Railroad Competition Improvement and Reauthorization Act of 2005

Railroad Competition Improvement and Reauthorization Act of 2005 - Amends federal transportation law to specify the primary objectives of U.S. rail transportation policy.

Requires a rail carrier, upon shipper request, to establish a rate for transportation and provide requested service between any two points on the carrier's system where traffic originates, terminates, or may reasonably be interchanged.

Prohibits the Surface Transportation Board (STB) from issuing a certificate authorizing construction and operation of railroad lines, or exempting a person, class of persons, or a transaction or service from the certificate requirement, if such an activity involves a transfer of interest in a line of railroad from a Class I rail carrier to a Class II or III rail carrier, and the activity directly or indirectly would restrict: (1) the ability of the Class II or Class III rail carrier to interchange traffic with other carriers; or (2) competition of rail carriers in the region affected by the activity in a manner that would violate federal antitrust laws. Prescribes a procedure for shipper petition and STB review of any activity alleged to have resulted in a restriction of competition for at least ten years.

Changes from discretionary to mandatory the STB's authority to require: (1) a rail carrier's terminal facilities to be used by another rail carrier subject to certain conditions; and (2) rail carriers to enter into reciprocal switching agreements. Prohibits the STB, in either instance, from requiring evidence of anticompetitive conduct by a rail carrier from which such access is sought.

Requires the STB to designate any state or substantial part of a state as an area of inadequate rail competition after finding that: (1) it encompasses rail shipping origins and destinations served exclusively by one Class I railroad; and (2) persons that ship by rail or receive rail shipments in it pay rates exceeding a certain mark, or have experienced competitive disadvantage in the marketplace or other economic adversity because of high cost or poor rail service quality. Specifies actions the STB may take to resolve such anti-competitive conditions.

Requires submission to arbitration of rail rate disputes.

Requires the STB to adopt new methods for determining the reasonableness of rail rates.

Establishes within the Department of Transportation (DOT) the Office of Rail Customer Advocacy.

Requires the STB, in a proceeding involving the merger or control of at least two Class I railroads, to consider among other things the safety and environmental effect of the proposed transaction on local communities and rail passenger transportation.