[Congressional Record Volume 151, Number 53 (Wednesday, April 27, 2005)]
[Senate]
[Pages S4407-S4408]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BURNS (for himself, Mr. Rockefeller, Mr. Dorgan, Mr. 
        Craig, Mr. Dayton, Mr. Vitter, Mr. Thune, Mr. Johnson, Mr. 
        Baucus, and Mr. Coleman):
  S. 919. A bill to amend title 49, United States Code, to enhance 
competition among and between rail carriers in order to ensure 
efficient rail service and reasonable rail rates, and for other 
purposes; to the Committee on Commerce, Science, and Transportation.
  Mr. BURNS. Mr. President, as the Senate begins the important task of 
debating the highway bill reauthorization, another critical 
infrastructure issue comes to mind: railroads. In Montana, we rely 
heavily on both passenger and freight rail for our transportation 
needs. However, Montana is served by only one major railroad, resulting 
in shippers being captive to little or no competition for price or 
service quality. That lack of competition hurts our competitiveness for 
agriculture and manufacturing. It drives up the cost of electricity, 
because of the increased costs for coal. Sometimes, it even costs us 
jobs in Montana.
  To address the problems faced by many captive shippers, I am 
introducing today the Railroad Competition Act of 2005. I am joined by 
my colleagues, Senators Rockefeller, Dorgan, Craig, Dayton, Vitter, 
Thune, Johnson, Baucus, and Coleman. This legislation will extend 
competition to many captive rail customers and correct problems in the 
Surface Transportation Board's implementation of railroad deregulation. 
Specifically, the legislation ensures that rail customers will receive 
rate quotes for movements between various points on a railroad's 
system; frees regional and short line railroads to provide access to 
additional major systems; provides captive rail customers who cannot 
afford to participate in expensive rate challenge proceedings access to 
arbitration; and directs the STB to adopt a more realistic and workable 
rate reasonableness standard.
  In addition to a lack of competition in many markets, the rail 
industry in America is badly in need of investment into its 
infrastructure. To address the infrastructure problem, the legislation 
increases ten-fold the current Railroad Rehabilitation and 
Infrastructure Financing program. The legislation also expands who is 
eligible for the loans and loan guarantees, so that qualified shipping 
entities can also invest in rail infrastructure.
  This is about jobs, plain and simple. Last year, when the intermodal 
hub in Shelby, Montana was closed, over 40 jobs were lost. The Port 
Authority in Shelby reached out to the railroads to persuade them to 
keep the hub open, but without competition, the single supplier chose 
to close. Those jobs are real losses in Shelby, a town of a little over 
3,000 people. As high rail rates make U.S. products less competitive, 
imports flow in to fill the gap--and that costs us jobs. I understand 
that the rail industry employs a lot of people, and I am glad for those 
jobs. But we can not let lack of choice and competition in price and 
service cost us jobs in other areas.
  Since passage of the Staggers Act in 1980, the railroad industry has 
experienced significant consolidation, from over 40 major railroads 
down to 7. Roughly 35 percent of the rail traffic in America is 
captive, driving up the cost of transportation and placing a heavy 
burden on shippers.
  Captive shippers, like my farmers in Montana, have nowhere to go to 
seek relief. The Surface Transportation Board, the watchdogs over the 
rail system, is a complicated and expensive mess that hardly provides a 
fair forum for disputes. To bring a rate reasonableness case, 
challenging the unfair rates charged to captive shippers, a rail 
customer must first file huge fees--fees that will double in the coming 
weeks. Then, the customer must construct a hypothetical railroad and 
prove to the STB that rail transportation theoretically can be provided 
at a lower fee. That process can cost over $2 million per case, and 
take years to see through. At the end, even if the shipper wins, all he 
gets is a lower fee in the future. Too often, damages for past 
overcharging are not awarded. Meanwhile, the railroad sits idly by, 
under no obligation to justify its rates, and continues to collect the 
exorbitant fees that are under dispute. This system can not stand.
  The Railroad Competition Act of 2005 directs the STB to address this 
nonsensical system, and develops a final offer arbitration option, 
allowing shippers to take their case to a neutral arbiter. These 
provisions are necessary, not to

[[Page S4408]]

punish railroads, but to develop a level playing field that keeps my 
small businesses and agriculture producers in business.
  Railroads are an essential part of our nation's infrastructure, a 
vast system that includes our highways, railroads, electric 
transmission lines, pipelines, and digital infrastructure. In a rural 
state like Montana, we rely on the rails to cover long distances 
efficiently, so rail must remain a viable shipping option. We need to 
achieve affordability, while still allowing sustainability for the 
railroads. There is a necessary public interest in our shared 
infrastructure, and the Railroad Competition Act of 2005 is designed to 
address legitimate public concerns, in Montana and around the nation, 
about rail operations. I look forward to working with my colleagues to 
secure passage of this important legislation.
  Mr. ROCKEFELLER. Mr. President, it is my pleasure today to join with 
my colleagues Senator Burns, Senator Dorgan, Senator Craig, Senator 
Dayton, Senator Vitter, Senator Johnson, Senator Thune, Senator 
Coleman, and Senator Baucus to introduce the Railroad Competition Act 
of 2005. This legislation encourages the competition and consumer 
protection in the freight railroad market that Congress intended when 
it partially deregulated the industry in 1980 with the passage of the 
Staggers Act.
  Introduction of legislation in this vein is a bit of a ritual for 
this Senator. West Virginia industries depend on efficient and 
dependable rail service at fair prices to move their products to 
market. This is a perfectly reasonable goal. However, for shippers 
without competitive rail access--referred to as captive shippers--it is 
a cruel and impossible dream. I have tried for years, with partners 
from both sides of the aisle and all parts of the country, to change 
the status quo, and improve the economic situation for rail shippers 
and retail shoppers. This is the seventh time since 1985 I have 
sponsored legislation to address this issue, and the fifth congress in 
a row in which I have worked closely with my good friends Conrad Burns 
and Byron Dorgan to help shippers and their customers. And I won't give 
up until I actually succeed.
  Predictably, the railroads will overreact to this bill with scathing 
accusations of what we are doing. In truth, we intend nothing more 
radical than helping shippers, consumers, and the railroads themselves, 
reap the benefits of the basic principles of capitalism--the ability of 
sophisticated actors to conduct arms-length negotiations for 
competition, service, and fair prices. Currently, Class I railroads 
overcharge and underserve captive shippers with impunity, and with an 
antitrust exemption preventing meaningful oversight by Congress. 
Customers have no power. This means higher prices for electricity, 
food, medicine, paper products; the chemicals to protect our water 
supply and crops, and the basic ingredients of the plastics in many of 
the goods we purchase. This is crucial to protecting commerce in the 
United States. So far, we have been thwarted, though we remain 
undeterred in our efforts and confident of the validity of our 
objectives.
  In the 1970s, Congress observed a bloated freight rail network, 
unprofitable railroads, and service was anything but efficient and 
dependable. When the Staggers Act was passed in 1980, Congress gave a 
green light to deregulation of the railroad industry. But, as with the 
deregulation of every other industry that Congress has allowed, there 
were to be constraints on the ability of railroads to abuse shippers 
left captive to just one railroad. The Staggers Act left it to the 
Interstate Commerce Commission (ICC) to watch over a partially 
deregulated industry carrying out Staggers' dual goals: Improving the 
financial health and viability of the railroads; and improving and 
maintaining service for shippers. The ICC was responsible for ensuring 
fair treatment and reasonable rates for those shippers made captive by 
mergers or business decisions allowed under Staggers.

  The success of Staggers has been completely one-sided. Captive rail 
shippers in my state of West Virginia have told me--since before I came 
to the United States Senate--that service was horrible and rates being 
charged were too high. That is still true today. When I was first 
running for the Senate, the country was served by about 40 ``Class I'' 
railroads. After Staggers the railroad industry ``rationalized'' its 
routes--meaning it dropped unprofitable lines and left more and more 
shippers captive to just one railroad.
  A virtually unimpeded string of rail mergers during the last 25 years 
has only compounded the problem. The number of Class I railroads has 
dropped to seven. Four of these--CSX and Norfolk Southern in the East 
and Burlington Northern Santa Fe and the Union Pacific in the West--
completely dominate the industry, accounting for about 90 percent of 
the freight rail traffic in the nation.
  This is simple. Fewer market participants mean less competition, and 
less competition opens up the possibility of the abuse of local 
monopoly power. Under the misadministration of the Staggers Act, first 
by the ICC, and later by its successor agency the Surface 
Transportation Board (STB), abuse of captive shippers has not only 
gotten worse, but it has been unjustly bestowed a veneer of propriety 
by a series of unwise administrative decisions and at least one court 
case that gave grudging deference to an agency, the STB, that has 
failed to carry out the clear directions of Congress. The STB, to which 
shippers have looked for a solution, has become a facilitator of the 
problem.
  The goals of the Railroad Competition Act are really quite mundane. 
My colleagues and I hope only to give life to a freight rail system 
originally envisioned by the drafters of the Staggers Act. We hope to 
send to the President a bill that will allow captive shippers the most 
basic right in business negotiations: They will be able to get the 
railroads that ship their products simply to quote a rate for the 
service.
  My colleagues may be amazed to find out that the STB's current 
reading of the Staggers Act allows shippers no such right. Our 
legislation will simply require railroads to tell their customers the 
cost of moving a certain quantity of product from their manufacturing 
facility to their customer. Point A to Point B. Nothing in business is 
more basic, but it is a basic of business negotiations captive shippers 
do not currently enjoy. Additionally, our legislation also would do the 
following: clarifies that the STB shall promote competition among rail 
carriers, helping to maintain both reasonable freight rail rates and 
consistent and efficient rail service; creates a system of ``final 
offer'' arbitration for matters before the STB; authorizes the STB to 
remove so-called ``paper barriers'' that prevent short-line and 
regional railroads from providing improved service to shippers; 
requires STB to act in the public interest and removes required showing 
of railroads' anti-competitive conduct; caps filing fees for STB rate 
cases at the level of federal district courts (reducing filing fee from 
the current fee $65,000, which is to be doubled in 2005); calls for a 
Department of Transportation (DOT) study of rail competition; allows 
elected officials and state railroad regulators to petition the STB for 
declarations of ``areas of inadequate rail competition,'' with 
appropriate remedies; creates position of Rail Customer Advocate at 
U.S. Department of Agriculture (USDA); and expands infrastructure 
modernization loan guarantee program.
  In closing I would suggest that, rather than the highly charged 
arguments we have engaged in over the years, my colleagues encourage 
the railroads to take shippers' concerns seriously, and that we all 
work to create a freight rail marketplace made up of companies hungry, 
in the best capitalist sense of that word, to do business. That is the 
goal of the Railroad Competition Act, and I look forward to its 
consideration by the full Senate.
                                 ______