[Congressional Record Volume 157, Number 10 (Tuesday, January 25, 2011)]
[Senate]
[Pages S161-S163]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KOHL (for himself, Mr. Vitter, Mr. Leahy, Mr. Hatch, Ms. 
        Klobuchar, Mr. Franken, and Mr. Tester):
  S. 49. 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, I rise today to introduce legislation 
essential to restoring competition to the nation's crucial freight 
railroad sector. Freight railroads are essential to shipping a myriad 
of vital goods, everything from coal used to generate electricity to 
grain used for basic foodstuffs. But for decades the freight railroads 
have been insulated from the normal rules of competition followed by 
almost all other parts of our economy by an outmoded and unwarranted 
antitrust exemption. So today I am introducing, along with my 
colleagues, the Railroad Antitrust Enforcement Act of 2011. This 
bipartisan legislation will eliminate the obsolete antitrust exemptions 
that protect freight railroads from competition. This legislation is 
identical to the legislation that was reported out of the Judiciary 
Committee in the last Congress by a unanimous 15-0 vote.
  Our legislation will eliminate unwarranted and outmoded antitrust 
exemptions that protect freight railroads from competition and result 
in higher prices to millions of consumers every day. Consolidation in 
the railroad industry in recent years has resulted in only four Class I 
railroads providing nearly 90 percent of the Nation's freight rail 
transportation, as measured by revenue. The harmful result of this 
industry concentration for railroad shippers is well documented. A 2006 
General Accounting Office Report found that shippers in many geographic 
areas ``may be paying excessive rates due to a lack of competition in 
these markets.'' These unjustified cost increases cause consumers to 
suffer higher electricity bills because a utility must pay for the high 
cost of transporting coal, result in higher prices for goods produced 
by manufacturers who rely on railroads to transport raw materials, and 
reduce earnings for American farmers who ship their products by rail 
and raise food prices paid by consumers.
  A recent staff report, issued September 15, 2010, of the Committee on 
Commerce, Science, and Transportation also makes clear how railroads 
have benefited from the unique combination of deregulation and large-
scale antitrust immunity, to the detriment of rail shippers and 
consumers. This Report--titled ``The Current State of the Class I 
Freight Rail Industry''--stated that ``[t]he four Class I railroads 
that today dominate the U.S. rail shipping market are achieving returns 
on revenue and operating ratios that rank them among the most 
profitable businesses in the U.S. economy.'' The four largest railroads 
nearly doubled their collective profit margins in the last decade to 13 
percent ranking the railroad industry the fifth most profitable 
industry as ranking by Fortune magazine.
  Increased concentration and lack of antitrust scrutiny have had clear 
price effects--according to the Commerce Committee Report, since 2004, 
``Class I railroads have been raising prices by an average of 5 percent 
a year above inflation.'' The recent Commerce Committee Report 
concluded that ``Class I freight railroads have regained the pricing 
power they lacked in the 1980s, and are now some of the most highly 
profitable businesses in the U.S. economy.'' Given the industry's 
concentration and pricing power, the case for full fledged application 
of the antitrust laws is plain.
  The ill-effects of railroad industry consolidation are exemplified in 
the case of ``captive shippers''--industries served by only one 
railroad. Over the past several years, these captive shippers have 
faced spiking rail rates. They are the victims of 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 outmoded 
exemptions from the normal rules of antitrust law to which all other 
industries must abide.
  These unwarranted antitrust exemptions have put the American consumer 
at risk, and in Wisconsin, victims of a lack of railroad competition 
abound. 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. We held a hearing at 
the Antitrust Subcommittee in the 110th Congress which detailed 
numerous instances of anti-competitive conduct by the dominant freight 
railroads and at which railroad shippers testified as to the need to 
repeal the outmoded and unwarranted antitrust exemptions which left 
them without remedies. Dozens of organizations, unions and trade groups 
affected by monopolistic railroad conduct endorsed the Railroad 
Antitrust Enforcement Act in the last Congress. Supporters of the 
legislation include 20 state Attorneys General, the National 
Association of Regulatory Utility Commissioners, NARUC, the Consumers 
Federation of America, Consumers Union, the American Farm Bureau 
Federation, American Chemistry Council, the American Corn Growers 
Association, the American Forest and Paper Association, the American 
Public Power Association, and the American Bar Association Antitrust 
Section.
  The current antitrust exemptions protect a wide range of railroad 
industry conduct from scrutiny by governmental antitrust 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. And there is no reason to treat railroads 
any differently from dozens of other regulated industries in our 
economy that are fully subject to antitrust law--whether the 
telecommunications sector regulated by the FCC, or the aviation 
industry regulation by the Department of Transportation, just name just 
two examples.
  Our bill will bring railroad mergers and acquisitions under the 
purview of

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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. This legislation will force railroads 
to play by the rules of free competition like all other businesses.
  Significantly, our bill will not affect in way the jurisdiction of 
the Surface Transportation Board to regulate freight railroads. It will 
in no way limit or alter the authority of the STB; the STB will 
continue to exercise full jurisdiction over the railroad industry.
  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 support the Railroad 
Antitrust Enforcement Act of 2011.
  Mr. President, 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. 49

       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 2011''.

     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 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 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. 45(a)(2)) 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 a common carrier by 
     railroad 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 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). The preceding sentence shall not apply to any 
     transaction relating to the pooling of railroad cars approved 
     by the Surface Transportation Board or its predecessor agency 
     pursuant to section 11322 of title 49, United States Code.
       ``(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 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

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     previously exempted agreement that is continued subsequent to 
     the date of enactment of this Act.
                                 ______