[Congressional Record (Bound Edition), Volume 145 (1999), Part 21]
[Extensions of Remarks]
[Page 31251]
[From the U.S. Government Publishing Office, www.gpo.gov]


[[Page 31251]]

       H.R. 3446, SURFACE TRANSPORTATION BOARD REFORM ACT OF 1999

                                 ______
                                 

                         HON. JAMES L. OBERSTAR

                              of minnesota

                    in the house of representatives

                      Thursday, November 18, 1999

  Mr. OBERSTAR. Mr. Speaker, I am introducing today H.R. 3446, the 
Surface Transportation Board Reform Act of 1999.
  The Surface Transportation Board has been a troubled agency since its 
creation at the end of 1995.
  First, the Board approved a huge merger between the Union Pacific and 
Southern Pacific railroads. Shippers were promised dramatically 
improved service. Instead, a year later, they got the biggest rail 
service meltdown in history. Two years later, the service crisis is 
over, but there are precious few signs that shippers are getting better 
service. Clearly, however, they are getting fewer choices and less 
competition.
  Last year, the Board approved another huge restructuring of the 
industry when it allowed Conrail to be divided between Norfolk Southern 
and CSX. After spending a year planning the transaction so as to 
minimize adverse consequences, the transaction became effective on June 
1st, and service almost instantly collapsed. While service in some 
areas has recovered, many shippers still cannot move their goods and 
are losing business to their competitors because they had the bad luck 
to be served by Norfolk Southern and CSX.
  Clearly, the Board has failed to analyze rail transactions adequately 
to avoid these service disasters. Because of the reduced competition 
that has resulted from these mergers, the Board needs to provide more 
aggressive support to shippers who come to the Board for relief from 
high rates and poor service. This bill directs the Board to move in 
that direction. Shippers also need more competitive options without 
having to go to the Board. The bill's provisions on bottlenecks, 
terminal access, and reciprocal switching would allow shippers to avoid 
the adverse effects of mergers by getting more competitive service 
without seeking rate relief from the Board.
  Second, the Board has continued the established policy of its 
predecessor in allowing railroads to abrogate their collective 
bargaining agreements as a ``reward'' for undergoing a merger. For 63 
years, from 1920 to 1983, the Interstate Commerce Commission held to 
the sensible view that the rather vague language in its statute did not 
entitle railroads to walk away from their signed contracts. In 1983, 
the Reagan-era ICC voted to ignore its precedents and adopt a new 
interpretation that was totally at variance with Congressional intent 
and sound policy. The Board appointed by the current Administration, 
rather than return to the sensible precedents of the past, has followed 
the misguided policy adopted by its immediate predecessors. Instead of 
using the discretion that the statute gives them, the Board has written 
to the Congress and invited us to change the statute to save us from 
themselves, and prevent them from continuing to pursue this regressive 
policy.
  This bill is a first step in that direction.
  Title I of this bill proposes a series of measures to enhance rail 
competition. It clarifies the Rail Transportation Policy to make clear 
that competition is the ``primary objective'' to be pursued by the 
Board. It corrects the Board's ``bottleneck'' decision, which says 
that, even if a railroad monopolizes only part of the route along which 
a shipper wishes to transport a shipment, it can effectively monopolize 
the whole route, because the railroad can refuse to offer to ship along 
only part of the route.
  The bill also makes it easier to secure competing rail service in 
terminal areas, and by reciprocal switching.
  It codifies the one recent decision by the Board that has benefited 
shippers, namely the December 1998 decision on ``product'' and 
``geographic'' competition.
  It ends the ludicrous annual charade in which the Board examines the 
books of railroads that are raising billions of dollars in the capital 
markets and concludes that they are earning inadequate revenues.
  It provides relief for small captive grain shippers by reducing the 
fees they must pay to protest rate and simplifying the process of 
determining a rate to be unreasonable. It also provides them with some 
assurance that they will be able to get enough cars to move out their 
grain each year.
  The bill also requires submission of monthly service quality 
performance reports by the railroads, so the Board can do a better job 
of monitoring the industry's performance.
  The bill's labor provisions in Title II end any authority of the 
Board to abrogate collective bargaining agreements, or to authorize a 
railroad or anyone else to do so. The bill strictly limits the 
preemption of other laws that is allowed in connection with railroads 
mergers, restricting this preemption to State and local laws that 
regulate mergers, and restricting this preemption in time to one year 
after the railroad takes possession of the acquired property.
  The bill also clarifies the status of labor protection for railroad 
employers. The current statute confusingly defines labor protection in 
terms of the labor protection once received by Amtrak employees, whose 
statutory labor protection was taken away by the 1997 Amtrak 
reauthorization bill. Today's bill makes clear that railroad employees 
receive six years of labor protection if they are laid off as the 
result of a merger. While employees in other industries are not given 
labor protection like this, employees in other industries are entitled 
to strike if they cannot reach agreement with their employer on a 
contract. Since World War II, railroad employees have been denied the 
right to strike by repeated congressional interventions every time a 
strike is threatened. It is only fair, if employees are not entitled to 
strike, that they at least be compensated if they lose their jobs as 
the result of a merger.
  Title III of the bill has several other significant provisions. The 
bill corrects an historical oversight by giving commuter railroads the 
same access to freight railroad rights-of-way that Amtrak has. When 
Amtrak was created in 1971, the Nation's private railroads were 
relieved of their common carrier obligation to provide passenger 
service--both intercity and commuter service. In return for being 
relieved of this common carrier obligation, the railroads were required 
to provide Amtrak with guaranteed access to their rights-of-way, but, 
in an oversight, the Nation's commuter railroads--which provide equally 
essential passenger service--were not given the same guaranteed access. 
This bill corrects that oversight by giving commuter railroads the same 
guaranteed access that Amtrak has.
  The bill also gives special consideration to local communities and to 
passenger railroads in the Board's merger decisions. The Board has 
often given short shrift to the legitimate concerns of these parties in 
approving mergers, and has not imposed conditions that are necessary to 
protect their legitimate interests.
  The bill also corrects an anomaly that was inserted in the statute by 
the 1995 ICC Termination Act. That bill preempted the authority of 
states to regulate the construction or abandonment of ``spur, 
industrial, team, switching, or side tracks,'' but it did not give 
corresponding authority to the Surface Transportation Board. The result 
was a regulatory black hole, where such facilities could be built or 
abandoned without regulation either by local zoning regulations or by 
Federal environmental regulations. If these facilities were only minor 
railroad spurs, this would perhaps be acceptable, but the term 
``switching tracks'' has been interpreted by the Board to include 
railroad yards occupying hundreds of acres. Not only can the railroads 
built these yards without any regulatory interference, they can also 
use their eminent domain authority to force landowners to sell them the 
land. This provision should never have been in the statute, and this 
bill repeals it, giving regulatory jurisdiction to the STB.
  The bill also eliminates tariff filing for water carriers in the 
domestic offshore trades serving Alaska, Hawaii, Puerto Rico, and Guam. 
These carriers are directed to make their tariffs available 
electronically, just as water carriers in the U.S. foreign trades were 
in the Ocean Shipping Reform Act.
  Finally, the bill reauthorizes the STB for three years, from fiscal 
year 2000 to fiscal year 2002, with authorized appropriations rising 
from $17 million in FY 2000 to $25 million in FY 2002. In view of its 
inability to respond promptly to shipper rate protests (documented in a 
GAO report earlier this year) and its inability to oversee the results 
of its merger decisions, the Board clearly needs additional resources. 
We can only hope that this bill will be enacted and that the Board will 
use these resources effectively.

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