The Surface Transportation Board today proposed changes that would make it easier for shippers to seek freight services from a railroad that does not directly serve their locations.
The proposed repeal of federal regulations governing reciprocal switching comes after a federal court ruling in July that tossed out the STB’s 2024 rule that would have allowed shippers who suffer from inadequate rail service to gain access to a second railroad.
Reciprocal switching allows a shipper physically served by one railroad to access the services of a competing railroad for linehaul services. The local carrier moves railcars to an interchange point, for a fee. That way, so-called “captive” shippers get a second option so they can seek services and prices from more than one carrier.
“This proposal would embrace market forces, enable meaningful choice for American businesses as provided under the statutes, and eliminate regulatory barriers unnecessarily stifling rail competition,” said STB Chairman Patrick J. Fuchs, in a release. “By proposing to remove these regulations, the board would return to the text of statutes that advance excellence, entrepreneurship, and innovation to support economic growth and supply chain resilience.”
The proposal would repeal federal rules dating to deregulation of the railroads in the 1980s requiring shippers to demonstrate “anticompetitive conduct” on the part of railroads as they sought regulatory relief. Notably, the STB said it has never issued a service order under these regulations.
The proposal also comes as Union Pacific (NYSE: UNP) and Norfolk Southern (NYSE: NSC) ask the STB to approve their merger to create the first all-freight transcontinental railroad. That deal, if approved, would reshape the U.S. rail network and has spurred opposition from agricultural, chemical and energy shippers who say it will drive up rates and erode service.
“Since the adoption of these regulations, the statutory framework has changed, the rail industry and its traffic portfolio have evolved significantly, and the regulations no longer have broad support across rail transportation stakeholders,” the STB said.
While loosening rules freeing shippers to seek a better deal, the proposal falls short of providing open access, where a carrier can reach any shipper on tracks it does not own.
The agency said its proposal, which was adopted unanimously by the three current members, “would restore the board’s discretion to consider — on a case-by-case basis — the merits of each case brought before the agency under the statutory standards set by Congress. The statutes recognize that competitive access issues do not have a one-size-fits-all solution and allow the board to consider these cases in the full context of a carrier’s operations, competitive situation, and other considerations.”
A PDF of the proposal can be downloaded here.
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