STB proposes competitive switching rule

The U.S. Surface Transportation Board (STB) proposed a rule yesterday that would allow shippers to switch cargo among large railroads if the shippers can show the arrangement is "practicable and in the public interest," or "necessary to provide competitive rail service."

The rule involves "reciprocal" or "competitive 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.

The STB will accept comments on the proposed rule until Sept 26.

In 2011, the National Industrial Transportation League (NITL) filed with the STB a petition asking that the board modify its standards for mandatory reciprocal or competitive switching.

NITL proposed certain captive shippers located in terminal areas be granted access to a competing railroad if there is a working interchange within 30 miles. The switching agreement would not be imposed if either railroad could establish that the arrangement isn't feasible or safe, or would "unduly hamper" either one's ability to serve customers.

"We appreciate STB's support of the revised reciprocal switching regulations proposed by the National Industrial Transportation League," said Jennifer Hedrick, NITL's executive director, in a prepared statement issued by the Rail Customer Coalition, which represents a variety of shippers. "Our member companies across a host of industries need this type of competitive, market-based rail transportation alternative."

But, the Association of American Railroads (AAR) said the STB should have dismissed NITL's petition.

Imposing a new rule "is a step backward from the deregulatory path that has allowed railroads to make the capacity investments required to meet customer demand and further modernize a nationwide rail network that benefits shippers and consumers," said AAR President and Chief Executive Officer Edward Hamberger in a prepared statement.

"The freight rail industry's position remains unchanged: forced access is an ill-conceived approach that compromises the efficiency of the entire network by gumming up the system through added interchange movements, more time and increased operational complexity," Hamberger said.

"Forced access would be a step backwards for the supply chain in our country as railroads would ultimately require more resources to move the same amount of freight, which would impact operational efficiencies introduced under the Staggers Rail Act," he added.

Hamberger also noted that existing STB regulations already protect rail shippers as railroads voluntarily switch traffic under the current system, and by law, if freight can get from its origin to final destination only if it is carried by two or more railroads, railroads must cooperate to move the shipments.