[Congressional Record Volume 145, Number 40 (Monday, March 15, 1999)]
[Senate]
[Pages S2674-S2678]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ROCKEFELLER (for himself, Mr. Dorgan, Mr. Burns, Mr. 
        Roberts, and Mr. Conrad):
  S. 621. A bill to enhance competition among and between rail carriers 
in order to ensure efficient rail service and reasonable rail rates in 
any case in which there is an absence of effective competition; to the 
Committee on Commerce, Science, and Transportation.


        RAILROAD COMPETITION AND SERVICE IMPROVEMENT ACT OF 1999

 Mr. ROCKEFELLER. Mr. President, I rise today to introduce a 
bill that will, twenty years after the Staggers Rail Act, finally 
deliver the benefits of market competition to the railroad industry and 
its customers--the Railroad Competition and Service Improvement Act of 
1999. I am joined in this effort by Senators Dorgan, Burns, Roberts and 
Conrad, and I thank them for their leadership on this bill for the 
benefit not only of rail customers but also the future health of the 
railroads themselves.
  As many of my colleagues know, there are certain issues that I feel 
especially strongly about, and all of them are issues that have far-
reaching consequences for the State of West Virginia and for our 
nation. Competition--or the lack thereof--in the railroad industry is 
one of those issues.
  In the United States we have a railroad industry that has gone from 
63 class I railroads in 1976 to 9 class I railroads today, of which 
only 5 control the vast majority of rail freight across the country: 2 
in the East, 2 in the West, and one down the Mississippi River in the 
middle of the country. We also have a railroad industry with service 
problems so expansive and so disruptive that grain and chemical and 
other manufacturers have lost tens of millions of dollars in recent 
years, must operate with the vulnerability of future service crises, 
and have no choice but to constantly be on the lookout for better and 
more reliable transportation options. And we have a railroad industry 
that seems continually to assert undue and anti-competitive power over 
its customers in increasing local monopoly situations.
  I believe the railroad industry is at a crossroads. It's been nearly 
twenty years since the Staggers Rail Act of 1980, which limited the 
regulation of the railroad industry by allowing government intervention 
only where a railroad customer has no effective means of competition. 
By many measures, the railroads are in far better financial health 
today, and rail freight transportation is far more safe, stable and 
efficient than in the dire days of the 1970s.
  Yet despite these apparent gains, shippers across the nation are 
broadly discontent. As a significant new report from the General 
Accounting Office confirms, rail shippers believe that in the aftermath 
of Staggers--and in direct conflict with the intent of Staggers--we 
have in fact created a system that very heavily, and with tremendous 
financial consequences, favors monopoly railroads and shuts shippers 
out of the regulatory process that is supposed to protect them.
  We have put in place a system that leaves 70 percent of shippers with 
poorer rate and service options than they need to run their businesses 
cost-efficiently, and a system in which nearly 60 percent of shippers 
fear retaliation from the railroads should they access the rate relief 
process--a process which costs between $500,000 and $3 million per 
complaint and can take up to 16 years to get a resolution. The GAO 
makes crystal clear that the rate relief process for shippers with no 
competitive rail options is too costly and too time-consuming to be 
effective.
  Now some would say that customers always want more and better 
service, always want lower prices, and always are unhappy--so we should 
discount their railroad customer concerns and leave the system alone. 
They would say that the railroads are happy with the status quo, so 
Staggers must be working well.
  To my mind, that's a cop-out. The ``shipping community'' is the 
backbone of our nation--they are our farmers, our auto and chemical 
manufacturers, our utilities, our coal miners, our forest products 
workers--and they're not just crying wolf. They have legitimate 
problems with a skewed system, and they deserve the Congress' full 
attention and a commitment to deal with increased concentration and a 
developing pattern of service problems by infusing some degree of real 
and effective competition into the railroad industry as a whole.
  The legislation we introduce today is designed to do just that: it 
will jump-start competition and uphold the common carrier obligation by 
requiring railroads to quote a rate on any given segment; it will 
reduce monopoly routing by facilitating terminal access; it will 
streamline the rate relief process by simplifying the market dominance 
test; it will restore the integrity of the Surface Transportation Board 
by eliminating its annual revenue adequacy pronouncements; it will 
bolster rail access for small farmers by creating a targeted rate 
relief process; and it will require the railroads to file monthly 
service performance reports with the Department of Transportation, 
similar to what we require of the airline industry, so that rail 
customers have access to the information they need to make good 
railroad and transportation choices.
  We intend to offer this legislation as an amendment to the Surface 
Transportation Board reauthorization legislation later this year, and 
we especially look forward to working with our colleagues on the 
Commerce and Agriculture Committees to that end.

[[Page S2675]]

  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 621

       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 ``Railroad Competition and 
     Service Improvement Act of 1999''.

     SEC. 2 PURPOSES.

       The purposes of this Act are--
       (1) to clarify the rail transportation policy of the United 
     States by requiring the Surface Transportation Board to 
     accord greater weight to the need for increased competition 
     between and among rail carriers and consistent and efficient 
     rail service in its decision making;
       (2) to eliminate unreasonable barriers to competition among 
     rail carriers serving the same geographic areas and ensure 
     that smaller carload or intermodal shippers are not precluded 
     from accessing rail systems due to volume requirements;
       (3) to ensure reasonable rail rates for captive rail 
     shippers;
       (4) to provide relief for certain agricultural facilities 
     lacking effective competitive alternatives; and
       (5) to remove unnecessary regulatory burdens from the rate 
     reasonableness procedures of the Surface Transportation 
     Board.

     SEC. 3. FINDINGS.

       The Congress finds that:
       (1) Prior to 1976, the Interstate Commerce Commission 
     regulated most of the rates that railroads charged shippers. 
     The Railroad Revitalization and Regulatory Act (1976) and the 
     Staggers Rail Act (1980) limited the regulation of the rail 
     industry by allowing the Interstate Commerce Commission to 
     regulate rates only where railroads have no effective 
     competition and established the Interstate Commerce 
     Commission's process for resolving rate disputes.
       (2) In 1976, when the Congress began the process of 
     railroad deregulation, there were 63 class I railroads in the 
     United States. By 1997, through mergers and other factors, 
     the number of class I railroads shrunk to nine.
       (3) The nine class I carriers accounted for more than 90 
     percent of the industry's freight revenue and 71 percent of 
     the industry's mileage operated in 1997.
       (4) Rail industry consolidation has diminished competition, 
     creating an even greater dependence upon a rate relief 
     process through a regulatory body such as the Surface 
     Transportation Board.
       (5) Agricultural, chemical, and utility industries in 
     particular rely heavily upon rail transportation, and 
     unreasonable rail rates and inadequate service have a 
     dramatic impact on these important industries.
       (6) According to a report issued by the General Accounting 
     Office, ``. . . [t]he Surface Transportation Board's standard 
     procedures for obtaining rate relief are highly complex and 
     time-consuming'' and the General Accounting Office estimates 
     that over ``70 percent [of shippers] believe that the time, 
     complexity, and costs of filing complaints are barriers that 
     often preclude them from seeking relief.''
       (7) The General Accounting Office analyzed all 41 rate 
     complaints filed with the Interstate Commerce Commission and 
     its successor, the Surface Transportation Board, since 1990 
     and found that each complaint cost shippers between $500,000 
     to $3 million apiece and took between a few months and 16 
     years to resolve.
       (8) The General Accounting Office surveyed over 700 
     shippers and found that--
       (A) 75 percent of the shippers believed that they are 
     overcharged with unreasonable rates and
       (B) over 70 percent of the shippers believed that the time, 
     complexity, and costs of filing complaints create 
     unsurmountable barriers and therefore preclude them form 
     pursuing the rate relief they are entitled to under the law.
       (9) The General Accounting Office survey of shippers 
     identified the following barriers to obtaining rate relief 
     under the current process:
       (A) The costs associated with filing complaints outweighs 
     the benefits of winning relief.
       (B) The rate complaint process is too complex and too 
     lengthy.
       (C) Developing the stand-alone revenue-to-variable cost 
     model is too costly.
       (D) Most shippers believe that the STB is most likely to 
     decide in favor of the railroad.
       (E) The discovery process is too difficult because the 
     shipper is dependent upon the railroad for all the necessary 
     data.
       (F) Responding to the railroads requests for discovery is 
     too difficult and time consuming.
       (G) Shippers fear reprisal from the railroad.
       (H) The Surface Transportation Board filing fee is too 
     high.
       (10) According to the General Accounting Office report, the 
     vast majority of shippers believe that the following changes 
     in the rate relief process are necessary to provide them with 
     the ability to seek the rate relief:
       (A) The Surface Transportation Board's time limit for 
     deciding a rate relief case should be shortened.
       (B) The complaint fee required upon filing should be 
     eliminated or reduced.
       (C) The market dominance requirement should be simplified.
       (D) Mandatory binding arbitration should be used to resolve 
     rate disputes.
       (E) The Surface Transportation Board's jurisdictional 
     threshold of 180% revenue-to-variable cost should be lowered.
       (11) According to the General Accounting Office report, 
     shippers believe that increasing competition in the railroad 
     industry would lower rates and diminish the need for a rate 
     complaint process. Proposals to increase railroad competition 
     identified in the report include the following:
       (A) Require the STB to grant trackage rights; require 
     reciprocal switching at the nearest junction or interchange 
     upon request of a shipper or competing railroad; and increase 
     rail access for shortline and regional railroads.
       (B) Overturn the STB's ``bottle neck'' decision by 
     requiring railroads to quote a rate for all route segments.
       (12) Consolidation in the railroad industry has diminished 
     competition, thwarting the intended objectives of 
     deregulation to allow competition to lower rates and improve 
     service.
       (13) The rate protection intended for shippers without 
     effective competition has been de-railed by a complex, 
     costly, and time-consuming maze of discovery, findings, and 
     appeals that take years and cost millions of dollars.
       (14) Because of diminished rail competition, a rate relief 
     process plagued with unsurmountable barriers and blanket 
     antitrust immunity unique to the railroad industry, captive 
     shippers have no effective recourse under the current system.

     SEC. 4. CLARIFICATION OF RAIL TRANSPORTATION POLICY.

       Section 10101 of title 49, United States Code, 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 shall be--
       ``(1) to ensure effective competition among rail carriers 
     at origin and destination;
       ``(2) to maintain reasonable rates in the absence of 
     effective competition; and
       ``(3) to maintain consistent and efficient rail 
     transportation service to shippers, including the timely 
     provision of railcars requested by shippers; and
       ``(4) to ensure that smaller carload and intermodal 
     shippers are not precluded from accessing rail systems due to 
     volume requirements.''.

     SEC. 5. FOSTERING RAIL TO RAIL COMPETITION.

       (a) Establishment of Rate.--Section 11101(a) of title 49, 
     United States Code, is amended by inserting after the first 
     sentence the following: ``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--
       ``(1) whether the rate established is for only part of a 
     movement between an origin and a destination;
       ``(2) whether the shipper has made arrangements for 
     transportation for any other part of that movement; or
       ``(3) whether the shipper currently has a contract with any 
     rail carrier for part or all of its transportation needs over 
     the route of movement.

     ``If such a contract exists, the rate established by the 
     carrier shall not apply to transportation covered by the 
     contract.''.
       (b) Review of Reasonableness of Rates.--Section 10701(d) of 
     title 49, United States Code, is amended--
       (1) by redesignating paragraph (3) as paragraph (4); and
       (2) by inserting after paragraph (2) the following:
       ``(3) A shipper may challenge the reasonableness of any 
     rate established by a rail carrier in accordance with 
     sections 11101(a) and 10701(c) of this title. The Board shall 
     determine the reasonableness of the rate so challenged 
     without regard to--
       ``(A) whether the rate established is for only part of a 
     movement between an origin and a destination;
       ``(B) whether the shipper has made arrangements for 
     transportation for any other part of that movement; or
       ``(C) whether the shipper currently has a contract with a 
     rail carrier for any part of the rail traffic at issue, 
     provided that the rate prescribed by the Board shall not 
     apply to transportation covered by such a contract.''.

     SEC. 6. SIMPLIFIED RELIEF PROCESS FOR CERTAIN AGRICULTURAL 
                   SHIPPERS.

       (a) Limitation of Fees.--Nothwithstanding any other 
     provision of law, the Surface Transportation Board shall not 
     impose fees in excess of $1,000 for services collected from 
     an eligible facility in connection with rail maximum rate 
     complaints under part 1002 of title 49, Code of Federal 
     Regulations.
       (b) Simplified Rate and Service Relief.--Section 10701 of 
     title 49, United States Code, is amended by adding at the end 
     thereof the following:
       ``(e) Simplified Rates and Services.--
       ``(1) In general.--Notwithstanding any other provision of 
     law, a rail carrier may not charge a rate for shipments from 
     or to an eligible facility which results in a revenue-to-

[[Page S2676]]

     variable cost percentage, using system average costs, for the 
     transportation service to which the rate applies that is 
     greater than 180 percent.
       ``(2) Acceptance of requests.--Nothwithstanding any other 
     provision of law, a rail carrier shall accept all requests, 
     for grain service from an eligible facility up to a maximum 
     of 110 percent of the grain carloads shipped from or to the 
     facility in the immediately preceding calendar year. If, in a 
     majority of instances, a rail carrier does not in any 45-days 
     period, supply the number of grain cars so ordered by an 
     eligible facility or does not initiate service within 30 days 
     of the reasonably specified loading date, the eligible 
     facility may request that an alternative rail carrier provide 
     the service using the tracks of the original carrier. If the 
     alternative rail carrier agrees to provide such service, and 
     such service can be provided without substantially impairing 
     the ability of the carrier whose tracks reach the facility to 
     use such tracks to handle its own business, the Board shall 
     order the alternative carrier to commence service and to 
     compensate the other carrier for the use of its tracks. The 
     alternative carrier shall provide reasonable compensation to 
     the original carrier for the use of the original carrier's 
     tracks.
       ``(3) Cancellation penalties.--A carrier may accept car 
     orders under paragraph (2) subject to reasonable penalties 
     for service requests that are canceled by the requester. If 
     the carrier fills such orders more than 15 days after the 
     reasonably specified loading date, the carrier may not assess 
     a penalty for canceled car orders.
       ``(4) Damages.--A rail carrier that fails to provide 
     service under the requirements of paragraph (2) is liable for 
     damages to an eligible facility that does not have access to 
     an alternative carrier, including lost profits, attorney's 
     fees, and any other consequences attributable to the 
     carrier's failure to provide the ordered service. A claim for 
     such damage may be brought in an appropriate United States 
     District Court or before the Board.
       ``(5) Timetable for board proceeding.--The Board shall 
     conclude any proceeding brought under this subsection no 
     later than 180 days from the date a complaint is filed.
       ``(6) Definitions.--In this subsection:
       ``(A) Eligibility facility.--The term `eligible facility' 
     means a shipper facility that--
       ``(i) is the origin or destination for not more than 4,000 
     carloads annually of grain as defined in section 3(g) of the 
     United States Grain Standards Act (7 U.S.C. 75(g));
       ``(ii) is served by a single rail carrier at its origin;
       ``(iii) has more than 60 percent of the facility's inbound 
     or outbound grain and grain product shipments (excluding the 
     delivery of grain to the facility by producers), measured by 
     weight or bushels moved via a rail carrier in the immediately 
     preceding calendar year; and
       ``(iv) the rate charged by the rail carrier for the 
     majority of shipments of grain and grain products from or to 
     the facility, excluding premium for special service programs, 
     results in a revenue-to-variable cost percentage, using 
     system average costs, for the transportation to which the 
     rate applies that is equal to or greater than 180 percent.
       ``(B) Reasonable compensation.--The term `reasonable 
     compensation' shall mean an amount no greater than the total 
     shared costs of the original carrier and the alternative 
     carrier incurred, on a usage basis, for the provision of 
     service to an eligible facility. If the carriers are unable 
     to agree on compensation terms within 15 days after the 
     facility requests service from the alternative carrier, the 
     alternative carrier or the eligible facility may request the 
     Board to establish the compensation and the Board shall 
     establish the compensation within 45 days after such request 
     is made.
       ``(C) Original carrier.--The term `original carrier' means 
     a rail carrier which provides the only rail service to an 
     eligible facility using its own tracks or provides such 
     service over an exclusive lease of the tracks serving the 
     eligible facility.
       ``(D) Alternative carrier.--The term `alternative carrier' 
     means a rail carrier that is not an original carrier to an 
     eligible facility.''.

     SEC. 7. COMPETITIVE RAIL SERVICE IN TERMINAL AREAS.

       (a) Trackage Rights.--Section 11102(a) of title 49, United 
     States Code, is amended--
       (1) by striking ``may'' in the first sentence and inserting 
     ``shall'';
       (2) by inserting [as a new second sentence] after 
     ``business.'' the following: ``In making this determination, 
     the Board shall not require evidence of anticompetitive 
     conduct by the rail carrier from which access is sought.''; 
     and
       (3) by striking ``may establish'' in the next-to-last 
     sentence and inserting ``shall.''
       (b) Reciprocal Switching.--Section 11102(c)(1) of title 49, 
     United States Code, is amended--
       (1) by striking ``may'' in the first sentence and inserting 
     ``shall'';
       (2) by inserting after ``service.'' the following: ``In 
     making this determination, the Board shall not require 
     evidence of anticompetitive conduct by the rail carrier from 
     which access is sought.''; and
       (3) by striking ``may establish'' in the last sentence and 
     inserting ``shall''.

     SEC. 8. SIMPLIFIED STANDARDS FOR MARKET DOMINANCE.

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

     SEC. 9. REVENUE ADEQUACY DETERMINATIONS.

       (a) Rail Transportation Policy.--Section 10101(3) of title 
     49, United States Code, is amended by striking ``revenues, as 
     determined by the Board;'' and inserting ``revenues;''.
       (b) Standards for Rates.--Section 10701(d)(2) is amended by 
     striking ``revenues, as established by the Board under 
     section 10704(a)(2) of this title'' and inserting 
     ``revenues.''.
       (c) Revenue Adequacy Determinations.--Section 10704(a) of 
     title 49, United States Code, is amended--
       (1) by striking ``(a)(1)'' and inserting ``(a)''; and
       (2) by striking paragraphs (2) and (3).

     SEC. 10. RAIL CARRIER SERVICE QUALITY PERFORMANCE REPORTS.

       (a) In General.--Chapter 5 of subtitle I of title 49, 
     United States Code, is amended by adding at the end thereof 
     the following:


                 ``subchapter iii. performance reports

     ``Sec. 541. RAIL CARRIER SERVICE QUALITY PERFORMANCE REPORTS

       ``(a) In General.--The Secretary of Transportation shall 
     require, by regulation, each rail carrier to submit a monthly 
     report to the Secretary, in such a uniform format as the 
     Secretary may be regulation prescribe, containing information 
     about--
       ``(1) its on-time performance;
       ``(2) its car availability deadline performance;
       ``(3) its average train speed;
       ``(4) its average terminal dwell time;
       ``(5) the number of its cars loaded (by major commodity 
     group); and
       ``(6) such other aspects of its performance as a rail 
     carrier as the Secretary may require.
       ``(b) Information Furnished to STB; the Public.--The 
     Secretary shall furnish a copy of each report required under 
     subsection (a) to the Surface Transportation Board no later 
     than the next business day following its receipt by the 
     Secretary, and shall make each such report available to the 
     public.
       ``(c) Annual Report to the Congress.--The Secretary shall 
     transmit to the Congress an annual report based upon 
     information received by the Secretary under this section.
       ``(d) Definitions.--In this section, the definitions in 
     section 10102 apply.''.
       (b) Conforming Amendment.--The chapter analysis for chapter 
     5 of subtitle I of title 49, United States Code, is amended 
     by adding at the end thereof the following:

                 ``Subchapter III. Performance Reports

``541. Rail carrier service quality performance reports''.

 Mr. DORGAN. Mr. President, I am very pleased to join Senators 
Rockefeller, Burns, and Roberts today in introducing the ``Railroad 
Competition and Service improvement Act of 1999.'' This legislation is 
designed to stimulate railroad competition and level the field for 
shippers who need relief from unreasonable rates. Earlier this month, 
the General Accounting Office (GAO) issued a report on the barriers to 
rate relief that prevent small captive shippers from unreasonable 
rates. That report, outlined below, identified a number of remedies 
that would give captive shippers a fighting chance at rate relief. This 
legislation closely mirrors the GAO's findings and if enacted, would go 
a long way to improve rail service and promote competition.
  In my home state of North Dakota over fifty percent of the state 
economy is dependent upon agriculture. Our ability to move its 
agricultural production to distant markets affects large sectors of 
North Dakota's economy. Over eighty percent of all the grain shipped 
out-of-state moves by rail and 97 percent of North Dakota's grain 
elevators have access to only one railroad. Those who survive on 
farming and those who live in states like North Dakota whose main 
business is agriculture have a great deal at stake when it comes to 
rail transportation. Overcharges cost us millions of dollars a year, 
adding a substantial cost to a product that already operates at very 
low margins.
  Since virtually all of the shippers in North Dakota are subject to 
monopoly service, our farmers and county grain elevators are paying a 
premium for a service they cannot afford to live without. Rail service 
in this country is supposed to be competitive where the forces of 
competition determine shipping rates and in the absence of competition, 
the STB is suppose to have a process that will protect captive shippers 
from overcharges. Unfortunately, rail competition is more of an 
exception than the rule and the process that is designed to protect 
captive shippers is so costly and time-consuming that shippers are 
without recourse; left to the mercy of monopoly railroads who not only 
determine whether or not their product will get to market but

[[Page S2677]]

also how much they will charge to deliver that product. This is a 
circumstance that must be addressed as the Congress considers the 
reauthorization of the STB this year.
  Prior to 1976, the ICC regulated almost all the rates that railroads 
charged shippers. The Railroad Revitalization and Regulatory Act (1976) 
and the Staggers Rail Act (1980) limited the regulation of the rail 
industry by allowing the ICC to regulate rates only where railroads 
have no effective competition and established the ICC's process for 
resolving rate disputes.
  At the time when the Congress began the process of railroad 
deregulation (1976) there were 63 class I railroads in the United 
States. By 1997, through mergers and other factors, the number of class 
I railroads shrunk to nine. These nine carriers accounted for more than 
90 percent of the industry's freight revenue and 71 percent of the 
industry's mileage operated in 1997. In July, 1998, the STB approved 
another Class I merger by splitting the assets of Conrail between CSX 
and Norfolk Southern (reducing the Class I count to 8 once 
implemented). Another merger between Canadian National Railway and 
Illinois Central is pending before the STB.

  This consolidation has diminished competition, creating an even 
greater dependence upon a rate relief process through a regulatory body 
such as the STB. Agricultural, utility, and chemical industries in 
particular rely heavily upon rail transportation and the cost of 
unreasonable rail rates has a dramatic impact on these important 
industries.
  According to GAO/RCED-99-46, ``Railroad Regulation: Current Issues 
Associated With the Rate Relief Process,'' February 1999, ``[t]he 
Surface Transportation Board's standard procedures for obtaining rate 
relief are highly complex and time-consuming'' and the GAO estimates 
that over ``70 percent [of shippers] believe that the time, complexity, 
and costs of filing complaints are barriers that often preclude them 
from seeking relief.'' The report documents that the process for a 
small captive shipper to obtain rate relief under the current 
regulatory and legal framework is broken and unworkable. The reasons 
for these barriers are multiple:
  (A) Historical regulatory precedence has created a complex web of 
hurdles an barriers building an insurmountable maze for a small shipper 
to seek rate relief;
  (B) contradictory statutorily directives based on a statute that was 
designed to protect the financial health of railroads while at the same 
time attempt to protect the needs of shippers to challenge unreasonable 
rates; and
  (C) the time and cost entailed in filing a rate complaint has reached 
absurd levels, far outweighing the potential savings that could be 
achieved through a successful challenge to an unreasonable rate.
  The STB rate complaint process involves an up front filing fee cost 
of $54,500 ($5,400 for the simplified guidelines)--plus the costs of 
pursuing the case through years of negotiation through a complex maze 
of discovery; evidentiary hearings; rebuttals; and administrative 
appeals.
  Seeking rate relief under the current process is very costly to 
shippers. The rate relief cases analyzed by the GAO cost shippers 
between $500,000 to $3 million each to file and wade through the 
process and took between a few months and 16 years to resolve. For 
example, the McCarty Farms case took over 16 years to resolve and ended 
up in Federal District Court.
  The GAO surveyed over 700 shippers and found that (a) 75 percent of 
the shippers believed that they are overcharged with unreasonable 
rates; and (b) over 70 percent of the shippers believed that the time, 
complexity, and costs of filing complaints create unsurmountable 
barriers and therefore preclude them from pursuing the rate relief they 
are entitled to under the law. (It is not surprising that the GAO found 
that the railroad monopolies unanimously support the current process 
and see no need for change.)

  The report reviewed all the rate relief filings pending before the 
STB (and its predecessor, the ICC) since 1990. The GAO found that only 
41 rate relief filings were either pending or have been filed since 
1990. About half of these complaints were settled outside of the STB's 
process and therefore dismissed. Of the remaining complaints, 7 were 
decided in favor of the railroad and only 2 have been decided in favor 
of the shipper; 9 are still pending; and 5 were dismissed without 
settlement.
  The GAO also found that, in 1997, only 18 percent of the total 
tonnage shipped via rail in this country is subject to rate regulation 
by the STB. About 70 percent of all shipments is exempt because it is 
shipped under contract and the STB has exempted another 12 percent. 
Thus, the GAO's analysis of barriers to shippers only relates to a 
portion of the total tonnage of rail shipments in the United States.
  The ICC Terminations Act required the STB to develop simplified 
procedures for rate complaint filings. While the STB has developed 
those simplified procedures, the railroad industry has already 
challenged them in court and not a single shipper has filed a complaint 
under these new procedures since the STB issued the simplified 
guidelines in December 1996.
  The GAO survey of shippers found that the vast majority of shippers 
(over 70%) believe that the STB rate relief process is too costly, 
complex, and time consuming. Shippers identified the following barriers 
to obtaining rate relief under the current process:
  The legal costs associated with filing complaints outweighs the 
benefits of winning relief.
  The rate complaint process is too complex and takes too long.
  Developing the stand alone revenue to variable cost model (shippers 
are required to calculate that the rate they are charged exceeds 180% 
of the revenue to variable cost of a hypothetical railroad to provide 
them service) is too costly.
  Most shippers believe that the STB is most likely to decide in favor 
of the railroad so the effort is not worth its costs.
  The discovery process is too difficult because the shipper is 
dependent upon the railroad for all the necessary data to calculate the 
revenue to variable cost ratio.
  Responding to the railroad requests for discovery is too difficult 
and time consuming (note: the GAO identified instances in its analysis 
of the 41 cases filed since 1990 that railroads often extended the 
complaint process through lengthy discovery requests).

  Fear of reprisal from the railroads.
  The STB filing fee in itself is too high to consider filing a rate 
complaint.
  The GAO report found that shippers desire to see (1) a more 
simplified rate complaint process and (2) increased competition in the 
railroad industry that would lower rates and diminish the need for a 
rate complaint process.
  According to the GAO report, the vast majority of shippers believe 
that the following changes in the rate relief process are necessary to 
provide them with the ability to seek the rate relief--
  The STB's time limit for deciding a rate relief case should be 
shortened (the current limit is 16 months).
  The complaint fee required upon fining should be eliminated or 
reduced.
  The market dominance requirement should be simplified.
  Use mandatory binding arbitration between shippers and railroads to 
resolve rate disputes.
  Lower the STB's jurisdictional threshold from the current level of 
180% of revenue to variable cost.
  While shippers contend that the rate complaint process needs serious 
repair, shippers believe that increasing competition in the railroad 
industry would do more to lower rates and diminish the need for a rate 
complaint process. Proposals to increase railroad competition 
identified in this report include the following:
  Require the STB to grant trackage rights; require reciprocal 
switching at the nearest junction or interchange upon request of a 
shipper or competing railroad; and increase rail access for shortline 
and regional railroads.
  Overturn the STB's ``bottle neck'' decision by requiring railroads to 
quote a rate for all route segments.
  Consolidation in the railroad industry has diminished competition, 
thwarting the intended objectives of deregulation to allow competition 
to lower rates and improve service. The rate protection intended for 
shippers without effective competition has been de-railed by a complex; 
costly; and

[[Page S2678]]

time consuming web of discoveries, findings, and appeals that take 
years and cost millions of dollars. The result is that we have more 
captive shippers whose only recourse for rate protection is an 
impossible process that is simply not worth the expense. This cannot 
continue.
  Small shippers are forced to take on well financed railroad 
corporations populated with hundreds of lawyers who can use the complex 
system to make rate relief an impossible maze of endless filings, 
appeals, and delays. In the GAO's survey, shippers emphasized the time, 
cost, and complexity involved in filing a rate complaint as significant 
enough barriers as to prevent them from attempting to seek rate relief 
through the STB process. Since the railroad industry has blanket 
antitrust immunity--which is a status not enjoyed by another industry--
captive shippers have no recourse and will remain overcharged unless 
Congress takes some action to level the field.
  I urge my colleagues to support this legislation. Attached is a 
summary of the bill's provisions. I ask unanimous consent that the 
summary be printed in the Record.
  There being no objection, the summary was ordered to be printed in 
the Record, as follows:

       Railroad Competition and Service Improvement Act--Summary


                         section 1. short title

       The ``Railroad Competition and Service Improvement Act of 
     1999''


                          section 2. purposes

       The purpose of the legislation is to require the STB to 
     accord greater weight to increase rail competition; to 
     eliminate unreasonable barriers to competition; ensure 
     reasonable rates in the absence of competition; and remove 
     unnecessary regulatory barriers that impede the ability of 
     rail shippers to obtain rate relief.


                          section 3. findings

       The Congress finds that the railroad industry has become 
     concentrated and that rail industry consolidation has 
     diminished competition, creating a greater dependence upon 
     the Surface Transportation Board's rate relief process, whose 
     procedures for obtaining rate relief, according to a report 
     issued by the General Accounting Office, ``are highly complex 
     and time-consuming.''
       The GAO also found that--
       75 percent of the shippers believed that they are 
     overcharged with unreasonable rates and over 70 percent of 
     the shippers believed that the time, complexity, and costs of 
     filing complaints create unsurmountable barriers and 
     therefore precluded them from pursuing the rate relief they 
     are entitled to under the law;
       The STB rate relief process cost shippers between $500,000 
     to $3 million per complaint and took between a few months and 
     16 years to resolve;
       Over ``70 percent [of shippers] believe that the time, 
     complexity, and costs of filing complaints are barriers that 
     often preclude them from seeking relief''; and
       While shippers contend that the rate complaint process 
     needs serious repair, shippers believe that increasing 
     competition in the railroad industry would do more to lower 
     rates and diminish the need for a rate complaint process.
       Consolidation in the railroad industry has diminished 
     competition, thwarting the intended objectives of 
     deregulation to allow completion to lower rates and improve 
     service. The rate protection intended for shippers without 
     effective competition has been de-railed by a complex; 
     costly; and time consuming web of discoveries, findings, and 
     appeals that take years and cost millions of dollars.


           section 4. clarification of transportation policy

       The legislation requires the STB to give priority to the 
     following policy objectives:
       (1) ensuring effective competition among rail carriers;
       (2) maintaining reasonable rates where there is an absence 
     of effective competition;
       (3) maintaining consistent and efficient service to 
     shippers, including the timely provision of railcars 
     requested by shippers.


                 section 5. fostering rail competition

       The bill overturns the STB's ``bottle neck'' decision that 
     has been disappointing for shippers. Under the legislation, 
     rail carriers would have to quote a rate for transportation 
     over a segment of line upon the request of a shipper. If the 
     rail carrier refuses, the STB shall establish the rate.


          section 6. relief for certain agricultural shippers

       Places a $1,000 limit on filing fees on rate complaints 
     filed by small, captive agricultural shippers; establishes a 
     simplified and streamlines rate complaint process for small, 
     captive agricultural shippers; and would allow a small, 
     captive agricultural shipper to request service from another 
     railroad or file for damages when their carrier fails to 
     honor railcar orders.


         section 7. competitive rail service in terminal areas

       Eliminates the requirement that evidence of anti-
     competitive conduct be produced when the STB determines the 
     outcome of requests to allow another railroad access to rail 
     customer facilities within an area served by the tracks of 
     more than one railroad.


          section 8. simplified standards for market dominance

       The market dominance standard (which establishes the terms 
     in which rail shippers may have standing to challenge the 
     reasonableness of a rate) is simplified in a goal to minimize 
     the regulatory burdens confronting captive rail shippers. 
     Under this legislation, a rail carrier will be presumed to 
     have market dominance if the shipper is served by only one 
     rail carrier and if the rail shipper can demonstrate that the 
     carrier's rate is above 180% revenue to variable cost. 
     [Currently, a shipper must demonstrate--in addition to the 
     above criteria--there is no geographic or product 
     competition. This legislation would eliminate those hurdles 
     for the shipper.]


               section 9. revenue adequacy determinations

       Repeals the revenue adequacy test [which is a determination 
     by the STB on the financial fitness of the railroads and 
     creates another obstacle for shippers seeking rate relief 
     from the STB].


                section 10. service performance reports

       Requires the railroads to submit service performance 
     reports to the Department of Transportation.

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