[Congressional Record Volume 153, Number 38 (Tuesday, March 6, 2007)]
[Senate]
[Pages S2708-S2710]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KOHL (for himself, Mr. Coleman, Mr. Feingold, Mr. Vitter, 
        and Mr. Rockefeller):
  S. 772. A bill to amend the Federal antitrust laws to provide 
expanded coverage and to eliminate exemptions from such laws that are 
contrary to the public interest with respect to railroads; to the 
Committee on the Judiciary.
  Mr. KOHL. Mr. President, as Chairman of the Senate Antitrust 
Subcommittee, I believe it is my role to investigate and help end--
monopolistic practices that exploit American consumers. In that spirit, 
I rise today to introduce along with my colleagues, Senators Coleman, 
Feingold, Vitter and Rockefeller, the Railroad Antitrust Enforcement 
Act of 2007. This legislation will eliminate obsolete antitrust 
exemptions that protect freight railroads from competition.
  Consolidation in the railroad industry, allowed under the exemptions 
my legislation would repeal, has resulted in only four Class I 
railroads providing over 90 percent of the nation's freight rail 
transportation. The lack of competition was recently documented in a 
Government Accountability Office October 2006 report. That report found 
that, ``concerns about competition and captivity, in the rail industry, 
remain as traffic is concentrated in fewer railroads.'' The report also 
stated that the Surface Transportation Board, the entity charged with 
ensuring that the industry remains competitive, has failed to do so. In 
August 2006, the Attorneys General of 17 states and the District sent a 
letter to Congress citing problems due to a lack of competition and 
asked that the antitrust exemptions be removed.
  The ill-effects of this consolidation are exemplified in the case of 
``captive shippers''--industries served by only one railroad. Over the 
past several years, these captive shippers faced spiking rail rates. 
They are the victims of the monopolistic practices and price gouging by 
the single railroad that serves them, price increases which they are 
forced to pass along into the price of their products, and ultimately, 
to consumers. And in many cases, the ordinary protections of antitrust 
law are unavailable to these captive shippers--instead, the railroads 
are protected by a series of exemptions from the normal rules of 
antitrust law to which all other industries must abide.
  These exemptions have put the American consumer at risk, and in 
Wisconsin, victims of a lack of railroad competition abound. A 
coalition has formed, consisting of about 40 affected organizations--
Badger CURE. From Dairyland Power Cooperative in La Crosse to Wolf 
River Lumber in New London, companies in my State are feeling the 
crunch of years of railroad consolidation. To help offset a 93 percent 
increase in shipping rates in 2006, Dairyland Power Cooperative had to 
raise electricity rates by 20 percent. The reliability, efficiency, and 
affordability of freight rail have all declined, and Wisconsin 
consumers feel the pinch.
  And similar stories exist across the country. That is why I'm joining 
with my colleagues to introduce the Railroad Antitrust Enforcement Act 
of 2007. This legislation will force railroads to play by the rules of 
free competition like all other businesses.
  The current antitrust exemptions protect a wide range of railroad 
industry conduct from scrutiny by governmental antirust enforcers. 
Railroad mergers and acquisitions are exempt from antitrust law and are 
reviewed solely by the Surface Transportation Board. Railroads that 
engage in collective ratemaking are also exempt from antitrust law. 
Railroads subject to the regulation of the Surface Transportation Board 
are also exempt from private antitrust lawsuits seeking the termination 
of anti-competitive practices via injunctive relief. Our bill will 
eliminate these exemptions.
  No good reason exists for them. While railroad legislation in recent 
decades--including most notably the Staggers Rail Act of 1980--
deregulated much railroad rate setting from the oversight of the 
Surface Transportation Board, these obsolete antitrust exemptions 
remained in place, insulating a consolidating industry from obeying the 
rules of fair competition.
  Our bill will bring railroad mergers and acquisitions under the 
purview of the Clayton Act, allowing the Federal Government, State 
attorneys general and private parties to file suit to enjoin anti-
competitive mergers and acquisitions. It will restore the review of 
these mergers to the agencies where they belong--the Justice 
Department's Antitrust Division and the Federal Trade Commission. It 
will eliminate the exemption that prevents FTC's scrutiny of railroad 
common carriers. It will eliminate the antitrust exemption for railroad 
collective ratemaking. It will allow State attorneys general and other 
private parties to sue railroads for treble damages and injunctive 
relief for violations of the antitrust laws, including collusion that 
leads to excessive and unreasonable rates.
  In sum, by clearing out this thicket of outmoded antitrust 
exemptions, railroads will be subject to the same laws as the rest of 
the economy. Government antitrust enforcers will finally have the tools 
to prevent anti-competitive transactions and practices by railroads. 
Likewise, private parties will be able to utilize the antitrust laws to 
deter anti-competitive conduct and to seek redress for their injuries.
  It is time to put an end to the abusive practices of the Nation's 
freight railroads. On the Antitrust Subcommittee, we have seen that in 
industry after industry, vigorous application of our Nation's antitrust 
laws is the best way to eliminate barriers to competition, to end 
monopolistic behavior, to keep prices low and quality of service high. 
The railroad industry is no different. All those who rely on railroads 
to ship their products--whether it is an electric utility for its coal, 
a farmer to ship grain, or a factory to acquire its raw materials or 
ship out its finished product--deserve the full application of the 
antitrust laws to end the anti-competitive abuses all too prevalent in 
this industry today. I urge my colleagues to support the Railroad 
Antitrust Enforcement Act of 2007.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 772

       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 Antitrust 
     Enforcement Act of 2007''.

     SEC. 2. INJUNCTIONS AGAINST RAILROAD COMMON CARRIERS.

       The proviso in section 16 of the Clayton Act (15 U.S.C. 26) 
     ending with ``Code.'' is amended to read as follows: 
     ``Provided, That nothing herein contained shall be construed 
     to entitle any person, firm, corporation, or association, 
     except the United States, to bring suit for injunctive relief 
     against any common carrier that is not a railroad subject to 
     the jurisdiction of the Surface Transportation Board under 
     subtitle IV of title 49, United States Code.''.

     SEC. 3. MERGERS AND ACQUISITIONS OF RAILROADS.

       The sixth undesignated paragraph of section 7 of the 
     Clayton Act (15 U.S.C. 18) is amended to read as follows:
       ``Nothing contained in this section shall apply to 
     transactions duly consummated pursuant to authority given by 
     the Secretary of Transportation, Federal Power Commission, 
     Surface Transportation Board (except for agreements described 
     in section 10706 of title 49, United States Code, and 
     transactions described in section 11321 of that title), the 
     Securities and Exchange Commission in the exercise of its 
     jurisdiction under section 10 (of the Public Utility Holding 
     Company Act of 1935), the United States Maritime Commission, 
     or the Secretary of Agriculture under any statutory provision 
     vesting such power in the Commission, Board, or Secretary.''.

     SEC. 4. LIMITATION OF PRIMARY JURISDICTION.

       The Clayton Act is amended by adding at the end thereof the 
     following:
       ``Sec. 29.  In any civil action against a common carrier 
     railroad under section 4, 4C, 15, or 16 of this Act, the 
     district court shall not be required to defer to the primary 
     jurisdiction of the Surface Transportation Board.''.

     SEC. 5. FEDERAL TRADE COMMISSION ENFORCEMENT.

       (a) Clayton Act.--Section 11(a) of the Clayton Act (15 
     U.S.C. 21(a)) is amended by striking ``subject to 
     jurisdiction'' and all that follows through the first 
     semicolon and inserting ``subject to jurisdiction under 
     subtitle IV of title 49, United States Code (except for 
     agreements described in section

[[Page S2709]]

     10706 of that title and transactions described in section 
     11321 of that title);''.
       (b) FTC Act.--Section 5(a)(2) of the Federal Trade 
     Commission Act (15 U.S.C. 44(a)(1)) is amended by striking 
     ``common carriers subject'' and inserting ``common carriers, 
     except for railroads, subject''.

     SEC. 6. EXPANSION OF TREBLE DAMAGES TO RAIL COMMON CARRIERS.

       Section 4 of the Clayton Act (15 U.S.C. 15) is amended by--
       (1) redesignating subsections (b) and (c) as subsections 
     (c) and (d), respectively; and
       (2) inserting after subsection (a) the following:
       ``(b) Subsection (a) shall apply to common carriers by rail 
     subject to the jurisdiction of the Surface Transportation 
     Board under subtitle IV of title 49, United States Code, 
     without regard to whether such railroads have filed rates or 
     whether a complaint challenging a rate has been filed.''.

     SEC. 7. TERMINATION OF EXEMPTIONS IN TITLE 49.

       (a) In General.--Section 10706 of title 49, United States 
     Code, is amended--
       (1) in subsection (a)--
       (A) in paragraph (2)(A), by striking ``, and the Sherman 
     Act (15 U.S.C. 1 et seq.),'' and all that follows through 
     ``or carrying out the agreement'' in the third sentence;
       (B) in paragraph (4)--
       (i) by striking the second sentence; and
       (ii) by striking ``However, the'' in the third sentence and 
     inserting ``The''; and
       (C) in paragraph (5)(A), by striking ``, and the antitrust 
     laws set forth in paragraph (2) of this subsection do not 
     apply to parties and other persons with respect to making or 
     carrying out the agreement''; and
       (2) by striking subsection (e) and inserting the following:
       ``(e) Application of Antitrust Laws.--
       ``(1) In general.--Nothing in this section exempts a 
     proposed agreement described in subsection (a) from the 
     application of the Sherman Act (15 U.S.C. 1 et seq.), the 
     Clayton Act (15 U.S.C. 12, 14 et seq.), the Federal Trade 
     Commission Act (15 U.S.C. 41 et seq.), section 73 or 74 of 
     the Wilson Tariff Act (15 U.S.C. 8 and 9), or the Act of June 
     19, 1936 (15 U.S.C. 13, 13a, 13b, 21a).
       ``(2) Antitrust analysis to consider impact.--In reviewing 
     any such proposed agreement for the purpose of any provision 
     of law described in paragraph (1), the Board and any other 
     reviewing agency shall take into account, among any other 
     considerations, the impact of the proposed agreement on 
     shippers, on consumers, and on affected communities.''.
       (b) Combinations.--Section 11321 of title 49, United States 
     Code, is amended--
       (1) in subsection (a)--
       (A) by striking ``The authority'' in the first sentence and 
     inserting ``Except as provided in sections 4 (15 U.S.C. 15), 
     4C (15 U.S.C. 15c), section 15 (15 U.S.C. 25), and section 16 
     (15 U.S.C. 26) of the Clayton Act (15 U.S.C. 21(a)), the 
     authority''; and
       (B) by striking ``is exempt from the antitrust laws and 
     from all other law,'' in the third sentence and inserting 
     ``is exempt from all other law (except the antitrust laws 
     referred to in subsection (c)),''; and
       (2) by adding at the end the following:
       ``(c) Application of Antitrust Laws.--
       ``(1) In general.--Nothing in this section exempts a 
     transaction described in subsection (a) from the application 
     of the Sherman Act (15 U.S.C. 1 et seq.), the Clayton Act (15 
     U.S.C. 12, 14 et seq.), the Federal Trade Commission Act (15 
     U.S.C. 41 et seq.), section 73 or 74 of the Wilson Tariff Act 
     (15 U.S.C. 8-9), or the Act of June 19, 1936 (15 U.S.C. 13, 
     13a, 13b, 21a).
       ``(2) Antitrust analysis to consider impact.--In reviewing 
     any such transaction for the purpose of any provision of law 
     described in paragraph (1), the Board and any other reviewing 
     agency shall take into account, among any other 
     considerations, the impact of the transaction on shippers and 
     on affected communities.''.
       (c) Conforming Amendments.--
       (1) The heading for section 10706 of title 49, United 
     States Code, is amended to read as follows: ``RATE 
     AGREEMENTS''.
       (2) The item relating to such section in the chapter 
     analysis at the beginning of chapter 107 of such title is 
     amended to read as follows:

``10706. Rate agreements.''.

     SEC. 8. EFFECTIVE DATE.

       (a) In General.--Subject to the provisions of subsection 
     (b), this Act shall take effect on the date of enactment of 
     this Act.
       (b) Conditions.--
       (1) Previous conduct.--A civil action under section 4, 15, 
     or 16 of the Clayton Act (15 U.S.C. 15, 25, 26) or complaint 
     under section 5 of the Federal Trade Commission Act (15 
     U.S.C. 45) may not be filed with respect to any conduct or 
     activity that occurred prior to the date of enactment of this 
     Act that was previously exempted from the antitrust laws as 
     defined in section 1 of the Clayton Act (15 U.S.C. 12) by 
     orders of the Interstate Commerce Commission or the Surface 
     Transportation Board issued pursuant to law.
       (2) Grace period.--A civil action or complaint described in 
     paragraph (1) may not be filed earlier than 180 days after 
     the date of enactment of this Act with respect to any 
     previously exempted conduct or activity or previously 
     exempted agreement that is continued subsequent to the date 
     of enactment of this Act.

  Mr. ROCKEFELLER. Mr. President, I am proud today to join with my 
colleagues, Senator Kohl, Senator Coleman, Senator Feingold, and 
Senator Vitter, to introduce the Railroad Antitrust Enforcement Act of 
2007. If enacted, this bill would close an incomprehensible legal 
loophole that has allowed our Nation's freight railroads the unfettered 
ability to act in anti-competitive ways for too many years. Since 
before I came to the United States Senate I have been quite stunned at 
the ability of railroad companies, by virtue of an exemption from our 
antitrust laws, to ignore the legitimate complaints of their customers, 
to sidestep the appropriate concerns of elected officials and leaders 
in the private sector alike, and to consolidate operations and power to 
the detriment of the consumer.
  The Railroad Antitrust Enforcement Act would benefit businesses, 
employees, and consumers by providing meaningful government oversight 
where none exists currently. It will give our Nation's shippers--long 
captive to monopoly abuses courts were powerless to check, the Surface 
Transportation Board was unwilling to acknowledge--remedies that will 
make for a more open and competitive freight rail marketplace.
  In my home State of West Virginia and in towns all across the 
country, companies and consumers are negatively impacted by lack of 
competitive rail transportation options--a phenomenon often referred as 
a shipper being ``captive'' to one railroad. Because the antitrust 
exemptions in place allowed railroads to ignore the rules by which 
virtually all other American corporations are required to operate, 
railroads have refused to negotiate in good faith with their customers 
over the costs of shipping important rail-dependent commodities such as 
coal, bulk chemicals, and grains and other agricultural products. 
Manufacturers have been left at the mercy of the railroads and are 
forced to pay exorbitant transportation rates to ship their goods. Many 
manufacturers struggle to be competitive with competitors here and 
abroad because they simply do not have real transportation choices. The 
bottom line, which should come as no surprise to my colleagues, is that 
if industrial inputs and the fuel used to produce half of our 
electricity are artificially high in price, consumers are left paying 
higher prices for just about everything they buy. This continues to 
have an overwhelmingly negative affect on West Virginia's economy, as 
industries served by only one carrier face pressures to cut production 
in the state, or to leave it altogether.
  How has this been allowed to come to pass? It will probably come as a 
shock to members of the Senate, but the railroad industry is exempt 
from the Nation's antitrust laws related to mergers, acquisitions, and 
pooling arrangements approved by the Surface Transportation Board 
(STB). They are also exempt from antitrust laws that would otherwise 
influence ratemaking. Under the current exemptions, private parties 
cannot file antitrust suits against railroad companies to halt what in 
would be for every other industry illegal practices. Under current law, 
railroads are allowed to continue a wide range of anti-competitive 
practices that severely inhibit the ability of our Nation's businesses 
from shipping their goods at reasonable rates. What this Nation has 
experienced in the more than 25 years since the Staggers Act partially 
deregulated the freight rail market are not efforts by railroads to 
modernize their systems, improve efficiency, and upgrade service. 
Rather, rail carriers have manipulated the system to charge their so-
called ``captive'' customers as much as they chose to charge, not what 
the market would normally bear.
  Specifically, the Railroad Antitrust Enforcement Act will alter 
exemptions in current law to allow for the following: Permit the 
Justice Department and the Federal Trade Commission (FTC) to review 
mergers under the Clayton and Sherman Acts, and allow them to bring 
legal action to block anti-anticompetitive railroad mergers. Remove 
antitrust exemptions that have allowed railroads to merge, acquire new 
properties, set rates collectively, and otherwise coordinate policies 
across the entire freight rail market. Allow State Attorneys-General 
and other private parties to sue for treble damages for violations of 
antitrust laws, including for collusive activity leading to excessive 
and unreasonable

[[Page S2710]]

rates. Allow State Attorneys General and private parties to sue for 
court orders to halt anticompetitive conduct. Expand the jurisdiction 
of the FTC to allow it to enforce antitrust law in the railroad 
industry.
  By granting consumers and shippers long-denied access to the 
protections of our antitrust laws with regard to the freight rail 
industry, the Railroad Antitrust Enforcement Act may make strides 
toward creating the competitive freight rail marketplace envisioned by 
Congress when it passed the Staggers Act in 1980. I hope so. However, 
because I believe rail customers and retail consumers need greater 
protection still, along with some of my cosponsors today and others, 
later this month I will be introducing additional, broader rail policy 
legislation to declare the rights shippers were meant to have, and the 
responsibilities railroads were meant to have, when Congress passed the 
Staggers Act.
  For the system to work, there must be a meaningful way to seek 
redress of grievances and punish wrongdoing. The Railroad Antitrust 
Enforcement Act will go a long way toward correcting some of the 
glaring problems those of us who pay attention to the rail marketplace 
have known about for a long time. It will not fix all the problems in 
the system, but perhaps its provisions will encourage railroads to 
negotiate with their customers in good faith. The lack of fairness in 
the current system is devastating to businesses in my state of West 
Virginia, and to companies and consumers in every part of the country.
  I again express my support for the Railroad Antitrust Enforcement Act 
of 2007, and I urge my colleagues to do the same. This is a problem 
that affects rural America and urban America, the Grain Belt and the 
Coalfields, and all points on the compass. Indeed, no American consumer 
is unaffected by this problem, and all American consumers should take 
heart: If we enact this bill, help will be on the way.
                                 ______