part or all of its trans9 portation needs over the route of movement.

10 ‘‘If such a contract exists, the rate established by the car11 rier shall not apply to transportation covered by the con12 tract.’’.

13 (b) REVIEW OF REASONABLENESS OF RATES.—Sec14 tion 10701(d) of title 49, United States Code, is

15 amended—

16 (1) by redesignating paragraph (3) as para17 graph (4); and

18 (2) by inserting after paragraph (2) the fol19 lowing:

20 ‘‘(3) A shipper may challenge the reasonable21 ness of any rate established by a rail carrier in ac22 cordance with sections 11101(a) and 10701(c) of

23 this title. The Board shall determine the reasonable24 ness of the rate so challenged without regard to—
10

•S 621 IS

1 ‘‘(A) whether the rate established is for

2 only part of a movement between an origin and

3 a destination;

4 ‘‘(B) whether the shipper has made ar5 rangements for transportation for any other

6 part of that movement; or

7 ‘‘(C) whether the shipper currently has a

8 contract with a rail carrier for any part of the

9 rail traffic at issue, provided that the rate pre10 scribed by the Board shall not apply to trans11 portation covered by such a contract.’’.

12 SEC. 6. SIMPLIFIED RELIEF PROCESS FOR CERTAIN AGRI13 CULTURAL SHIPPERS.

14 (a) LIMITATION ON FEES.—Notwithstanding any

15 other provision of law, the Surface Transportation Board

16 shall not impose fees in excess of $1,000 for services col17 lected from an eligible facility in connection with rail max18 imum rate complaints under part 1002 of title 49, Code

19 of Federal Regulations.

20 (b) SIMPLIFIED RATE AND SERVICE RELIEF.—Sec21 tion 10701 of title 49, United States Code, is amended

22 by adding at the end thereof the following:

23 ‘‘(e) SIMPLIFIED RATES AND SERVICES.—

24 ‘‘(1) IN GENERAL.—Notwithstanding any other

25 provision of law, a rail carrier may not charge a rate
11

•S 621 IS

1 for shipments from or to an eligible facility which re2 sults in a revenue-to-variable cost percentage, using

3 system average costs, for the transportation service

4 to which the rate applies that is greater than 180

5 percent.

6 ‘‘(2) ACCEPTANCE OF REQUESTS.—Notwith7 standing any other provision of law, a rail carrier

8 shall accept all requests, for grain service from an

9 eligible facility up to a maximum of 110 percent of

10 the grain carloads shipped from or to the facility in

11 the immediately preceding calendar year. If, in a

12 majority of instances, a rail carrier does not in any

13 45-day period, supply the number of grain cars so

14 ordered by an eligible facility or does not initiate

15 service within 30 days of the reasonably specified

16 loading date, the eligible facility may request that an

17 alternative rail carrier provide the service using the

18 tracks of the original carrier. If the alternative rail

19 carrier agrees to provide such service, and such serv20 ice can be provided without substantially impairing

21 the ability of the carrier whose tracks reach the fa22 cility to use such tracks to handle its own business,

23 the Board shall order the alternative carrier to com24 mence service and to compensate the other carrier

25 for the use of its tracks. The alternative carrier shall
12

•S 621 IS

1 provide reasonable compensation to the original car2 rier for the use of the original carrier’s tracks.

3 ‘‘(3) CANCELLATION PENALTIES.—A carrier

4 may accept car orders under paragraph (2) subject

5 to reasonable penalties for service requests that are

6 canceled by the requester. If the carrier fills such or7 ders more than 15 days after the reasonably speci8 fied loading date, the carrier may not assess a pen9 alty for canceled car orders.

10 ‘‘(4) DAMAGES.—A rail carrier that fails to

11 provide service under the requirements of paragraph

12 (2) is liable for damages to an eligible facility that

13 does not have access to an alternative carrier, in14 cluding lost profits, attorney’s fees, and any other

15 consequences attributable to the carrier’s failure to

16 provide the ordered service. A claim for such damage

17 may be brought in an appropriate United States

18 District Court or before the Board.

19 ‘‘(5) TIMETABLE FOR BOARD PROCEEDING.—

20 The Board shall conclude any proceeding brought

21 under this subsection no later than 180 days from

22 the date a complaint is filed.

23 ‘‘(6) DEFINITIONS.—In this subsection:

24 ‘‘(A) ELIGIBLE FACILITY.—The term ‘eli25 gible facility’ means a shipper facility that—
13

•S 621 IS

1 ‘‘(i) is the origin or destination for not

2 more than 4,000 carloads annually of

3 grain as defined in section 3(g) of the

4 United States Grain Standards Act (7

5 U.S.C. 75(g));

6 ‘‘(ii) is served by a single rail carrier

7 at its origin;

8 ‘‘(iii) has more than 60 percent of the

9 facility’s inbound or outbound grain and

10 grain product shipments (excluding the de11 livery of grain to the facility by producers),

12 measured by weight or bushels moved via

13 a rail carrier in the immediately preceding

14 calendar year; and

15 ‘‘(iv) the rate charged by the rail car16 rier for the majority of shipments of grain

17 and grain products from or to the facility,

18 excluding premium for special service pro19 grams, results in a revenue-to-variable cost

20 percentage, using system average costs, for

21 the transportation to which the rate ap22 plies that is equal to or greater than 180

23 percent.

24 ‘‘(B) REASONABLE COMPENSATION.—The

25 term ‘reasonable compensation’ shall mean an
14

•S 621 IS

1 amount no greater than the total shared costs

2 of the original carrier and the alternative car3 rier incurred, on a usage basis, for the provision

4 of service to an eligible facility. If the carriers

5 are unable to agree on compensation terms

6 within 15 days after the facility requests service

7 from the alternative carrier, the alternative car8 rier or the eligible facility may request the

9 Board to establish the compensation and the

10 Board shall establish the compensation within

11 45 days after such request is made.

12 ‘‘(C) ORIGINAL CARRIER.—The term

13 ‘original carrier’ means a rail carrier which pro14 vides the only rail service to an eligible facility

15 using its own tracks or provides such service

16 over an exclusive lease of the tracks serving the

17 eligible facility.

18 ‘‘(D) ALTERNATIVE CARRIER.—The term

19 ‘alternative carrier’ means a rail carrier that is

20 not an original carrier to an eligible facility.’’.

21 SEC. 7. COMPETITIVE RAIL SERVICE IN TERMINAL AREAS.

22 (a) TRACKAGE RIGHTS.—Section 11102(a) of title

23 49, United States Code, is amended—

24 (1) by striking ‘‘may’’ in the first sentence and

25 inserting ‘‘shall’’;
15

•S 621 IS

1 (2) by inserting [as a new second sentence]

2 after ‘‘business.’’ the following: ‘‘In making this de3 termination, the Board shall not require evidence of

4 anticompetitive conduct by the rail carrier from

5 which access is sought.’’; and

6 (3) by striking ‘‘may establish’’ in the next-to7 last sentence and inserting ‘‘shall.’’

8 (b) RECIPROCAL SWITCHING.—Section 11102(c)(1)

9 of title 49, United States Code, is amended—

10 (1) by striking ‘‘may’’ in the first sentence and

11 inserting ‘‘shall’’;

12 (2) by inserting after ‘‘service.’’ the following:

13 ‘‘In making this determination, the Board shall not

14 require evidence of anticompetitive conduct by the

15 rail carrier from which access is sought.’’; and

16 (3) by striking ‘‘may establish’’ in the last sen17 tence and inserting ‘‘shall’’.

18 SEC. 8. SIMPLIFIED STANDARDS FOR MARKET DOMINANCE.

19 Section 10707(d)(1)(A) of title 49, United States

20 Code, is amended by adding at the end thereof the fol21 lowing: ‘‘The Board shall not consider evidence of product

22 or geographic competition in making a market dominance

23 determination under this section.’’.
16

•S 621 IS

1 SEC. 9. REVENUE ADEQUACY DETERMINATIONS.

2 (a) RAIL TRANSPORTATION POLICY.—Section

3 10101(3) of title 49, United States Code, is amended by

4 striking ‘‘revenues, as determined by the Board;’’ and in5 serting ‘‘revenues;’’.

6 (b) STANDARDS FOR RATES.—Section 10701(d)(2) is

7 amended by striking ‘‘revenues, as established by the

8 Board under section 10704(a)(2) of this title’’ and insert9 ing ‘‘revenues.’’.

10 (c) REVENUE ADEQUACY DETERMINATIONS.—Sec11 tion 10704(a) of title 49, United States Code, is

12 amended—

13 (1) by striking ‘‘(a)(1)’’ and inserting ‘‘(a)’’;

14 and

15 (2) by striking paragraphs (2) and (3).

16 SEC. 10. RAIL CARRIER SERVICE QUALITY PERFORMANCE

17 REPORTS.

18 (a) IN GENERAL.—Chapter 5 of subtitle I of title 49,

19 United States Code, is amended by adding at the end

20 thereof the following:

21 ‘‘SUBCHAPTER III. PERFORMANCE REPORTS

22 ‘‘§ 541. Rail carrier service quality performance re23 ports

24 ‘‘(a) IN GENERAL.—The Secretary of Transportation

25 shall require, by regulation, each rail carrier to submit a

26 monthly report to the Secretary, in such uniform format
17

•S 621 IS

1 as the Secretary may by regulation prescribe, containing

2 information about—

3 ‘‘(1) its on-time performance;

4 ‘‘(2) its car availability deadline performance;

5 ‘‘(3) its average train speed;

6 ‘‘(4) its average terminal dwell time;

7 ‘‘(5) the number of its cars loaded (by major

8 commodity group); and

9 ‘‘(6) such other aspects of its performance as a

10 rail carrier as the Secretary may require.

11 ‘‘(b) INFORMATION FURNISHED TO STB; THE PUB12 LIC.—The Secretary shall furnish a copy of each report

13 required under subsection (a) to the Surface Transpor14 tation Board no later than the next business day following

15 its receipt by the Secretary, and shall make each such re16 port available to the public.

17 ‘‘(c) ANNUAL REPORT TO THE CONGRESS.—The Sec18 retary shall transmit to the Congress an annual report

19 based upon information received by the Secretary under

20 this section.

21 ‘‘(d) DEFINITIONS.—In this section, the definitions

22 in section 10102 apply.’’.

23 (b) CONFORMING AMENDMENT.—The chapter anal24 ysis for chapter 5 of subtitle I of title 49, United States
18

•S 621 IS

1 Code, is amended by adding at the end thereof the fol2 lowing:

‘‘SUBCHAPTER III. PERFORMANCE REPORTS

‘‘541. Rail carrier service quality performance reports’’.

Æ