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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2047 Introduced in House (IH)]

109th CONGRESS
  1st Session
                                H. R. 2047

 To authorize appropriations for the Surface Transportation Board, to 
    enhance rail transportation competition, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                              May 3, 2005

Mr. Baker (for himself, Mr. Oberstar, Mr. Alexander, Mr. Boustany, Mr. 
  Rehberg, Mr. Peterson of Minnesota, Mr. Jefferson, Ms. Hooley, Mr. 
    Berry, Mr. Pastor, Mr. Melancon, Mr. Pomeroy, and Ms. Herseth) 
 introduced the following bill; which was referred to the Committee on 
                   Transportation and Infrastructure

_______________________________________________________________________

                                 A BILL

 
 To authorize appropriations for the Surface Transportation Board, to 
    enhance rail transportation competition, and for other purposes.

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

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

    (a) Short Title.--This Act may be cited as the ``Railroad 
Competition Improvement and Reauthorization Act of 2005''.
    (b) Amendment of Title 49, United States Code.--Except as otherwise 
expressly provided, whenever in this Act an amendment or repeal is 
expressed in terms of an amendment to, or a repeal of, a section or 
other provision, the reference shall be considered to be made to a 
section or other provision of title 49, United States Code.

SEC. 2. CLARIFICATION OF RAIL TRANSPORTATION POLICY.

    Section 10101 is amended--
            (1) by inserting ``(a) In General.--'' before ``In 
        regulating''; and
            (2) by adding at the end the following:
    ``(b) Primary Objectives.--The primary objectives of the rail 
transportation policy of the United States are as follows:
            ``(1) To maintain consistent and efficient rail 
        transportation service for shippers, including the timely 
        provision of rail cars requested by shippers.
            ``(2) To promote effective competition among rail carriers 
        at origins and destinations.
            ``(3) To maintain reasonable rates in the absence of 
        effective competition.''.

SEC. 3. REQUIREMENT FOR RATE QUOTES.

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

SEC. 4. ELIMINATION OF BARRIERS TO COMPETITION BETWEEN CLASS I, CLASS 
              II, AND CLASS III RAIL CARRIERS.

    Section 10901 is amended by adding at the end the following new 
subsection:
    ``(e)(1) The Board may not issue a certificate authorizing an 
activity described in subsection (a), or exempt a person, class of 
persons, or a transaction or service from the applicability of this 
section with respect to such an activity under section 10502, if the 
activity involves a transfer of interest in a line of railroad, from a 
Class I rail carrier to a Class II rail carrier or Class III rail 
carrier and the activity directly or indirectly would--
            ``(A) restrict the ability of the Class II or Class III 
        rail carrier to interchange traffic with other rail carriers; 
        or
            ``(B) restrict competition of rail carriers in the region 
        affected by the activity in a manner that would violate 
        antitrust laws of the United States.
    ``(2) Any party to an activity described in paragraph (1) that was 
authorized by the Board within the 10-year period preceding the date of 
enactment of this subsection, and any rail shipper affected by such an 
activity, may request that the Board review the activity to determine 
whether the activity has resulted in a restriction described in 
paragraph (1)(A) or (B). If, upon review of the activity, the Board 
determines that the activity resulted in such a restriction, the Board 
shall declare the restriction to be unlawful and terminate the 
restriction unless the Board finds that the termination of the 
restriction would materially impair the ability of an affected rail 
carrier to provide service to the public or would otherwise be 
inconsistent with the public interest.
    ``(3) In this subsection, the term `antitrust laws' has the meaning 
given that term in subsection (a) of the first section of the Clayton 
Act (15 U.S.C. 12(a)), except that such term also means section 5 of 
the Federal Trade Commission Act (15 U.S.C. 45) to the extent that 
section 5 applies to unfair methods of competition.''.

SEC. 5. RECIPROCAL SWITCHING.

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

SEC. 6. AREAS OF INADEQUATE RAIL COMPETITION.

    (a) Designation and Remedies.--
            (1) In general.--Chapter 105 is amended by adding at the 
        end the following new section:
``Sec. 10503. Areas of inadequate rail competition
    ``(a) In General.--The Board shall designate any State or 
substantial part of a State as an area of inadequate rail competition 
after finding that--
            ``(1) the State or substantial part of the State 
        encompasses rail shipping origins and destinations that are 
        served exclusively by one Class I railroad; and
            ``(2) persons that ship by rail or receive rail shipments 
        in the State or substantial part of the State--
                    ``(A) pay rates for the rail shipments that exceed 
                the rates necessary to yield recovery by the rail 
                carrier of 180 percent of revenue-variable costs, as 
                determined under standards applied in the 
                administration of section 10707(d); or
                    ``(B) have experienced competitive disadvantage in 
                the marketplace or other economic adversity because of 
                high cost or poor quality of rail service in the State 
                or substantial part of the State.
    ``(b) Specific Commodities.--An area of inadequate rail competition 
may be composed of the facilities of a group of shippers or receivers 
of one or more specific commodities within a geographic area.
    ``(c) Authorized Petitioners.--A Governor of a State, an Attorney 
General of a State, a Member of Congress, and the Rail Customer 
Advocate of the Department of Transportation are authorized to petition 
the Board for a designation of a State or substantial part of a State 
as an area of inadequate rail competition.
    ``(d) Actions.--Upon designating a State or substantial part of a 
State as an area of inadequate rail competition, the Board shall 
resolve, not later than 60 days after the date of the designation, the 
conditions described in subsection (a) that justify the designation. In 
taking such action, the Board shall not require rates lower than those 
necessary to yield recovery of 180 percent of revenue-variable costs. 
In addition to providing other remedies authorized by law, the Board 
may order any of the following actions:
            ``(1) Provision of reciprocal switching and access to 
        tracks of another rail carrier beyond the limits specified in 
        section 11102(a).
            ``(2) Haulage transportation of railroad cars by a rail 
        carrier to or from facilities that such carrier physically 
        serves on behalf of another rail carrier, for a fee prescribed 
        by the Board.
            ``(3) Regarding rates on any rail segments within or 
        connected to the area of inadequate rail competition on which 
        rail service is susceptible to delay or interruption due to 
        traffic congestion, expedited final offer arbitration under 
        section 11708(e).
            ``(4) Expedited review, under guidelines established under 
        section 10701(d)(3), of the reasonableness of--
                    ``(A) increases in rates or other charges; and
                    ``(B) new transportation service tariffs.
            ``(5) Expedited review of whether a rate violates the 
        prohibition against discriminatory rates contained in section 
        10741, without regard to subsection (b)(2) of such section.
    ``(e) Procedures.--(1) In the case of a petition for an order for 
reciprocal switching or access to tracks of another rail carrier under 
subsection (d)(1), the Board may not require that there be evidence of 
anticompetitive conduct by a rail carrier as a prerequisite for 
ordering such action.
    ``(2) In the case of a petition for expedited review of rates under 
subsection (d)(4) or final offer arbitration of rates under subsection 
(d)(3)--
            ``(A) the Board or arbitrator or arbitrators shall accord, 
        with respect to rail transportation of a specific commodity, 
        significant persuasive weight to evidence comparing--
                    ``(i) rates charged for rail transportation of 
                various quantities of that commodity within the area of 
                inadequate rail competition; and
                    ``(ii) rates charged for rail transportation of 
                similar quantities of that commodity or any similar 
                commodity or commodities in areas where there is 
                competition among rail carriers for shipments of such 
                commodity or commodities; and
            ``(B) the Board or arbitrator or arbitrators shall not 
        apply any method for determining the reasonableness of rail 
        rates which involves the costs of a hypothetical competitor.
    ``(3) In the case of a petition for expedited review, under 
subsection (d)(4), of an increase of a rate or other charge or the 
imposition of a new service tariff by a rail carrier--
            ``(A) the rail carrier shall have the burden of proving the 
        reasonableness of the increase or tariff charge; and
            ``(B) the Board shall consider any evidence comparing--
                    ``(i) the increased rate or other charge, or the 
                tariff charge; and
                    ``(ii) corresponding rates, other charges, or new 
                service tariff charges, respectively, imposed for rail 
                transportation in areas where there is a significant 
                level of competition among the rail carriers.''.
            (2) Clerical amendment.--The table of sections at the 
        beginning of chapter 105 is amended by adding at the end the 
        following new item:

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

SEC. 7. RAIL SERVICE.

    (a) Public Notice.--The Surface Transportation Board shall, within 
7 days after receipt by the Board or any Member or staff of the Board 
of a complaint from a customer about rail service, post on the Board's 
Internet Web site a description of the complaint, including information 
identifying the railroad or railroads providing the service that is the 
subject of the complaint, the general geographic area of the customer's 
movement, the date upon which the service problem occurred and the date 
notice of the complaint was made to the Board or any Member or staff of 
the Board. The Internet posting shall identify the rail customer only 
upon the written consent of the rail customer. Not later than 5 days 
after the date the complaint is resolved, the Board shall update the 
information posted on the Board's Internet Web site to indicate that 
the complaint has been resolved, the means of its resolution, and the 
date of its resolution.
    (b) Annual Report to Congress.--Not later than March 15, 2006, and 
annually thereafter, the Surface Transportation Board shall transmit to 
Congress a report regarding the service complaints received by the 
Board, or any Member or staff of the Board, in the previous calendar 
year for each Class I railroad. The report shall include a description 
of each service complaint, including information identifying the 
railroad in question, the geographic area of the customer's movements, 
the date upon which the service problem occurred, the date notice of 
the service complaint was made to the Board or any Member or staff of 
the Board, and the date and nature of the resolution of the complaint. 
The report shall be posted on the Board's Internet Web site.
    (c) Time Limits on Petitions for Injunctive Relief.--Section 
721(b)(4) is amended by adding at the end the following: ``Where a 
complaint is filed and injunctive or similar relief is sought within 20 
days after the publication of a new or revised rail rate, rule, or 
practice, based on an allegation of unlawfulness other than an 
allegation that a rate level is not reasonable within the meaning of 
section 10701(d), the Board shall determine, based on applicable law, 
not later than 90 days after receiving the request for injunctive or 
similar relief, whether or not to grant such relief. If the moving 
party establishes that the rule or practice involved in the complaint 
is unlawful per se, there shall be a strong presumption of irreparable 
harm regardless of the availability of monetary relief. The Board shall 
not deny injunctive or similar relief based in whole or in part on the 
absence of irreparable harm due to the availability of adequate 
monetary relief unless monetary damages have been awarded to the 
complaining party.''.

SEC. 8. ARBITRATION OF RAIL DISPUTES.

    (a) Amendment.--Chapter 117 is amended by adding the following 
section after section 11707:
``Sec. 11708. Arbitration of rail disputes
    ``(a) In General.--Whenever a dispute arises between a rail shipper 
and a rail carrier under this part, the dispute shall, on request of 
one party to the dispute, be submitted to final offer arbitration.
    ``(b) Selection of Arbitrators.--The rail carrier or carriers that 
are parties to arbitration under this section shall collectively name 
one arbitrator, and the rail shipper or shippers that are parties to 
the arbitration shall collectively name one arbitrator. The two 
arbitrators thus chosen shall select a third arbitrator from the roster 
of arbitrators established under subsection (c). If the arbitrators 
chosen by the parties fail to name the third arbitrator within 5 days 
after their first meeting, such third arbitrator shall be named by the 
Secretary of Transportation from the roster of arbitrators established 
under subsection (c).
    ``(c) Roster of Arbitrators.--The Secretary of Transportation shall 
establish, maintain, and revise as necessary a roster of arbitrators 
who--
            ``(1) are experienced in transportation or economic issues;
            ``(2) satisfy requirements for neutrality and other 
        qualification requirements prescribed by the Secretary;
            ``(3) consent to serve as arbitrators under this section; 
        and
            ``(4) are not officers or employees of the United States.
    ``(d) Rules for Arbitration.--The arbitrators shall organize and 
select and make all necessary rules for conducting hearings. The 
arbitrators shall give the parties to the dispute a full and fair 
hearing, which shall include an opportunity to present evidence in 
support of their claims, and an opportunity to present their case in 
person, by counsel, or by other representative as they may elect.
    ``(e) Compensation.--Each arbitrator named by either party to the 
arbitration shall be compensated by the party naming the arbitrator. 
The third arbitrator chosen under subsection (b) by both parties or 
named by the Secretary of Transportation shall be compensated by the 
Board. The Secretary of Transportation shall fix the compensation for 
all of the arbitrators, and the Board shall pay each arbitrator's 
necessary traveling expenses and expenses actually incurred for 
subsistence, while serving as an arbitrator.
    ``(f) Decision.--The decision of the arbitrators shall be the final 
offer of one of the parties to the dispute.
    ``(g) Revenue-Variable Cost Percentage.--The decision may not 
provide for a rate for transportation by a rail carrier that would 
result in a revenue-variable cost percentage of such transportation 
that is less than 180 percent, as determined under standards applied in 
the administration of section 10707(d).
    ``(h) Effective Competition Standard.--If the party requesting 
arbitration of a dispute under subsection (a) seeks compensation for 
damages incurred by the party as a result of a specific rate or charge 
imposed by a rail carrier for the transportation of goods for the party 
and the party alleges an amount of damages that does not exceed 
$500,000 for any year as a result of the imposition of the specific 
rate or charge, the arbitrators, in making an award on the dispute, 
shall consider the rates or charges that are imposed by rail carriers 
for the transportation of similar goods under similar circumstances in 
rail transportation markets where there is effective competition, as 
determined under standards applied by the Board in the administration 
of section 10707(a).
    ``(i) Copies of Award.--The arbitrators shall furnish a certified 
copy of its award to the parties to the dispute, and shall transmit the 
original, together with the paper and proceedings and a transcript of 
the evidence taken at the hearings, certified under the hands of at 
least a majority of the arbitrators, to the Board, to be filed in its 
office.
    ``(j) Assistants.--The arbitrators may employ and fix the 
compensation of such assistants as it considers necessary in carrying 
on the arbitration proceedings. The compensation of such assistants, 
together with their necessary traveling expenses and expenses actually 
incurred for subsistence, while so employed, and the necessary expenses 
of the arbitration panel, shall be paid by the Board.
    ``(k) Oaths; Subpoenas.--All testimony before arbitrators under 
this section shall be given under oath or affirmation, and any 
arbitrator shall have the power to administer oaths or affirmations. 
The arbitrators shall have the power to require the attendance of 
witnesses and the production of such books, papers, contracts, 
agreements, and documents as may be necessary to a just determination 
of the matters submitted to arbitration, and may request the district 
court of the United States for the district where the arbitration is 
being conducted to issue the necessary subpoenas. Any witness appearing 
before arbitrators under this section shall receive the same fees and 
mileage reimbursement as witnesses in courts of the United States, to 
be paid by the party securing the subpoena, or in the case of a 
subpoena secured by the arbitrators, to be paid by the Board.
    ``(l) Time for Issuance of Arbitration Decision.--The arbitration 
panel shall issue a final decision on a dispute under this section not 
later than 180 days after the date on which the panel of arbitrators is 
completed to resolve the dispute.
    ``(m) Regulations.--Not later than 90 days after the date of 
enactment of this section, the Secretary of Transportation shall issue 
final regulations establishing procedures for the resolution of 
disputes submitted for arbitration, in accordance with the requirements 
of this section.
    ``(n) Applicability of Title 9.--The following provisions of title 
9, United States Code, shall apply to an arbitration decision issued in 
a dispute under this section:
            ``(1) Section 9 (relating to confirmation of an award in an 
        arbitration decision), which shall be applied as if the parties 
        had entered into an agreement under title 9 to submit the 
        dispute to the arbitration and had provided in that agreement 
        for a judgement of an unspecified court to be entered on the 
        award made pursuant to the arbitration.
            ``(2) Sections 10 and 11 (relating to judicial vacation, 
        modification, or correction of an award in an arbitration 
        decision).''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
such chapter is amended by inserting after the item relating to section 
11707 the following:

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

SEC. 9. FILING FEES ON PETITIONS FOR CAPTIVE RATE RELIEF.

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

SEC. 10. IMPROVEMENT OF RATE REASONABLENESS STANDARD.

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

SEC. 11. RAIL CUSTOMER ADVOCATE.

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

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

SEC. 12. STUDY OF RAIL TRANSPORTATION COMPETITION.

    (a) Requirement.--Not later than 9 months after the date of 
enactment of this Act, the Secretary of Transportation shall enter into 
an arrangement with the National Academy of Science's Transportation 
Research Board to conduct a comprehensive study of rail carrier 
competition since the enactment of the Staggers Rail Act of 1980. The 
study shall include an assessment of--
            (1) the overall level of rail-to-rail competition in the 
        rail transportation industry of the United States;
            (2) the markets that have limited rail-to-rail competition; 
        and
            (3) the Board's ability to measure and balance the 
        railroads' need to earn a fair return on invested capital with 
        the captive shippers' need for fair and reasonable rates.
    (b) Report to Congress.--Not later than 2 years after the date of 
enactment of this Act, the Secretary shall transmit the results of the 
study conducted under subsection (a) to Congress. The report shall 
include the Transportation Research Board's recommendations for 
enhancing rail-to-rail competition, particularly in markets identified 
as having limited rail-to-rail competition.

SEC. 13. EFFECT OF MERGERS ON LOCAL COMMUNITIES AND RAIL PASSENGER 
              TRANSPORTATION.

    Section 11324 is amended--
            (1) in subsection (b)--
                    (A) by striking ``and'' at the end of paragraph 
                (4);
                    (B) by striking the period at the end of paragraph 
                (5) and inserting a semicolon; and
                    (C) by adding at the end the following new 
                paragraphs:
            ``(6) the safety and environmental effects of the proposed 
        transaction, including the effect on local communities, and the 
        public interest in enforcing Federal, State, and local safety 
        and environmental laws; and
            ``(7) the effect of the proposed transaction on rail 
        passenger transportation.''; and
            (2) in subsection (c), by inserting ``The Board shall 
        impose conditions under this subsection to mitigate the effects 
        of the transaction on local communities when such conditions 
        are in the public interest. In imposing such conditions, the 
        Board shall consider the effect of those conditions on local 
        communities, and shall consider the public interest in the 
        enforcement of Federal, State, and local safety and 
        environmental laws.'' after ``effects are alleviated.''.

SEC. 14. AUTHORIZATION OF APPROPRIATIONS.

    Section 705 is amended by striking paragraphs (1) through (3) and 
inserting the following:
            ``(1) $24,000,000 for fiscal year 2006;
            ``(2) $26,000,000 for fiscal year 2007; and
            ``(3) $28,000,000 for fiscal year 2008.''.
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