S. Rept. 112-38 - the Railroad Antitrust Enforcement Act of 2011, 2011-07-18

• Date: 18 July 2011
• Type of Document: House Report
• Issuer: Committee on the Judiciary

99–007

Calendar No. 19

112

TH

C

ONGRESS

R

EPORT

" !

SENATE

1st Session 112–38

THE RAILROAD ANTITRUST ENFORCEMENT ACT OF 2011

J

ULY

18, 2011.—Ordered to be printed

Mr. L

EAHY

, from the Committee on the Judiciary,

submittedthefollowing

R E P O R T

[To accompany S. 49]

[Including cost estimate of the Congressional Budget Office]

The Committee on the Judiciary, to which was referred the bill

(S. 49), to amend the Federal antitrust laws to provide expanded

coverage and to eliminate exemptions from such laws that are con-

trary to the public interest with respect to railroads, having consid-

ered the same, reports favorably thereon, without amendment, and

recommends that the bill do pass.

CONTENTS

Page

I. Background and Purpose of the Railroad Antitrust Enforcement Act

of 2011 .........................................................................................................1

II. History of the Bill and Committee Consideration .......................................10

III. Section-by-Section Summary of the Bill......................................................11

IV. Congressional Budget Office Cost Estimate ................................................13

V. Regulatory Impact Evaluation ......................................................................15

VI. Conclusion ......................................................................................................15

VII. Changes to Existing Law Made by the Bill, as Reported ...........................15

I. B

ACKGROUND AND

P

URPOSE OF THE

R

AILROAD

A

NTITRUST

E

NFORCEMENT

A

CT

A

.

INTRODUCTION

The purpose of S. 49, the Railroad Antitrust Enforcement Act of

2011, is to remove current exemptions and subject the American

freight railroad industry to all the provisions of the Nation’s anti-

trust laws. This legislation will ensure that interested parties suf-

fering from anti-competitive railroad practices that would other-

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2

1

This legislation addresses freight railroads, and is not intended to have any effect on the

passenger operations of Amtrak. While Amtrak is deemed a ‘‘railroad’’ for the purpose of certain

Federal laws, most of the provisions of subtitle IV of title 49 do not apply to Amtrak. See 49

U.S.C. §24301(c). Specifically, the bill does not affect 49 U.S.C. § 24301(j) (Section 306(e) of Pub.

L. No. 91–518 (1970), recodified without substantive change by Pub. L. No. 103–272 (1994)),

which provides that agreements entered into by Amtrak for the joint use or operation of facili-

ties and equipment necessary for the provision of expeditious and efficient passenger service are

exempt from the antitrust laws.

wise be actionable under U.S. antitrust law will have access to

those causes of action in Federal district court. In addition, Govern-

ment enforcement agencies, including the United States Depart-

ment of Justice and the Federal Trade Commission (FTC), as well

as state attorneys general acting on behalf of their citizens, will be

able to fully enforce the antitrust laws to prevent anti-competitive

mergers and anti-competitive business practices.

Under current law, the railroad industry is exempted from anti-

trust law in most respects. Virtually no other industry enjoys such

a broad exemption from the antitrust laws. There is no basis for

this broad antitrust immunity, especially since the railroad indus-

try has been largely deregulated since the passage of the Staggers

Rail Act in 1980.

The bill is prospective, but will apply to any current anti-com-

petitive practices that continue after 180 days following the date of

enactment of this Act. The purpose of the grace period is to give

the freight railroad carriers time to cure their previously exempt

conduct. The bill will allow the Justice Department and the FTC

to sue to enjoin any future railroad merger or acquisition, whether

or not approved by the Surface Transportation Board (STB), if the

Justice Department or FTC believes that merger or acquisition vio-

lates the antitrust laws. After the enactment of S. 49, anti-competi-

tive business practices engaged in by railroads will be subject to

antitrust scrutiny and could be subject to civil actions for treble

damages and injunctive relief. Among these are two current prac-

tices that rail customers believe to be anti-competitive—so-called

‘‘paper barriers’’ and so-called ‘‘bottlenecks,’’ as explained below.

B

.

NEED FOR LEGISLATION

1. The Staggers Rail Act of 1980

This legislation is needed because there is a lack of competition

in the national freight rail system today.

1

In 1980, Congress passed

the Staggers Rail Act, the purpose of which was to partially de-

regulate the Nation’s railroad industry and replace government

regulation with market competition to the extent possible. When

the legislation was passed, Congress did not remove the antitrust

exemptions protecting the railroad industry. These antitrust ex-

emptions had been extended to the Nation’s railroads when they

were subject to a pervasive regulatory system in which prior ap-

proval by the Interstate Commerce Commission (ICC) was required

for most of their actions and transactions, a regulatory system that

was no longer in place after the 1980 legislation.

The new regulatory system provided by Congress in the Staggers

Rail Act of 1980 recognized that some customers who require rail-

road service would continue to have access to service by a single

freight railroad and that these ‘‘captive’’ customers could be subject

to railroad monopoly power. The ICC, which was replaced by the

STB of the United States Department of Transportation through

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