[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3398 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 3398

  To ensure that a national railroad system is maintained or created 
which is adequate to provide the transportation services needed for the 
             United States economy, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 16, 1999

  Mr. Nadler introduced the following bill; which was referred to the 
             Committee on Transportation and Infrastructure

_______________________________________________________________________

                                 A BILL


 
  To ensure that a national railroad system is maintained or created 
which is adequate to provide the transportation services needed for the 
             United States economy, 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.

    This Act may be cited as the ``Surface Transportation Board 
Modernization Act''.

SEC. 2. FINDINGS; PURPOSE.

    (a) Findings.--The Congress makes the following findings:
            (1) The goal of the body of Federal laws regulating the 
        provision of transportation services is, and always has been, 
        to foster an efficient and comprehensive national 
        transportation system. Competition has historically been viewed 
        by the Interstate Commerce Commission and the Surface 
        Transportation Board as a principal means of obtaining 
        efficiency.
            (2) Before enactment of the Staggers Rail Act of 1980, 
        railroads were hindered by excessive regulation. With that Act, 
        the railway industry returned to profitability and the 
        financial community began to re-invest in the industry.
            (3) The Interstate Commerce Commission and its successor 
        agency, the Surface Transportation Board, have long held that 
        truck competition is an adequate force to keep the rail 
        industry under control and to substitute for lost rail service. 
        However, with any mode of transportation, competition from 
        another mode does not regulate the entire spectrum of a 
        carrier's activities.
            (4) Trucks provide intense competition to the rail industry 
        for a large majority of the Nation's freight traffic, 
        particularly with respect to short-haul and high-value traffic, 
        because of access to a highway infrastructure that is 
        consistently maintained and modernized by the Federal and local 
        governments. By contrast, no major effort has been made to 
        modernize the routes of the Nation's railway system so as to 
        provide less circuitous routes than those necessitated by the 
        limitations of 19th century civil engineering, thereby reducing 
        the distance between markets.
            (5) In response to the presence of the trucking industry, 
        railway management has followed a policy of reducing railway 
        track mileage and car fleet size, to focus on traffic sectors 
        deemed sufficiently profitable by the financial markets to 
        justify continued capital investment.
            (6) Almost all the main lines in the Nation are now 
        operated by only four major operators that dominate vast areas 
        of the Nation. They have all abandoned vast stretches of track. 
        Competition alone is an inadequate method of attaining the 
        goals of the Nation's railway system, since it does not address 
        the problems resulting from inadequate track capacity.
    (b) Purpose.--It is the purpose of this Act to ensure that a 
national railway system is maintained that is adequate to provide the 
transportation services needed by the Nation's economy in the 21st 
century. To serve this purpose, this Act seeks to ensure that--
            (1) the national railroad system serves all regions on 
        equitable terms and is fully adequate to serve the national 
        interest under all circumstances;
            (2) the national railroad system is environmentally 
        efficient, maximizes the competitiveness of the Nation's 
        economy in world markets, and allows a reasonable distribution 
        of freight traffic between transportation modes based on their 
        inherent efficiency; and
            (3) these purposes are achieved by the industry with as 
        little oversight or regulation as possible, but, where 
        oversight is required, that the Surface Transportation Board 
        have and exercise jurisdiction.

SEC. 3. AUTHORIZATION OF APPROPRIATIONS.

    Section 705 of title 49, United States Code, is amended by striking 
paragraphs (1) through (3) and inserting the following:
            ``(1) $17,000,000 for fiscal year 2000;
            ``(2) $23,000,000 for fiscal year 2001; and
            ``(3) $28,000,000 for fiscal year 2002.''.

SEC. 4. SCOPE OF AUTHORITY.

    Section 11321 of title 49, United States Code, is amended--
            (1) in subsection (a), by striking ``all other law'' and 
        all that follows through ``acquired through the transaction'' 
        and inserting ``State and local laws to the extent they 
        regulate combinations, mergers, and acquisitions of control of 
        rail carriers, as necessary to let that rail carrier, 
        corporation, or person carry out the transaction''; and
            (2) by adding at the end the following new subsection:
    ``(c) After a transaction approved or exempted by the Board under 
this subchapter (or by the Interstate Commerce Commission under this 
subchapter or any predecessor statute) is completed, the activities of 
a rail carrier participating in or resulting from such transaction 
shall be subject to State and Federal law to the same extent as those 
of any other similarly situated rail carrier that has not participated 
in or resulted from such a transaction. Completion of a transaction for 
purposes of this section shall be deemed to occur when the acquiring 
rail carrier assumes responsibility for the property transferred.''.

SEC. 5. CIRCUITOUS ROUTING.

    Section 10741 of title 49, United States Code, is amended by adding 
at the end the following new subsection:
    ``(d) Notwithstanding subsection (b), a rail carrier providing 
transportation or service subject to the jurisdiction of the Board 
under this part may not offer terms and conditions of carriage which 
discriminate against the most direct routing of traffic between points 
and impose circuitous routing of traffic (as defined in section 
11324(c)(4)).''.

SEC. 6. CONDITIONS OF APPROVAL.

    (a) Amendment.--Section 11324(c) of title 49, United States Code, 
is amended to read as follows:
    ``(c)(1) The Board shall approve and authorize a transaction under 
this section when it finds the transaction is consistent with the 
public interest. The Board may impose conditions governing the 
transaction. The Board shall impose such conditions as are feasible, 
consistent with the public interest, to promote the goal of providing 
the Nation, and each major population center, with comprehensive, 
competitive rail freight services, to the extent that the imposition of 
such conditions does not substantially impair the viability of a rail 
carrier. When the transaction contemplates a guaranty or assumption of 
payment of dividends or of fixed charges or other actions that will 
result in an increase of total fixed charges, the Board may approve and 
authorize the transaction only if it finds that the guaranty, 
assumption, or increase is consistent with the public interest. In 
imposing conditions under this subsection, the Board shall consider the 
impact of those conditions on local communities, and shall consider the 
public interest in the enforcement of Federal, State, and local safety 
and environmental laws. Conditions imposed by the Board under this 
subsection may include--
            ``(A) transfers of tracks or trackage rights, or 
        requirements of access to facilities;
            ``(B) the inclusion of rail carriers, or the transfer or 
        inclusion of assets, not a subject of the original application, 
        to the extent consistent with the public interest, after due 
        notice to the owners of such nonapplicant rail carriers or 
        assets and after hearing;
            ``(C) provision, wherever practicable, for competitive rail 
        services between major market centers to ensure that such 
        services are available to the greatest extent possible within 
        all areas of all major markets, and that the capacity and 
        redundancy of the Nation's railway system is preserved and 
        enhanced, with parallel lines between major markets, to the 
        extent practicable, not operated by the same rail carrier;
            ``(D) elimination of rail monopolies in major markets, or 
        parts thereof, to the extent practicable, considering the 
        physical assets available within the market area; and
            ``(E) wherever practicable, provisions to avoid inefficient 
        or circuitous routing of traffic, with service of major 
        population centers by connecting highway services from remote 
        locations, requiring truck haulage through urban areas, 
        permitted only where such haulage cannot be practically 
        eliminated or reduced, and only if conditioned upon 
        modifications to be made, or to be made within a reasonable 
        time, that will minimize highway carriage and the adverse 
        environmental effects thereof.
    ``(2) The Board shall ensure that fair compensation is paid for all 
property transferred under a transaction approved and authorized under 
this section, and that all assets transferred are preserved for a 
period adequate to ensure that any associated operating plan is 
successful and can be modified to ensure that service to the public is 
not jeopardized.
    ``(3) The Board shall review operations resulting from a 
transaction approved and authorized under this section at 6-month 
intervals to ensure that the public interest is being served. The Board 
may modify or revoke a transaction, on terms that are just and 
reasonable, if the public interest so requires.
    ``(4) For purposes of this subsection, the term `circuitous 
routing' means the routing of rail traffic in a manner, through closing 
of interchanges, discriminatory pricing, or otherwise, that adds 25 
percent or more to the mileage traveled for any carriage over 400 
miles, or that adds 1 full day to any carriage time.
    ``(5) Judicial review of any determination by the Board under this 
section shall include review of the issues by the court de novo.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to all transactions before the Surface Transportation Board as of 
January 1, 1998, and thereafter, including transactions over which the 
Board had retained jurisdiction as of that date.

SEC. 7. PRESERVATION AND RESTORATION OF SERVICE.

    (a) Railroad Development.--Section 10907 of title 49, United States 
Code, is amended--
            (1) by amending subsection (a) to read as follows:
    ``(a) In this section--
            ``(1) the term `eligible applicant' means a person or a 
        governmental authority or representative group who, or which, 
        is able to assure that adequate transportation will be provided 
        over such line for a period of not less than 3 years; and
            ``(2) the term `railroad line' includes a line, right-of-
        way, track, terminal, or other facility, whether or not 
        currently operational.'';
            (2) in subsection (b)(1)--
                    (A) by inserting ``, pursuant to application by an 
                eligible applicant or on its own initiative,'' after 
                ``When the Board'';
                    (B) by striking subparagraph (B);
                    (C) in subparagraph (A)--
                            (i) by striking ``(i)'';
                            (ii) by inserting ``, including a 
                        previously abandoned railroad line,'' after 
                        ``particular railroad line'';
                            (iii) by striking ``(ii)'' and inserting 
                        ``(B)''; and
                            (iv) by striking ``; and'' at the end and 
                        inserting a comma; and
                    (D) by striking ``to sell such line to such 
                financially responsible person at a price not less than 
                the constitutional minimum value'' and inserting ``to 
                restore service or facilities on the line or to 
                transfer such line to an eligible applicant, a person 
                designated by an eligible applicant, or a person 
                designated by the Board. A person to whom a railroad 
                line is required to be transferred under this 
                subsection shall be a person who can most effectively 
                provide rail service to shippers which are or could be 
                served by the railroad line. Transfers required under 
                this subsection shall be made for not less than the 
                constitutional minimum value'';
            (3) in subsection (c)--
                    (A) by striking ``to shippers who transport traffic 
                over such line'' in paragraph (1)(A);
                    (B) by striking ``for the majority of shippers who 
                transport traffic over such line'' in paragraph (1)(B) 
                and inserting ``to serve the public interest'';
                    (C) by striking ``a significantly adverse financial 
                effect on the rail carrier operating such line;'' in 
                paragraph (1)(C) and inserting ``an adverse impact on 
                the public interest; and'';
                    (D) by striking paragraph (1)(D);
                    (E) by redesignating subparagraph (E) of paragraph 
                (1) as subparagraph (D);
                    (F) in paragraph (1)(D), as so redesignated by 
                subparagraph (E) of this paragraph, by striking ``for 
                shippers that transport traffic over such line''; and
                    (G) in paragraph (2), by striking ``the person 
                filing the application'' and inserting ``a person 
                filing an application''; and
            (4) in subsection (g)(1)--
                    (A) by striking ``Any person'' and inserting ``Any 
                Class II or Class III rail carrier''; and
                    (B) by inserting ``or of subsections (a) and (c) of 
                this section'' after ``107 of this title''.
    (b) Situations Requiring Immediate Action To Serve the Public.--
Section 11123 of title 49, United States Code, is amended--
            (1) in subsection (a), by inserting ``, on its own 
        initiative or pursuant to complaint by a governmental authority 
        or other person,'' after ``When the Board'';
            (2) in subsection (a), by striking ``creates an emergency 
        situation of such magnitude as to have'' and inserting ``has''; 
        and
            (3) in subsection (c)(1), by striking ``transportation 
        emergency'' and inserting ``situation''.

SEC. 8. SALE OF CERTAIN CONNECTING RAILROAD LINES.

    (a) Amendment.--Chapter 109 of title 49, United States Code, is 
amended by adding at the end the following new section:
``Sec. 10908. Sale of certain connecting railroad lines
    ``(a) Whenever a railroad line owned by a Class I or Class II 
railroad carrier that connects with one or more railroad lines owned or 
operated by Class III railroad carriers is offered for sale, the Class 
I or II carrier shall notify the Board within 10 days after such offer. 
Whenever--
            ``(1) the Board is notified of such an offer for sale; or
            ``(2) such a line is the subject of an effort by the Board 
        under section 10907 to find a designated operator therefor,
the owners and operators of such connecting Class III railroad lines 
shall be notified by the Board. Such owners and operators may, within 
30 days after such notice, file with the offering Class I or Class II 
railroad carrier or with the Board a written notice of intention to bid 
on the purchase of the railroad line. Such a filing shall entitle the 
filer to a right of first refusal to match any offer to purchase the 
railroad line, subject to this section.
    ``(b) If more than one person files a notice of intention to bid 
under subsection (a) and seeks to exercise the right of first refusal, 
the Board shall select the purchaser, giving preference to a bid 
representing--
            ``(1) a greater number of connecting Class III railroad 
        lines; or
            ``(2) a greater amount of traffic using the line to be 
        transferred, averaged over the preceding 3 years,
whichever the Board determines will better represent the interests of 
all of the connecting Class III railroad carriers and their shippers. 
The Board may deny a person filing under subsection (a) the right of 
first refusal if the Board finds that the public convenience and 
necessity do not permit the purchase of the railroad line by that 
person.
    ``(c) If no person exercises a right of first refusal under this 
section on a bid, the Board shall impose conditions on the sale of the 
railroad line to protect service needed in the region that is provided 
by the connecting Class III railroad carriers, including conditions 
that eliminate any restrictions on the routing or interchange of 
traffic proposed or required by the selling rail carrier.
    ``(d) If a notice of intention to bid has been filed under 
subsection (a) with respect thereto, the Board shall not approve any 
sale of a railroad line to a party not filing such a notice if the sale 
would impose a capital cost on the purchaser which cannot be supported 
by the traffic on the line or by any increase in such traffic as may 
reasonably be expected.''.
    (b) Table of Sections.--The table of sections of chapter 109 of 
title 49, United States Code, is amended by adding at the end the 
following new item:

``10908. Sale of certain connecting railroad lines.''.

SEC. 9. RAILROAD IMPROVEMENT PROPERTY TAX STABILIZATION.

    Section 11501 of title 49, United States Code, is amended--
            (1) by striking ``commercial and'' each place it appears;
            (2) in subsection (a)(4), by striking ``a commercial or'' 
        and inserting ``an''; and
            (3) by adding after subsection (b)(4) the following new 
        paragraph:
            ``(5) Increase an assessment on rail transportation 
        property on the basis of improvements directly related to the 
        provision of railroad transportation.''.

SEC. 10. PROVISION OF RATES ON REQUEST.

    Section 11101(b) of title 49, United States Code, is amended by 
inserting ``for a movement between any 2 points on its system or for an 
entire movement between a point on its system and any other point, 
according to the request made'' after ``other service terms'' in the 
first sentence.

SEC. 11. DISCRIMINATORY RATES.

    Section 10701 of title 49, United States Code, is amended--
            (1) in subsection (b) by inserting ``A rate discriminates 
        unreasonably against a connecting line for purposes of this 
        subsection if the rate is designed to divert traffic from or to 
        that connecting line to a less direct route or if it excludes 
        traffic from or to that connecting line.'' after ``specifically 
        by the shipper.''; and
            (2) by adding at the end the following new subsection:
    ``(e) A rail carrier may not establish a rate which discriminates 
against the interchange of traffic as between carriers on any basis 
except actual cost based on mileage traveled and services rendered.''.

SEC. 12. USE OF TERMINAL FACILITIES.

    Section 11102 of title 49, United States Code, is amended--
            (1) in subsection (a)--
                    (A) by striking ``may require'' and inserting 
                ``shall require'';
                    (B) by striking ``in the public interest'' and 
                inserting ``to enable that other rail carrier to 
                provide more efficient or lower cost railroad 
                transportation service'';
                    (C) by inserting after ``handle its own business'' 
                the following: ``and to maintain service for shippers. 
                A rail carrier requesting the Board to order another 
                rail carrier to allow it to use terminal facilities or 
                trackage rights under this subsection shall not be 
                required to show anticompetitive activities on the part 
                of the owner of the terminal facilities''; and
                    (D) by striking ``, the Board may establish'' and 
                all that follows through ``condemnation proceedings'' 
                and inserting ``on such conditions and compensation 
                within 30 days after an order of the Board under this 
                subsection, the Board shall establish conditions and 
                compensation for the use of the facilities. 
                Compensation established by the Board under this 
                subsection shall be based on usage of the facilities 
                and sharing of the total costs incurred, with provision 
                for a reasonable profit for the owning rail carrier 
                above expenses and investment (with investment in 
                facilities acquired through mergers and acquisitions 
                calculated on the basis of book value). The Board shall 
                not require the use by a Class I rail carrier of 
                facilities owned by a Class II or III rail carrier 
                under this subsection unless the owning carrier is not 
                serving or permitting service for, and is unable or 
                unwilling to serve or permit service for, a customer or 
                customers through such facilities''; and
            (2) in subsection (c)(1)--
                    (A) by striking ``may require'' and inserting 
                ``shall require'';
                    (B) by inserting ``if such agreements will not 
                substantially impair the ability of the rail carrier 
                providing the switching service to handle its own 
                business. A rail carrier requesting the Board to order 
                another rail carrier to enter into reciprocal switching 
                agreements under this subsection shall not be required 
                to show anticompetitive activities on the part of the 
                other railroad carrier'' after ``competitive rail 
                service''; and
                    (C) by striking ``, but, if the'' and all that 
                follows through the period at the end and inserting ``. 
                If the carriers fail to agree on such conditions and 
                compensation within 30 days after an order of the Board 
                under this subsection, the Board shall establish such 
                conditions and compensation. Compensation established 
                by the Board under this subsection shall be based on 
                the operating and roadway maintenance expenses 
                incurred, with provision for a reasonable profit for 
                the switching rail carrier above expenses and 
                investment in the facilities used in performing the 
                switching (with investment in facilities acquired 
                through mergers and acquisitions calculated on the 
                basis of book value).''.

SEC. 13. SIDE TRACKS.

    Section 10906 of title 49, United States Code, and the item 
relating thereto in the table of sections of chapter 109 of that title, 
are repealed.

SEC. 14. FEES.

    Section 721 of title 49, United States Code, is amended by adding 
at the end the following new subsection:
    ``(f) Limitation on Fees.--The Board shall not charge a fee for the 
filing of a complaint, protest, or other request for relief in an 
amount greater than fees charged by Federal district courts for 
comparable filings.''.

SEC. 15. EMPLOYEE PROTECTION.

    Section 11326(a) of title 49, United States Code, is amended to 
read as follows:
    ``(a) Except as otherwise provided in this section, when approval 
is sought for a transaction under sections 11324 and 11325 of this 
title, the Board shall require the rail carrier to provide a fair 
arrangement at least as protective of the interests of employees who 
are affected by the transaction as the terms imposed under section 
11347 of this title as in effect before December 29, 1995. The 
arrangement and the order approving the transaction must require that--
            ``(1) the employees of the affected rail carrier will not 
        be in a worse position related to their employment as a result 
        of the transaction during the 6 years following the date on 
        which the employee is affected by the action taken by the 
        affected rail carrier as a result of the transaction (or if an 
        employee was employed for a lesser period of time by the rail 
        carrier before the transaction became final, for that lesser 
        period); and
            ``(2) the rail carrier and the authorized representatives 
        of the rail carrier's employees shall negotiate under the 
        Railway Labor Act any arrangement regarding the selection of 
        forces or assignment of employees caused by the Board's order 
        of approval under section 11324 or 11325.
Notwithstanding paragraph (2), arbitration of a proposed arrangement 
may occur only if both parties agree to that process. The Board shall 
not, under any circumstances, have the authority under this title to 
break, modify, alter, override, or abrogate, in whole or in part, any 
provision in any collective bargaining agreement or implementing 
agreement made between a rail carrier and the authorized 
representatives of its employees under the Railway Labor Act, or to 
provide such authority to any other person.''.

SEC. 16. MARKET DOMINANCE.

    Section 10707(d)(1)(A) of title 49, United States Code, is amended 
by adding at the end the following: ``The Board shall not consider 
evidence of product or geographic competition in making a market 
dominance determination under this section.''.

SEC. 17. ADVISORY COMMITTEE.

    (a) Establishment.--There shall be established a Federal Railroad 
Advisory Committee (in this section referred to as the ``Committee'') 
to make recommendations to the Congress and the President on the issues 
described in subsection (c).
    (b) Membership.--The Committee shall consist of 15 members, each of 
whom shall be an individual from industry, the professions, labor, or 
academia who has knowledge of the transportation industry. The 
President shall appoint 9 members including 1 representative of 
railroad employees and 1 each with special expertise in--
            (1) port operation and design;
            (2) rail operations;
            (3) electrification;
            (4) coal and bulk movement;
            (5) agricultural movement;
            (6) hazardous materials movement;
            (7) passenger operations; and
            (8) intermodal operations.
The Speaker of the House of Representatives shall appoint 2 members, 
the Majority Leader of the Senate shall appoint 2 members, the Minority 
Leader of the House of Representatives shall appoint 1 member, and the 
Minority Leader of the Senate shall appoint 1 member.
    (c) Functions.--The Committee shall investigate, analyze, and make 
recommendations on the condition and capacity of the present physical 
plant of the Nation's railway system and the adequacy of that plant to 
meet the needs of the 21st century. The Committee shall make specific 
recommendations concerning needed legislation or regulatory authority 
and national investment to--
            (1) preserve or increase the capacity of the railway system 
        to provide environmentally sound, comprehensive, cost-effective 
        transportation services throughout the Nation;
            (2) modernize the railway system to eliminate circuitry, 
        inadequate bridges, avoidable curvature, grade crossings, and 
        heavy grades, and to allocate the costs of such improvements 
        equitably, in proportion to the benefit afforded and the origin 
        of the need to incur the cost, as between the railway industry 
        and any other benefited class or industry, including the 
        general public;
            (3) provide for sufficient redundancy to reduce regional 
        dependence on single railroad carriers or lines for access to 
        the national system and to render the national system less 
        vulnerable to disruption by natural or manmade disasters and 
        incidents;
            (4) provide, maintain, and manage the equipment and labor 
        pool required to handle the projected needs of commerce, 
        agriculture, and defense;
            (5) electrify and maintain electrification on principal 
        high-capacity rail routes and all trunk lines in urban areas 
        while preserving load capacity and clearances suitable to 
        double stack and other efficient, high-volume freight and 
        passenger carrying equipment;
            (6) provide connectivity between the highway, air, 
        maritime, and railway systems in such manner as to maximize 
        financial and environmental efficiency;
            (7) correct present railroad merger policy or patterns to 
        restore or preserve effective competition and to serve the 
        public convenience and necessity;
            (8) maintain or increase needed rail freight services while 
        facilitating expansion of and modernization of rail passenger 
        services; and
            (9) connect the Alaskan Railroad to the continental rail 
        system, if the Committee considers such connection advisable.
With respect to the issues described in each of paragraphs (1) through 
(9), the Committee shall assess present conditions, the cost of 
modifications, the expected financial benefits to the rail or other 
industry, the financial and environmental benefits, and the benefits to 
the public of improved connectivity, more balanced development, reduced 
energy consumption, better regional equity, and improved global 
competitiveness. The Committee shall also review the ability and the 
will of the current owners of the railway infrastructure to carry 
forward a program of improvements determined by the Committee to be 
necessary, and shall recommend programs needed to encourage or compel 
needed action, without unduly burdening the resources of private 
companies, to provide public benefits. The Committee shall recommend 
financial programs and devices to facilitate the early achievement of 
national goals.
    (d) Information.--
            (1) Protection.--The rules relating to the disclosure of 
        information applicable under section 1114 of title 49, United 
        States Code, shall apply to any information provided to the 
        Committee.
            (2) Availability.--The Committee shall be provided with 
        access to any information maintained by an agency of the 
        Federal Government, as the Committee considers necessary to 
        carry out its functions under this section.
    (e) Administrative Support.--The Secretary of Transportation shall 
provide necessary administrative support to enable the Committee to 
carry out its functions under this section.
    (f) Report.--Not later than 2 years after the date of the enactment 
of this Act, the Committee shall transmit to the President and the 
Congress a final report containing the recommendations required under 
subsection (c).
    (g) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Transportation $4,000,000 for carrying 
out this section.
                                 <all>