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.

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.

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.

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.

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.

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:

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.

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..

Arbitration of rail disputes

(a)

Amendment

Chapter 117 is amended by adding the following section after section 11707:

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

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.

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.

11.

Rail customer advocate

(a)

Amendment

Subchapter II of chapter 7 is amended by adding at the end the following new section:

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

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.

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..

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.