	Introduction

Beginning in the late 1970s, Congress deregulated the railroad industry by giving railroads more flexibility to set rates and negotiate confidential contracts with their customers. Over the last decade, as major railroads have consolidated and have achieved higher profitability, Some Members of Congress have questioned whether the present regime needs to be revised to protect the interests of rail customers who are poorly positioned to benefit from competition among freight transportation providers—a group often referred to as "captive shippers." They typically claim that the railroad serving them acts like a monopoly, charging excessive rates and providing inadequate service. However, the captive shipper issue has wider economic implications than just the division of revenue between shippers and railroads. An important policy question for Congress is whether more competition will lead to a more robust and efficient railroad system or undermine it by discouraging investment in rail infrastructure. It then explains "bottlenecks" and "terminal switching arrangements," two of the main points of contention between railroads and their captive customers. The Surface Transportation Board (STB or Board) recently began a review of its policies regarding these two issues, and they are addressed in legislation supported by captive shippers. The Interstate Commerce Commission Termination Act of 1995 ( P.L. What is a "Captive Shipper"? Most shippers claiming to be captive handle bulky materials, such as coal, chemicals, grain, and construction materials. In the Senate, these bills have been reintroduced in the 112 th Congress as S. 49 and S. 158 . In its announcement, the Board observed that the railroad industry had changed in many significant ways since policies with respect to competitive access were originally adopted in the mid-1980s. The chairman and ranking Member of the House Committee on Transportation and Infrastructure, along with the chairman and ranking Member of the Subcommittee on Railroads, wrote STB in January 2011, "we would like to ... impress upon you the importance of maintaining the existing regulatory balance between the railroads and shippers," adding, "Any policy change made by the STB which restricts the railroads' abilities to invest, grow their networks and meet the nation's freight transportation demands will be opposed by the Committee." Captive shippers seek legislative or regulatory changes that would require railroads to provide a rate on any bottleneck segment of a route. Congress faces consideration of whether addressing the problems of captive shippers would be detrimental or beneficial to maintaining a strong and vibrant railroad system.
Beginning in the late 1970s, Congress gave railroads flexibility to set rates and to enter into confidential contracts with their customers. Over the last decade, large railroads have consolidated and, particularly in recent years, have achieved higher profitability. These changes have left some bulk shippers, particularly those that claim to be "captive" to a single railroad, frustrated with what they perceive as poor rail service and exorbitant rates. "Captive shippers" claim that the railroad serving them acts like a monopoly—charging excessively high rates and providing less service than they require.
Such complaints have led Congress to consider whether the present, largely deregulated, regime should be revised to accommodate the interests of "captive shippers." A major point of contention is whether current railroad industry practices should be changed to guarantee such shippers more railroad routing options. Legislation, supported by captive shippers and opposed by the railroads and other shippers, failed to reach the floor of either the House or Senate in the last Congress, and has been reintroduced in the 112th Congress (S. 49 and S. 158).
In the wake of renewed congressional interest, the Surface Transportation Board (STB or Board), successor agency of the Interstate Commerce Commission (ICC), is reviewing its policies with respect to railroad access and competition issues. It announced a hearing on "bottleneck rates" and "competitive access" matters. Changes in these policies might benefit some shippers of bulk products, such as coal and grain, but could be disadvantageous to shippers of other products, such as maritime containers and domestic truck trailers, that want railroads to maintain high levels of investment in order to provide fast, reliable service for high-value shipments.
The captive shipper issue has wider economic implications than just the division of revenue between railroads and their customers. Higher fuel prices, congestion on certain segments of the interstate highway system, and rising domestic and international trade volumes are driving shippers to demand more rail capacity. Freight revenues are a significant means of financing rail capacity because the railroads receive negligible public financing. If it acts in this area, Congress would face consideration of how a legislated or regulatory solution to the "captive shipper" problem would affect the development of a more robust and efficient railroad system.