AAR: STB's proposed competitive switching rules are 'unlawful'

The Surface Transportation Board's (STB) proposed new reciprocal or "competitive" switching rules are unlawful, the Association of American Railroads (AAR) said in comments submitted to the federal agency this week.

AAR was one of a number of organizations to file comments on the proposal for reciprocal switching, which refers to a situation in which a railroad that has physical access to a specific shipper facility switches rail traffic to the facility for another railroad that does not have physical access, according to the STB. The second railroad pays the railroad that has physical access, typically in the form of a per-car switching charge.

In its comments, the AAR said the proposed rules are "contrary to the established law dating back well before the Staggers Act and providing that a shipper must show 'actual necessity' to obtain an order of forced switching."

The rules also would ignore statutory language that requires a showing of necessity for a switching order, the AAR stated in its comments.

"The rules give no weight to provisions of the Rail Transportation Policy directing the agency to allow market forces to govern railroad commercial activity to the maximum extent possible and to minimize regulatory intervention into the market," according to the AAR filing.

Also this week, a coalition of organizations that oppose the STB's proposed reciprocal switching rules wrote to members of Congress asking that they stop the STB from enforcing them.

The rules would return the rail industry to pre-Staggers Act days of heavy regulation by the federal government, the coalition said.

"We believe that freight rail deregulation—culminating in the Staggers Rail Act of 1980—represents one of the most significant economic policy successes in the history of the United States and that these reforms must be protected," stated the letter from the Competitive Enterprise Institute (CEI).

"The regulatory proceeding regarding revised reciprocal switching rules that was recently opened by the STB reverses three decades of precedent," CEI wrote. "Many industry observers have expressed concern that imposing forced access and reducing railroad rate freedom will come at the expense of network investment. This unprecedented action threatens railroads, shippers, and consumers with degraded service quality and higher goods prices that would naturally follow the resulting reduction in railroad investment."