Rail Shipper Fairness Act of 2017

To improve the efficiency and reliability of rail transportation by reforming the Surface Transportation Board, and for other purposes. 1. Short title This Act may be cited as the Rail Shipper Fairness Act of 2017 2. Improving rail service (a) Common carrier obligations Section 11101(a) of title 49, United States Code, is amended by inserting , as necessary for the efficient and reliable transportation based on the shipper’s reasonable service requirements, the transportation or service (b) Emergency service orders Section 11123(b) of such title is amended by adding at the end the following: (4) The Board may issue emergency service orders that include shipments moving under contract if such shipments are part of a regional service order issued in accordance with this section. . (c) Reports Section 11145(a) of such title is amended— (1) in paragraph (1), by striking and (2) by redesignating paragraph (2) as paragraph (3); and (3) by inserting after paragraph (1) the following: (2) reports, service plans, or other documents that cover shipments moving under contract if such shipments are part of a general report, service plan, or other document that generally covers the geographic area or commodity; and . (d) Equitable relief; damages Section 11704 of such title is amended— (1) in subsection (a), by inserting or subjected to inadequate or deficient service injured (2) by amending subsection (b) to read as follows: (b) A rail carrier providing transportation subject to the jurisdiction of the Board under this part is liable— (1) for damages sustained by a person as a result of an act or omission of that carrier in violation of this part; (2) to a person for amounts charged to that person that exceed the applicable rate for the transportation; and (3) to a person for damages or equitable relief as a result of inadequate or deficient service in violation of this part. ; and (3) in subsection (c), by adding at the end the following: (3) The Board may order a rail carrier to pay damages or to provide equitable relief, as appropriate, to a person subjected to inadequate or deficient service as a result of a violation of this part by that carrier. . (e) Civil penalties Section 11901 of such title is amended— (1) in subsection (a), by striking $5,000 $25,000 (2) in subsection (c), by striking $5,000 $25,000 (3) in subsection (e), by striking $100 $1,000 3. Improving rail competition (a) Rail transportation policy Section 10101 of title 49, United States Code, is amended— (1) by redesignating paragraphs (14) and (15) as paragraphs (15) and (16), respectively; and (2) by inserting after paragraph (13) the following: (14) to provide for and promote the protection of the shipping public; . (b) Rates Section 10705 of such title is amended by adding at the end the following: (d) Shippers may obtain rates to or from any interchange points of two or more rail carriers. . (c) Market dominance Section 10707 of such title is amended— (1) in subsection (a)— (A) by striking In this section, market dominance (a) In this section: (1) effective competition (2) market dominance ; and (2) in subsection (b)— (A) by inserting A rail carrier could have market dominance even in circumstances in which a shipper is served by two carriers. the rate applies. (B) by striking rate or transportation rate for transportation (d) Terminal facilities Section 11102(c) of such title is amended to read as follows: (c) (1) Except as provided in paragraph (2), the Board shall require a Class I rail carrier to enter into a competitive switching agreement if a shipper or receiver, or a group of shippers or receivers, files a petition with the Board that demonstrates, to the satisfaction of the Board, that— (A) the facilities of the shipper or receiver for whom such switching is sought are served by rail only by a single, Class I rail carrier; and (B) subject to paragraph (3), there is, or can be a working interchange between— (i) the Class I rail carrier serving the shipper or receiver for whom such switching is sought; and (ii) another rail carrier within a reasonable distance of the facilities of such shipper or receiver. (2) Competitive switching may not be imposed under this subsection if— (A) either rail carrier between which such switching is to be established demonstrates that the proposed switching is not feasible or is unsafe; or (B) the presence of reciprocal switching will unduly restrict the ability of a rail carrier to serve its own shippers. (3) The requirement set forth in paragraph (1)(B) is satisfied if each facility of the shipper or receiver for which competitive switching is sought is— (A) within the boundaries of a terminal of the Class I rail carrier; or (B) within a 100-mile radius of an interchange between the Class I rail carrier and another carrier at which rail cars are regularly switched. . 4. Improving reasonable rate standards (a) Benchmark-Based rate reasonableness standard Section 10701(d) of title 49, United States Code, is amended by adding at the end the following: (4) (A) Not later than 90 days after the date of the enactment of this paragraph, the Board shall initiate a rulemaking proceeding to develop a methodology for determining the reasonableness of challenged rail rates based on competitive rate benchmarking that predicts a competitive rate level based upon econometric models. (B) Rather than utilizing its existing Three-Benchmark Methodology, the Board shall develop a methodology that considers competitive markets or a proxy of such markets. (C) In determining the reasonableness of a challenged rate under the new benchmarking methodology developed under this paragraph, the Board shall presume that a rate above the benchmark rate level is unreasonable unless the rail carrier proves that the margin above the competitive rate benchmark is necessary to allow the rail carrier to earn adequate revenues. (D) Relief under the new benchmarking method shall have no monetary limit, but any rate prescription set by the Board shall remain in effect not less than 5 years. (E) The Board’s rulemaking under this paragraph shall set a standard procedural schedule for such cases, subject to necessary adjustments in particular adjudications, which may not exceed 365 days. . (b) Stand-Alone cost cases Section 10702 of such title is amended— (1) by inserting (a) A rail carrier (2) by adding at the end the following: (b) (1) The Board shall prohibit a rail carrier providing transportation subject to the jurisdiction of the Board under this part to change the challenged rate for providing such transportation to rail customers while a maximum reasonable rate case brought by such rail customers is pending before the Board. (2) A rail customer may file a maximum reasonable rate case with the Board after the date that is 2 years before the date on which a common carrier shipment rate is anticipated to begin. (3) The Board may not use cross-subsidy tests in deciding stand-alone cost cases. (4) The Board shall use a market-based revenue divisions methodology in deciding stand-alone cost cases. (5) In a stand-alone cost case, if the Board determines that the rail carrier is revenue adequate, the rail carrier shall have the burden of proof to demonstrate that the railroad carrier is charging a reasonable rate. . (c) Conforming amendment Section 10704 of such title is amended— (1) by striking subsection (c); and (2) by redesignating subsection (d) as subsection (c). (d) Market dominance Section 10707 of such title, as amended by section 3(c), is further amended— (1) in subsection (d)(1)(B), by adding at the end the following A shipper may introduce movement-specific Uniform Rail Costing System cost calculations. (2) by adding at the end the following: (e) In making a determination under this section, the Board may not utilize a qualitative analysis in which the Board attempts to identify any feasible transportation alternatives that could be used by the shipper. . 5. Protections from unreasonable practices Section 10701 of title 49, United States Code, is amended by adding at the end the following: (e) (1) A rail carrier providing transportation subject to the jurisdiction of the Board under this part may not use an index when establishing fuel surcharges. (2) Any fuel surcharges imposed by the rail carrier shall be directly accounted for by changes to the carrier’s actual fuel prices. The carrier’s fuel surcharge may not be greater than the amount necessary to recover the carrier’s incremental fuel cost increases. (3) The Board is authorized to require any rail carrier to report actual fuel prices as necessary to carry out the purposes of this subsection. (4) A shipper may challenge a fuel surcharge as an unreasonable practice under section 10702(2) if such charges, as applied to that shipper, exceed the carrier’s incremental fuel costs. . 6. Revenue adequacy (a) Elimination of revenue adequacy test Section 10704(a) of title 49, United States Code, is amended by striking paragraph (3). (b) Railroad cost of capital Section 10704(a) of such title, as amended by subsection (a), is further amended by adding at the end the following: (3) In calculating a rail carrier’s cost of capital, the Board shall multiply the value of the capital by the sum of— (A) the current annual yield on a 10-year United States Treasury Bond; and (B) a prospective market risk premium, which shall not exceed 5 percent per year. .

Summary: Rail Shipper Fairness Act of 2017 This bill amends federal transportation law to: (1) require rail transportation service to be efficient and reliable based on a shipper's reasonable service requirements, and (2) expand enumerated U.S. transportation policies to provide for and promote the protection of the shipping public. The Surface Transportation Board (STB) may: issue emergency service orders that include rail carrier shipments moving under contract if such shipments are part of a regional service order; and require reports, service plans, or other documents that cover shipments moving under contract. Rail carriers shall be liable for damages or equitable relief as a result of inadequate or deficient service. Civil penalties for rail carriers who violate certain federal requirements are increased from $5,000 to $25,000 per violation. The bill allows shippers to obtain rates to or from any interchange points within 100 miles of two or more rail carriers (i.e., competitive switching). The STB shall initiate a rulemaking proceeding to develop a market-based revenue methodology for determining the reasonableness of challenged rail rates. A rail carrier must compute fuel surcharges in accordance with changes in actual fuel prices, rather than using an index. The STB must: (1) suspend collection of rate increases in stand-alone cost cases while a rate case is pending, and (2) replace its revenue adequacy test for rail carriers with a formula for calculating a carrier's cost of capital.