To amend title 49, United States Code, to enhance competition among and between rail carriers in order to ensure efficient rail service and reasonable rail rates, and for other purposes.

April 11, 2003

Mr. BURNS (for himself, Mr. ROCKEFELLER, Mr. DORGAN, Mr. CRAIG, Mr. BAUCUS, Mr. COLEMAN, and Mr. JOHNSON) introduced the following bill; which was read twice and referred to the Committee on Commerce, Science and Transportation

To amend title 49, United States Code, to enhance competition among and between rail carriers in order to ensure efficient rail service and reasonable rail rates, 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 Act of 2003'.

(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 promote effective competition among rail carriers at origins and destinations.

`(2) To maintain reasonable rates in the absence of effective competition.

`(3) To maintain consistent and efficient rail transportation service for shippers, including the timely provision of rail cars requested by shippers.

`(4) To ensure that smaller carload and intermodal shippers are not precluded from accessing rail systems due to volume requirements.'.

SEC. 3. ARBITRATION OF CERTAIN RAIL RATE, SERVICE, AND OTHER DISPUTES.

(a) IN GENERAL-

(1) AUTHORITY- Chapter 117 of title 49 is amended by adding the following section after section 11707:

`Sec. 11708. Arbitration of certain rail rate, service, and other disputes

`(a) ELECTION OF ARBITRATION- A dispute described in subsection (b) shall be submitted for resolution by arbitration upon the election of any party to the dispute that is not a rail carrier.

`(b) COVERED DISPUTES- (1) Except as provided in paragraph (2), subsection (a) applies to any dispute between a party described in subsection (a) and a rail carrier that--

`(A) arises under section 10701(c), 10701(d), 10702, 10704(a)(1), 10707, 10741, 10745, 10746, 11101(a), 11102, 11121, 11122, or 11706 of this title; and

`(B) involves--

`(i) the payment of money;

`(ii) a rate or charge imposed by the rail carrier; or

`(iii) transportation or other service by the rail carrier.

`(2) Subsection (a) does not apply to a dispute if the resolution of the dispute would necessarily involve the promulgation of regulations generally applicable to all rail carriers.

`(c) ARBITRATION PROCEDURES- The Secretary of Transportation shall prescribe in regulations the procedures for the resolution of disputes submitted for arbitration under subsection (a). The regulations shall include the following:

`(1) Procedures, including time limits, for the selection of an arbitrator or panel of arbitrators for a dispute from among arbitrators listed on the roster of arbitrators established and maintained by the Secretary under subsection (d)(1).

`(2) Policies, requirements, and procedures for the compensation of each arbitrator for a dispute to be paid by the parties to the dispute.

`(3) Procedures for expedited arbitration of a dispute, including procedures for discovery authorized in the exercise of discretion by the arbitrator or panel of arbitrators.

`(d) SELECTION OF ARBITRATORS- (1) The Secretary of Transportation shall establish, maintain, and revise as necessary a roster of arbitrators who--

`(A) are experienced in transportation or economic issues within the jurisdiction of the Board or issues similar to those issues;

`(B) satisfy requirements for neutrality and other qualification requirements prescribed by the Secretary;

`(C) consent to serve as arbitrators under this section; and

`(D) are not officers or employees of the United States.

`(2) For a dispute involving an amount not in excess of $1,000,000, the regulations under subsection (c) shall provide for arbitration by a single arbitrator who--

`(A) is selected by the parties to the dispute; or

`(B) if the parties cannot agree, is selected by the Secretary from among the arbitrators listed on the roster of arbitrators under paragraph (1).

`(3)(A) For a dispute involving an amount in excess of $1,000,000, the regulations under subsection (c) shall provide for arbitration by a panel of three arbitrators selected as follows:

`(i) One arbitrator selected by the party electing the arbitration.

`(ii) One arbitrator selected by the rail carrier or all of the rail carriers who are parties to the dispute, as the case may be.

`(iii) One arbitrator selected by the two arbitrators selected under clauses (i) and (ii).

`(B) If a selection of an arbitrator is not made under clause (ii) or (iii) of subparagraph (A) within the time limits prescribed in the regulations, then the Secretary shall select the arbitrator from among the arbitrators listed on the roster of arbitrators under paragraph (1).

`(e) DISPUTES OVER RATES OR CHARGES- (1) The requirements of this subsection apply to a dispute submitted under this section concerning a rate or charge imposed by a rail carrier.

`(2)(A) Subject to subparagraph (B), the decision of an arbitrator or panel of arbitrators in a dispute on an issue described in paragraph (1) shall be the final offer of one of the parties to the dispute.

`(B) A decision under subparagraph (A) may not provide for a rate for transportation by a rail carrier that would result in a revenue-variable cost percentage for such transportation that is less than 180 percent, as determined under standards applied in the administration of section 10707(d) of this title.

`(3) If the party electing arbitration of a dispute described in paragraph (1) 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 items 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 arbitrator, in making a decision on the dispute, shall consider the rates or charges, respectively, that are imposed by rail carriers for the transportation of similar items 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) of this title.

`(f) TIME FOR ISSUANCE OF ARBITRATION DECISION- Notwithstanding any other provision of this subtitle limiting the time for the taking of an action under this subtitle, the arbitrator or panel of arbitrators for a dispute submitted for resolution under this section shall issue a final decision on the dispute within the maximum period after the date on which the arbitrator or panel is selected to resolve the dispute under this section, as follows:

`(1) In the case of a dispute involving $1,000,000 or less, 120 days.

`(2) In the case of a dispute involving more than $1,000,000, 180 days.

`(g) AUTHORIZED RELIEF- A decision of an arbitrator or panel of arbitrators under this section shall grant relief in either or both of the following forms:

`(1) Monetary damages, to the extent authorized to be provided by the Board in such a dispute under this subtitle.

`(2) An order that requires specific performance under any applicable law, including any law limiting rates to reasonable rates, for any period not in excess of two years beginning on the date of the decision.

`(h) JUDICIAL CONFIRMATION AND REVIEW- The following provisions of title 9 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 judgment of an unspecified court to be entered on the award made pursuant to the arbitration.

`(2) Section 10 (relating to judicial vacation of an award in an arbitration decision).'.

(2) 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 certain rail rate, service, and other disputes.'.

(b) TIME FOR IMPLEMENTING CERTAIN REQUIREMENTS- Not later than 180 days after the date of the enactment of this Act, the Secretary of Transportation shall promulgate regulations, prescribe a roster of arbitrators, and complete any other action that is necessary for the implementation of section 11708 of title 49, United States Code (as added by subsection (a)).

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

(a) RESTRICTION ON APPROVAL OR EXEMPTION OF CARRIERS' ACTIVITIES BY SURFACE TRANSPORTATION BOARD- Section 10901 is amended by adding at the end the following new subsection:

`(e)(1) The Board may not issue under this section a certificate authorizing an activity described in subsection (a), or exempt from the applicability of this section under section 10502 of this title such an activity that involves a transfer of interest in a line of railroad, by a Class I rail carrier to a Class II or III rail carrier if the activity directly or indirectly would result in--

`(A) a restriction of the ability of the Class II or Class III rail carrier to interchange traffic with other carriers; or

`(B) a restriction of competition between or among rail carriers in the region affected by the activity in a manner or to an extent that would violate antitrust laws of the United States (notwithstanding any exemption from the applicability of antitrust laws that is provided under section 10706 of this title or any other provision of law).

`(2) Any party to an activity referred to in paragraph (1) that has been carried out, or any rail shipper affected by such an activity, may request the Board to review the activity to determine whether the activity has resulted in a restriction described in that paragraph. If, upon review of the activity, the Board determines that the activity resulted in such a restriction and the restriction has been in effect for at least 10 years, 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:

`(A) 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 such section 5 applies to unfair methods of competition.

`(B) The terms `Class I rail carrier', `Class II rail carrier', and `Class III rail carrier' mean, respectively, a rail carrier classified under regulations of the Board as a Class I rail carrier, Class II rail carrier, and Class III rail carrier.'.

(b) APPLICABILITY TO PREVIOUSLY APPROVED OR EXEMPTED ACTIVITIES- Paragraph (2) of section 10901(e) of title 49, United States Code (as added by subsection (a)), shall apply with respect to any activity referred to in that paragraph for which the Surface Transportation Board issued a certificate authorizing the activity under section 10901 of such title, or exempted the activity from the necessity for such a certificate under section 10502 of such title, before, on, or after the date of the enactment of this Act.

SEC. 5. COMPETITIVE RAIL SERVICE IN TERMINAL AREAS.

(a) USE OF TERMINAL AREAS- Section 11102(a) is amended--

(1) by inserting `(1)' after `(a)';

(2) by striking `may' in the first sentence and inserting `shall';

(3) by inserting after the first sentence the following: `In making any finding for the purposes of the preceding sentence, the Board may not require that there be evidence of anticompetitive conduct by a rail carrier from which access is sought.';

(4) by striking `The rail carriers' at the beginning of the sentence following the sentence inserted by paragraph (3) and inserting the following:

`(2) The rail carriers'; and

(5) by striking `may establish conditions' in the penultimate sentence and inserting `shall establish conditions'.

(b) 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 for the purposes of the first sentence of paragraph (1), the Board may not require that there be evidence of anticompetitive conduct by a rail carrier from which access is sought.'.

SEC. 6. REQUIREMENT FOR RATE QUOTES.

Section 11101(a) is amended--

(1) by inserting `(1)' after `(a)'; and

(2) by striking `A rail carrier' at the beginning of the second sentence and inserting the following:

`(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 only 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) whether the shipper has a contract with any rail carrier for part or all of its transportation needs over the route of movement, in which case the rate established by the carrier shall not apply to transportation covered by the contract.

`(3) A rail carrier'.

SEC. 7. REVIEW OF RATES FOR REASONABLENESS.

Section 10701(d) is amended by striking paragraph (3) and inserting the following:

`(3) Upon a challenge made by a shipper to the reasonableness of any rate established by a rail carrier in accordance with subsection (c) or section 11101(a) of this title, the Board shall determine the reasonableness of the rate without regard to whether--

`(A) the rate is for only part of a movement between a point of origin and a destination;

`(B) the shipper has made arrangements for transportation for any other part of that movement; or

`(C) the shipper currently has a contract with a rail carrier for any part of the rail traffic involved, except that any rate prescribed by the Board shall not apply to transportation covered by such a contract.'.

SEC. 8. PERIODIC STUDY OF COMPETITION AMONG RAIL CARRIERS.

(a) REQUIREMENT FOR STUDY-

(1) TRIENNIAL STUDY- Chapter 101 is amended by adding at the end the following new section:

`Sec. 10103. Periodic study of rail carrier competition and processes of the Surface Transportation Board

`(a) REQUIREMENT FOR STUDY- Every three years, the Secretary of Transportation shall conduct a comprehensive study of rail carrier competition and the processes of the Board. The study shall include an assessment of the following:

`(1) The availability of effective competitive options among and between rail carriers.

`(2) The effectiveness of the processes of the Surface Transportation Board, including the process used for determining the reasonableness of rates of rail carriers.

`(3) The availability to rail users of effective regulatory dispute resolution options.

`(b) STUDY TO INCLUDE ASSESSMENT OF RAIL-TO-RAIL COMPETITION- In carrying out the study, the Board shall assess the overall level of rail-to-rail competition in the rail carrier industry in the United States. In

making the assessment, the Board shall consider the views of users of the services of rail carriers.

`(c) REPORT TO CONGRESS- Not later than November 15 of each year in which a study is conducted under subsection (a), the Secretary shall submit a report on the results of the study to Congress. The report shall include the following:

`(1) The Board's assessment of the overall level of rail-to-rail competition in the rail carrier industry in the United States.

`(2) The markets that have limited rail-to-rail competition.

`(3) Any recommendations for enhancing rail-to-rail competition, particularly in markets identified as having limited rail-to-rail competition.

`(4) An assessment of the Board's performance of its purpose to promote and enhance competition among and between railroads by--

`(A) addressing complaints regarding rates, charges, and service; and

`(B) promulgating regulations of general applicability or taking other actions.

`(5) Any recommendations for modification of any of the decisions of the Surface Transportation Board (or decisions of the former Interstate Commerce Commission continuing in effect) or for modification of the general authority or jurisdiction of the Board.

`(6) Any other findings, analyses, assessments, and recommendations that result from the study.'.

(2) CLERICAL AMENDMENT- The table of sections at the beginning of such chapter is amended by adding at the end the following:

`10103. Periodic study of rail carrier competition and processes of the Surface Transportation Board.'.

(b) TIME FOR FIRST STUDY- The first study under section 10103 of title 49, United States Code (as added by subsection (a)), shall be carried out not later than two years after the effective date specified in section 401.

SEC. 9. 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) DESIGNATION- The Board shall designate any State or part of a State as an area of inadequate rail competition after finding either of the grounds set forth in subsection (b). An area of inadequate rail competition may be limited to be composed of the facilities of a group of shippers or receivers of one or more specific commodities within a geographic area.

`(b) GROUNDS FOR DESIGNATION- The grounds for designating a State or part of a State as an area of inadequate rail competition are as follows:

`(1) The State or part of a State encompasses a significant number of rail shipping origins and destinations that are served exclusively by only one Class I railroad.

`(2) A significant number of the persons that ship by rail or receive rail shipments in the State or part of a State--

`(A) usually find it necessary to 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) of this title; 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 part of a State, as the case may be.

`(c) AUTHORIZED PETITIONERS- The following persons are authorized to petition the Board for a designation of a State or part of a State as an area of inadequate rail competition:

`(1) The chief executive of the State or another official of the State who is designated to do so by the chief executive or is authorized to do so under the laws of that State.

`(2) A Member of Congress from the State.

`(3) As provided in section 10504 of this title, the Rail Customer Advocate of the Department of Agriculture and any State official referred to in subsection (a)(2) of such section.

`(4) A person that ships by rail or receives rail shipments in that State or part of a State.

`(d) ACTIONS- Upon designating a State or a part of a State as an area of inadequate rail competition, the Board shall attempt to resolve, within 60 days after the date of the designation, the conditions described in subsection (b) that justify the designation. In addition to providing other remedies authorized by law, the Board may, when requested in a petition, 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) of this title.

`(2) Haulage transportation of railroad cars by a rail carrier to or from facilities that such carrier alone 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--

`(A) expedited review of the reasonableness of the rates under section 10701(d)(3) of this title; or

`(B) expedited final offer arbitration of the reasonableness of the rates under section 11708(e) of this title.

`(4) Expedited review, under section 10701(d)(3) of this title, 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 of this title, without regard to subsection (b)(2) of such section.

`(e) LIMITATIONS AND CONDITIONS APPLICABLE TO SPECIFIC REMEDIES- (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 or final offer arbitration of rates under subsection (d)(3)--

`(A) the Board or arbitrator or panel of arbitrators, as the case may be, 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 panel of arbitrators, as the case may be, shall not apply the stand-alone cost test or any other test that the Board applies in determining the reasonableness of rates reviewed in cases not involving rail service in an area of inadequate rail competition.

`(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, as the case may be; 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 such chapter is amended by adding at the end the following new item:

`10503. Areas of inadequate rail competition.'.

(b) STUDY AND REPORT ON AREAS OF INADEQUATE RAIL COMPETITION-

(1) STUDY REQUIRED- The Rail Customer Advocate of the Department of Agriculture shall carry out a study of the process provided under section 10503 of title 49, United States Code (as added by subsection (a)), for challenging and remedying conditions described in subsection (b) of such section in States and parts of States designated under such section as areas of inadequate rail competition insofar as such conditions adversely affect rail shippers of agricultural or forestry commodities and products.

(2) FINDINGS ON EFFECTIVENESS OF PROCESS- The Rail Customer Advocate shall make findings, on the basis of the study under paragraph (1), regarding the effectiveness of the process for remedying the conditions studied, particularly in the case of customers that ship agricultural or forestry commodities and products by rail in annual volumes of 1,500 rail cars or less.

(3) REPORT- Not later than three years after the date of the enactment of this Act, the Rail Customer Advocate shall submit to Congress a report on the results of the study under paragraph (1), including the findings required under paragraph (2).

SEC. 10. RAIL CUSTOMER ADVOCATE IN THE DEPARTMENT OF AGRICULTURE.

(a) PARTICIPATION OF RAIL CUSTOMER ADVOCATE IN STB PROCEEDINGS-

(1) AUTHORITY AND RESPONSIBILITIES- Chapter 105, as amended by section 9(a), is further amended by adding at the end the following new section:

`Sec. 10504. Participation of Rail Customer Advocate in Board proceedings

`(a) AUTHORITY- The following persons are authorized to petition the Board for an exercise of authority of the Board regarding rail transportation of any agricultural or forestry commodity or product, and to participate in any proceeding of the Board regarding rail transportation of such a commodity or product:

`(1) The Rail Customer Advocate of the Department of Agriculture.

`(2) Any official of the government of a State whose functions are the same as or similar to the functions of the Rail Customer Advocate of the Department of Agriculture.

`(b) CONSIDERATION OF PRESENTATIONS BY ADVOCATE- (1) The Board shall accord significant persuasive weight to any material evidence, proposal, or view that is presented by an official referred to in subsection (a) with respect to rail transportation of an agricultural or forestry commodity or product.

`(2) In disposing of any matter before the Board in which an official referred to in subsection (a) has participated under the authority of such subsection, the Board shall present in writing a detailed explanation of any disagreement of the Board with matters presented to the Board by that official.'.

(2) CLERICAL AMENDMENT- The table of sections at the beginning of such chapter, as amended by section 9(a)(2), is further amended by adding at the end the following new item:

`10504. Participation of Rail Customer Advocate in Board proceedings.'.

(b) ESTABLISHMENT AND DUTIES-

(1) IN GENERAL- Subtitle I of the Department of Agriculture Reorganization Act of 1994 (7 U.S.C. 7005) is amended by adding at the end the following new section:

`SEC. 286. RAIL CUSTOMER ADVOCATE.

`(a) ESTABLISHMENT OF OFFICE- There is established within the Department an Office of Rail Customer Advocacy.

`(b) RAIL CUSTOMER ADVOCATE-

`(1) APPOINTMENT- The Secretary shall appoint the Rail Customer Advocate.

`(2) HEAD OF OFFICE- The Rail Customer Advocate is the head of the Office of Rail Customer Advocacy.

`(c) FUNCTIONS- The Rail Customer Advocate has the following functions:

`(1) PARTICIPATION IN STB PROCEEDINGS- To participate as a party in proceedings of the Surface Transportation Board on petitions for action by the Board regarding the regulation of rail transportation of agricultural or forestry commodities or products, and to initiate any such action.

`(2) COMPILATION OF INFORMATION- To collect, compile, and maintain information regarding the cost and efficiency of rail transportation of agricultural commodities and products and forestry commodities and products.

`(3) STUDIES- To perform studies regarding rail transportation of agricultural commodities and products and forestry commodities and products.

`(d) ACCESS TO STB INFORMATION- To carry out the functions under subsection (b), the Rail Customer Advocate shall have access to information, including databases, of the Surface Transportation Board.'.

(2) CONFORMING AMENDMENTS- Section 296(b) of the Department of Agriculture Reorganization Act of 1994 (7 U.S.C. 7014(b)) is amended--

(A) in paragraph (4), by striking `or' at the end;

(B) in paragraph (5), by striking the period at the end and inserting `; or'; and

(C) by adding at the end the following:

`(6) the establishment of the Office of Rail Consumer Advocacy of the Department under section 286.'.

END