STB Proposes Plan That Could Boost Rail Competition

Five years after a shipper-backed proposal seeking to enhance rail competition, the Surface Transportation Board has proposed a new regulatory process that could open the way for more service options for those served today by just one railroad.

The agency said its proposal “creates an avenue for the board to impose a reciprocal switching arrangement” if a shipper can show that the switching arrangement is “practicable and in the public interest” or is “necessary to provide competitive rail service.” Reciprocal switching today is done by one railroad to reach a customer on another carrier’s lines by mutual arrangement between the railroads, rather than a regulatory decision.

The National Industrial Transportation League, later joined by other shipper groups, proposed that shippers served by just one railroad should be able to get service by a second carrier to lower costs and increase competition. The Association of American Railroads has stated its opposition to the proposal, saying it would reduce carrier profits and impair their ability to invest in their network to serve customers in the future.

Typically, the railroad that solely services a customer and switches freight for an additional railroad is paid a per-car fee for the services, according to an STB statement. The STB and its predecessor, the Interstate Commerce Commission, has been operating since 1985 under a precedent-setting decision called the Midtec case.

Since that decision, STB said no applications for reciprocal switching have been approved.

STB requested comments be filed by Sept. 25.

“I thank NITL for bringing their reciprocal switching proposal to the board for consideration, and I am pleased that today we are granting that petition in part,” STB Chairman Daniel R. Elliott III said. “I encourage all stakeholders to participate in the notice and comment process, and I look forward to meeting with them to hear their views directly.”