[Congressional Record Volume 158, Number 37 (Wednesday, March 7, 2012)]
[Senate]
[Pages S1437-S1438]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           RAILROAD ANTITRUST

  Mr. LEE. Madam President.
  I stand in this moment in opposition to the railroad antitrust 
amendment offered by my distinguished colleague, Senator Kohl, and I 
urge my fellow Senators to do likewise.
  As the Antitrust Modernization Commission noted in 2007, free market 
competition is the fundamental economic policy of the United States. In 
advancing this overarching policy goal, we should be wary of 
particularized exemptions from our Nation's antitrust laws. I know 
Senator Kohl shares my view in that regard.
  When properly applied, antitrust laws function to help ensure that 
market forces promote robust competition, spur innovation, and result 
in the greatest possible benefit to the American consumer. In many 
respects, Federal and State agencies enforce antitrust laws in order to 
forestall the need for burdensome and long-lasting government 
regulation.
  If competition thrives and market forces operate properly, there is 
no need for extensive government intrusion or interference. Likewise, 
when the antitrust laws do apply, comprehensive economic regulations 
should not dictate how an industry operates. It, therefore, makes 
little sense to impose upon a heavily regulated industry an additional 
layer of government oversight and enforcement through the application 
of antitrust laws while at the same time leaving in place a 
comprehensive regime of government oversight through economic 
regulation. Piling layer upon layer of government interference will not 
advance the cause of free market competition, innovation, and consumer 
welfare.
  I am concerned that such layering of government regulation is 
effectively what the Kohl amendment does. I worry that in extending the 
reach of antitrust laws to the freight rail industry, the amendment 
does not remove any authority or jurisdiction of the Surface 
Transportation Board, the regulatory agency currently overseeing the 
rail industry. As a result, the amendment simply imposes additional 
government supervision over the rail industry with attendant increased 
regulatory burdens and costs as well as inevitable conflicts and 
uncertainties resulting from a second layer of government oversight 
over the same activities.
  Given the highly regulated nature of the freight rail industry, 
application of antitrust laws would likely require courts to wade into 
the complex realm of rate setting and other highly technical matters--a 
task for which judges are particularly ill-equipped. In addition to 
this fundamental unease over multiplying government regulatory burdens, 
I am also very concerned with a number of the amendment's provisions 
that seem to reach beyond simply eliminating antitrust exceptions for 
the rail industry.
  First, I worry that section 4 of the amendment limits what is known 
as the doctrine of ``primary jurisdiction'' in those antitrust cases 
that involve railroads. Under this longstanding doctrine, which was 
established in 1907, a court will normally defer to an expert agency 
when that agency has jurisdiction over the subject matter of a legal 
dispute. This doctrine allows courts to balance regulatory requirements 
with other legal requirements for regulated industries. The primary 
jurisdiction doctrine is not an antitrust exemption and discouraging 
the use of this would be a legal and judicial change that reaches far 
beyond the antitrust laws and its implications.
  I would also note that section 4 would give trial lawyers the power 
to disregard agency action, but only with respect to the railroads. As 
a result, railroads would be singled out for special treatment, leaving 
the doctrine of primary jurisdiction available to the courts in cases 
involving electrical utilities and other regulated industries. I am 
unaware of any compelling justification for this disparity.
  My second concern relates to section 7(a) of the amendment which not 
only repeals antitrust immunity for rail rate bureaus but also repeals 
procedural protections that facilitate lawful rail transportation 
services. Because of their route structures, railroads are often not 
individually capable of providing rail transportation services to all 
locations that a customer may request or that regulations may require. 
As a result, approximately 40 percent of all rail travel is jointly 
handled by more than one railroad.
  While the railroads must work together to provide through service on 
some routes in order to meet their regulatory obligations and to meet 
their customers' transportation needs, the railroads compete with one 
another for freight movements on routes not involved with through 
service, and they are fully subject to the antitrust laws.
  Current law provides that proof of an antitrust violation may not be 
inferred from discussions among two or more rail carriers relating to 
interline movements and rates. In the conference report for the 
Staggers Rail Act of 1980, Congress explained the need for these 
evidentiary protections as follows:

       Because of the requirement that carriers concur in changes 
     to joint rates, carriers must talk to competitors about 
     interline movements in which they interchange.
       That requirement could falsely lead to conclusions about 
     rate agreements that were

[[Page S1438]]

     lawfully discussed. To prevent such a conclusion, the 
     Conference substitute provides procedural protections about 
     lawful discussions and resulting rates.

  These evidentiary protections are not antitrust exemptions. They are 
designed to avoid prejudicial inferences from discussions the railroads 
must have in order to implement joint arrangements. I am unaware of any 
compelling reason to alter Congress's considered judgment in 
establishing these procedural protections. Were these protections to be 
discarded, railroads would be exposed potentially to legal liability 
for interline discussions, and they may choose simply not to 
participate, and rail customers would be faced with the burden of 
having to deal separately with each railroad in a given route in order 
to work out commercial and service details.
  Third, and perhaps most critically, I am concerned that section 8 of 
the amendment would effectively lead to retroactive application of 
antitrust laws, allowing a government agency or private plaintiff to 
bring a case attacking past railroad activities that were expressly 
immunized from the antitrust laws in that respect.
  Section 8(b) would allow antitrust lawsuits for ongoing railroad 
activity that was previously immunized from the railroad antitrust 
laws. This would leave open the possibility that conduct in accordance 
with railroad merger and line sale transactions previously approved by 
the Interstate Commerce Commission or the Surface Transportation Board 
as in the public interest, immunized by statute from antitrust laws, 
and implemented by the railroads, consistent with the agency's 
approval, could now be challenged as unlawful.
  Were this to become law, the impact on the railroad network and its 
ability to plan and invest to meet our Nation's growing transportation 
needs would be adversely affected in a significant way.
  In summary, if this amendment eliminated regulatory intervention in 
the marketplace for rail transportation and left the rail industry 
subject solely to the antitrust laws, I could, perhaps, endorse that 
effort. However, that is not the case. This amendment increases rather 
than improves government oversight of the rail industry's activities 
and, in my view, is inconsistent with the overarching goal of seeking 
greater competition in the transportation marketplace unfettered by 
intrusive government regulation.
  In addition, the amendment goes beyond simply eliminating antitrust 
exemptions and instead changes longstanding policies and judicial 
doctrine that are not antitrust law tenets.
  Last year, when the Judiciary Committee favorably reported S. 49, 
which is the text of Senator Kohl's current amendment, I made clear 
that my support was contingent upon resolving these and other concerns 
prior to floor consideration. Regrettably, such a resolution did not 
occur, and I must now oppose the amendment and ask my colleagues in the 
Senate to do likewise.
  Thank you, Madam President.
  The ACTING PRESIDENT pro tempore. The Senator from New Mexico.

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