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[Congressional Record Volume 155, Number 1 (Tuesday, January 6, 2009)]
[Senate]
[Pages S129-S131]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KOHL (for himself, Mr. Vitter, Mr. Leahy, Mr. Feingold, 
        Mr. Schumer, Ms. Klobuchar, Mr. Dorgan, and Mr. Rockefeller):
  S. 146. A bill 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; to the 
Committee on the Judiciary.
  Mr. KOHL. Mr. President, I rise today to introduce legislation 
essential to restoring competition to the nation's crucial freight 
railroad sector. Freight railroads are essential to shipping a myriad 
of vital goods, everything from coal used to generate electricity to 
grain used for basic foodstuffs. But for decades the freight railroads 
have been insulated from the normal rules of competition followed by 
almost all other parts of our economy by an outmoded and unwarranted 
antitrust exemption. So today I am introducing along with my 
colleagues, Senators Vitter, Leahy, Feingold, Schumer, Rockefeller, 
Dorgan and Klobuchar, the Railroad Antitrust Enforcement Act of 2009. 
This legislation will eliminate the obsolete antitrust exemptions that 
protect freight railroads from competition. This legislation is 
identical to the legislation that was reported out of the Judiciary 
Committee in the last Congress without dissent.
  Our legislation will eliminate obsolete antitrust exemptions that 
protect

[[Page S130]]

freight railroads from competition and result in higher prices to 
millions of consumers every day. Consolidation in the railroad industry 
in recent years has resulted in only four Class I railroads providing 
over 90 percent of the nation's freight rail transportation. The lack 
of competition was documented in an October 2006 Government 
Accountability Office report. 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 
consumers to suffer higher electricity bills because a utility must pay 
for the high cost of transporting coal, result in higher prices for 
goods produced by manufacturers who rely on railroads to transport raw 
materials, and reduce earnings for American farmers who ship their 
products by rail and raise food prices paid by consumers.
  The ill-effects of this consolidation are exemplified in the case of 
``captive shippers''--industries served by only one railroad. Over the 
past several years, these captive shippers have faced spiking rail 
rates. They are the victims of the monopolistic practices and price 
gouging by the single railroad that serves them, price increases which 
they are forced to pass along into the price of their products, and 
ultimately, to consumers. And in many cases, the ordinary protections 
of antitrust law are unavailable to these captive shippers--instead, 
the railroads are protected by a series of outmoded exemptions from the 
normal rules of antitrust law to which all other industries must abide. 
In August 2006, the Attorneys General of 17 states and the District of 
Columbia sent a letter to Congress citing problems due to a lack of 
competition and asked that the antitrust exemptions be removed.
  These unwarranted antitrust exemptions have put the American consumer 
at risk, and in Wisconsin, victims of a lack of railroad competition 
abound. A coalition has formed, consisting of about 40 affected 
organizations--Badger CURE. From Dairyland Power Cooperative in La 
Crosse to Wolf River Lumber in New London, companies in my state are 
feeling the crunch of years of railroad consolidation. To help offset a 
93 percent increase in shipping rates in 2006, Dairyland Power 
Cooperative had to raise electricity rates by 20 percent. The 
reliability, efficiency, and affordability of freight rail have all 
declined, and Wisconsin consumers feel the pinch.
  Similar stories exist across the country. We held a hearing at the 
Antitrust Subcommittee in September 2007 which detailed numerous 
instances of anti-competitive conduct by the dominant freight railroads 
and at which railroad shippers testified as to the need to repeal the 
outmoded and unwarranted antitrust exemptions which left them without 
remedies. Dozens of organizations, unions and trade groups--including 
the American Public Power Association, the American Chemistry Council, 
American Corn Growers Associations and many more affected by 
monopolistic railroad conduct endorsed the Railroad Antitrust 
Enforcement Act in the last Congress.
  The current antitrust exemptions protect a wide range of railroad 
industry conduct from scrutiny by governmental antitrust enforcers. 
Railroad mergers and acquisitions are exempt from antitrust law and are 
reviewed solely by the Surface Transportation Board. Railroads that 
engage in collective ratemaking are also exempt from antitrust law. 
Railroads subject to the regulation of the Surface Transportation Board 
are also exempt from private antitrust lawsuits seeking the termination 
of anticompetitive practices via injunctive relief. Our bill will 
eliminate these exemptions.
  No good reason exists for them. While railroad legislation in recent 
decades--including most notably the Staggers Rail Act of 1980--
deregulated much railroad rate setting from the oversight of the 
Surface Transportation Board, these obsolete antitrust exemptions 
remained in place, insulating a consolidating industry from obeying the 
rules of fair competition. And there is no reason to treat railroads 
any differently from dozens of other regulated industries in our 
economy that are fully subject to antitrust law--whether the 
telecommunications sector regulated by the FCC, or the aviation 
industry regulation by the Department of Transportation, to name just 
two examples.
  Our bill will bring railroad mergers and acquisitions under the 
purview of the Clayton Act, allowing the Federal government, state 
attorneys general and private parties to file suit to enjoin 
anticompetitive mergers and acquisitions. It will restore the review of 
these mergers to the agencies where they belong--the Justice 
Department's Antitrust Division and the Federal Trade Commission. It 
will eliminate the exemption that prevents FTC's scrutiny of railroad 
common carriers. It will eliminate the antitrust exemption for railroad 
collective ratemaking. It will allow state attorneys general and other 
private parties to sue railroads for treble damages and injunctive 
relief for violations of the antitrust laws, including collusion that 
leads to excessive and unreasonable rates. This legislation will force 
railroads to play by the rules of free competition like all other 
businesses.
  In sum, by clearing out this thicket of outmoded antitrust 
exemptions, railroads will be subject to the same laws as the rest of 
the economy. Government antitrust enforcers will finally have the tools 
to prevent anti-competitive transactions and practices by railroads. 
Likewise, private parties will be able to utilize the antitrust laws to 
deter anti-competitive conduct and to seek redress for their injuries.
  It is time to put an end to the abusive practices of the Nation's 
freight railroads. On the Antitrust Subcommittee, we have seen that in 
industry after industry, vigorous application of our Nation's antitrust 
laws is the best way to eliminate barriers to competition, to end 
monopolistic behavior, to keep prices low and quality of service high. 
The railroad industry is no different. All those who rely on railroads 
to ship their products--whether it is an electric utility for its coal, 
a farmer to ship grain, or a factory to acquire its raw materials or 
ship out its finished product--deserve the full application of the 
antitrust laws to end the anti-competitive abuses all too prevalent in 
this industry today. I urge my colleagues support the Railroad 
Antitrust Enforcement Act of 2009.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 146

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Railroad Antitrust 
     Enforcement Act of 2009''.

     SEC. 2. INJUNCTIONS AGAINST RAILROAD COMMON CARRIERS.

       The proviso in section 16 of the Clayton Act (15 U.S.C. 26) 
     ending with ``Code.'' is amended to read as follows: 
     ``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, United States Code.''.

     SEC. 3. MERGERS AND ACQUISITIONS OF RAILROADS.

       The sixth undesignated paragraph of section 7 of the 
     Clayton Act (15 U.S.C. 18) is amended to read as follows:
       ``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 that title), the Securities and 
     Exchange Commission in the exercise of its jurisdiction under 
     section 10 (of the Public Utility Holding Company Act of 
     1935), the United States Maritime Commission, or the 
     Secretary of Agriculture under any statutory provision 
     vesting such power in the Commission, Board, or Secretary.''.

     SEC. 4. LIMITATION OF PRIMARY JURISDICTION.

       The Clayton Act is amended by adding at the end thereof the 
     following:
       ``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.''.

     SEC. 5. FEDERAL TRADE COMMISSION ENFORCEMENT.

       (a) Clayton Act.--Section 11(a) of the Clayton Act (15 
     U.S.C. 21(a)) is amended by striking ``subject to 
     jurisdiction'' and all that follows through the first 
     semicolon and inserting ``subject to jurisdiction under 
     subtitle IV of title 49, United States Code (except for 
     agreements described in section 10706 of that title and 
     transactions described in section 11321 of that title);''.

[[Page S131]]

       (b) FTC Act.--Section 5(a)(2) of the Federal Trade 
     Commission Act (15 U.S.C. 45(a)(2)) is amended by striking 
     ``common carriers subject'' and inserting ``common carriers, 
     except for railroads, subject''.

     SEC. 6. EXPANSION OF TREBLE DAMAGES TO RAIL COMMON CARRIERS.

       Section 4 of the Clayton Act (15 U.S.C. 15) is amended by--
       (1) redesignating subsections (b) and (c) as subsections 
     (c) and (d), respectively; and
       (2) inserting after subsection (a) the following:
       ``(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.''.

     SEC. 7. TERMINATION OF EXEMPTIONS IN TITLE 49.

       (a) In General.--Section 10706 of title 49, United States 
     Code, is amended--
       (1) in subsection (a)--
       (A) in paragraph (2)(A), by striking ``, and the Sherman 
     Act (15 U.S.C. 1 et seq.),'' and all that follows through 
     ``or carrying out the agreement'' in the third sentence;
       (B) in paragraph (4)--
       (i) by striking the second sentence; and
       (ii) by striking ``However, the'' in the third sentence and 
     inserting ``The''; and
       (C) in paragraph (5)(A), by striking ``, 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''; and
       (2) by striking subsection (e) and inserting the following:
       ``(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 any other considerations, the impact of the 
     proposed agreement on shippers, on consumers, and on affected 
     communities.''.
       (b) Combinations.--Section 11321 of title 49, United States 
     Code, is amended--
       (1) in subsection (a)--
       (A) by striking ``The authority'' in the first sentence and 
     inserting ``Except as provided in sections 4 (15 U.S.C. 15), 
     4C (15 U.S.C. 15c), section 15 (15 U.S.C. 25), and section 16 
     (15 U.S.C. 26) of the Clayton Act (15 U.S.C. 21(a)), the 
     authority''; and
       (B) by striking ``is exempt from the antitrust laws and 
     from all other law,'' in the third sentence and inserting 
     ``is exempt from all other law (except the antitrust laws 
     referred to in subsection (c)),''; and
       (2) by adding at the end the following:
       ``(c) Application of Antitrust Laws.--
       ``(1) In general.--Nothing in this section exempts a 
     transaction 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. 8-9), 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 transaction for the purpose of any provision of law 
     described in paragraph (1), the Board shall take into 
     account, among any other considerations, the impact of the 
     transaction on shippers and on affected communities.''.
       (c) Conforming Amendments.--
       (1) The heading for section 10706 of title 49, United 
     States Code, is amended to read as follows: ``Rate 
     agreements''.
       (2) The item relating to such section in the chapter 
     analysis at the beginning of chapter 107 of such title is 
     amended to read as follows:

``10706. Rate agreements.''.

     SEC. 8. EFFECTIVE DATE.

       (a) In General.--Subject to the provisions of subsection 
     (b), this Act shall take effect on the date of enactment of 
     this Act.
       (b) Conditions.--
       (1) Previous conduct.--A civil action under section 4, 15, 
     or 16 of the Clayton Act (15 U.S.C. 15, 25, 26) or complaint 
     under section 5 of the Federal Trade Commission Act (15 
     U.S.C. 45) may not be filed with respect to any conduct or 
     activity that occurred prior to the date of enactment of this 
     Act that was previously exempted from the antitrust laws as 
     defined in section 1 of the Clayton Act (15 U.S.C. 12) by 
     orders of the Interstate Commerce Commission or the Surface 
     Transportation Board issued pursuant to law.
       (2) Grace period.--A civil action or complaint described in 
     paragraph (1) may not be filed earlier than 180 days after 
     the date of enactment of this Act with respect to any 
     previously exempted conduct or activity or previously 
     exempted agreement that is continued subsequent to the date 
     of enactment of this Act.

  Mr. FEINGOLD. Mr. President, I would like to thank the senior Senator 
from Wisconsin for his hard work to address antitrust issues in the 
rail industry along with other industries as Chairman of the Antitrust, 
Competition Policy and Consumer Rights Subcommittee of the Judiciary 
Committee. I have been pleased to support his efforts to bring 
antitrust scrutiny to the large freight railroads since he first 
introduced a version of this legislation in 2006. As Senator Kohl well 
knows, this is a vitally important issue for rail customers and 
ultimately consumers both in Wisconsin and across the country.
  Over the past several years, I have heard more and more comments and 
concerns from freight rail customers at my town hall meetings in 
Wisconsin and my meetings in Washington. The concerns have come from 
constituents who rely on freight railroads to transport their goods or 
receive raw materials. The comments I have heard have been diverse by 
industry, ranging from forestry, energy, farming, and petrochemical 
companies to various manufacturers, and by size, from family owned 
enterprises to large corporations. The problems they have described do 
not seem to be isolated incidents, but instead suggest a systematic 
continuing problem.
  There are several general concerns that seem to apply no matter which 
class of railroad is discussed. While outright refusals of transport 
may be rare, several of my constituents have found it difficult to get 
timely estimates of costs for carriage for their cargo. This seems to 
especially be a problem for short distances or small loads, or if the 
cargo is only on the originating railroads' tracks for a short 
distance. Many have said that they feel like second-class citizens, 
denied the better service and dedicated trains that the long-haul 
receive.
  I have also heard about problems with changes to transportation 
schedules, and problems with rail car delivery and ancillary services 
such as scales. Many rail customers seem to feel that as railroads 
continued to merge over the past two decades, service, especially for 
small customers, has declined dramatically. Again, this seems to 
especially affect small railroad customers who are dependant on rail 
transport, but face difficulty in receiving cars to fill, moving filled 
cars in a timely manner or weighing their loads.
  Of course cost is also an issue, but it is not just the cost of 
transportation. Some rail customers feel that the Surface 
Transportation Board, STB, complaint process is too costly, slow and 
tilted in favor of the railroads over the customers. They contend that 
these hurdles to exposing anticompetitive practices have the effect of 
perpetuating the unfair treatment and excessive rates they experience.
  Senator Kohl's proposal would remove the current railroad antitrust 
exemptions so that railroads would be covered like other segments of 
industry. The Department of Justice and the Federal Trade Commission 
would then have the authority to review mergers and block anti-
competitive mergers. The legislation would also expand the ability of 
State Attorneys General and private parties to halt anti-competitive 
behavior and seek up to treble damages for any such violations.
  I believe this is a very reasonable and measured proposal as 
evidenced by the bill being passed out of the Judiciary Committee in 
the previous Congress by voice vote. I look forward to supporting 
Senator Kohl's efforts to move the legislation through committee again 
and push for its passage into law during the current Congress.
  While I hope that providing the Department of Justice the authority 
to review possible antitrust violations as proposed in the current bill 
will improve the situation for many shippers, it may have to go hand-
in-hand with reforms at the STB as were contemplated in the previous 
Congress by Senator Rockefeller's Railroad Competition and Service 
Improvements Act of 2007.
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